30 May 2023
TOPEKA (KSNT) – The clock is ticking for Congress to pass a debt ceiling deal. If it fails, Kansas, like other states, could be in a tough spot, according to economic experts.
Kansas Capitol Bureau spoke with Economics Professor Paul Byrne about the pending deal to raise the federal government’s more than 31 trillion dollar debt limit.
“We’ve had these kind of repeated negotiations of, ‘we’re getting closer to the debt ceiling…’ It’s not that we don’t hit the debt ceiling, it’s that, in U.S. history, we’ve never defaulted on the debt,” Byrne said.
Congress has until Monday to pass a deal, averting a default that could wrack the global economy, and have major consequences in Kansas, according to Byrne.
“If the Treasury decided to prioritize certain payments… de-prioritized payments would be things for Medicaid and to hospitals, where hospitals would start running into problems… especially nursing homes as well, in terms of getting their Medicaid reimbursements,” he explained.
Byrne said the unprecedented event could also lead to delays in social security payments and federal dollars coming to the state. According to Kansas Budget Director Adam Profitt, the state is hoping for the best, but planning for a default, if it were to occur.
“The Division of the Budget continues to monitor the ongoing negotiations in D.C. regarding the nation’s debt ceiling, as the U.S. Treasury Secretary has predicted for months that the federal government could run out of cash as soon as June 1, 2023. We are in constant contact with each state agency to determine what, if any, the impact could be to state operations should the federal government run out of cash in the coming days or weeks. Given the unprecedented nature of the situation, we are doing our best to develop contingency plans, to ensure there is no disruption in state services should this occur. While we are hopeful that federal negotiators can avoid such a precarious situation, we are fortunate that the state of Kansas is in very good fiscal health, and we anticipate being able to continue delivering service to Kansas citizens.”
Adam Proffitt, Kansas Budget Director