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  • 5 ways a debt default could affect you | CNN Politics

    5 ways a debt default could affect you | CNN Politics

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    CNN
     — 

    President Joe Biden and House Republicans may have as little as a month to prevent the US from defaulting on its debt, which would impact millions of Americans and unleash economic and fiscal chaos here and around the world.

    Treasury Secretary Janet Yellen warned Monday that the government may not be able to pay all of its bills in full and on time as soon as June 1. However, the forecast was uncertain, and the default date might come several weeks later, she said. The US hit its $31.4 trillion debt ceiling in January, and Treasury has been using cash and “extraordinary measures” to satisfy obligations since then.

    Just what would happen if the nation defaults on its debt is unknown since it’s never actually happened before. A close call in 2011 roiled the financial markets and prompted Standard & Poor’s to downgrade the US’ credit rating to AA+ from AAA.

    Yellen gave a sense of the turmoil it would cause in her letter to House Speaker Kevin McCarthy on Monday.

    “If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she wrote.

    To be clear, a debt default doesn’t mean all payments would stop and people would permanently lose out on money they are owed. Treasury would have the funds to satisfy some obligations, but it’s not certain how the agency would handle the disbursements. Much would also depend on how long it takes Congress to address the borrowing cap.

    “Tens of millions of people across the country who expect payments from the federal government may not get them on time,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center.

    Here are five ways that Americans could be affected by debt default:

    About 66 million retirees, disabled workers and others receive monthly Social Security benefits. The average payment for retired workers is $1,827 a month in 2023.

    Almost two-thirds of beneficiaries rely on Social Security for half of their income, and for 40% of recipients, the payments constitute at least 90% of their income, according to the National Committee to Preserve Social Security and Medicare.

    These payments could be delayed in a debt default scenario, though it’s possible Treasury could continue making on-time payments because of the entitlement program’s trust fund, Akabas said.

    The benefits are disbursed four times a month, on the third day of the month and on three Wednesdays. Roughly $25 billion a week is sent out, according to the Congressional Budget Office.

    “Even a short delay in the payment of Social Security benefits would be a burden for the millions of Americans who rely on their earned benefits to pay for out-of-pocket health care expenses, food, rent and utilities,” Max Richtman, the committee’s CEO, said in a statement.

    Many other government payments could also be affected, including funding for food stamps; federal grants to states and municipalities for Medicaid, highways, education and other programs; and Medicare payments to hospitals, doctors and health insurance plans.

    More than 2 million federal civilian workers and around 1.4 million active-duty military members could see their paychecks delayed. Federal government contractors could also see a lag in payments, which could affect their ability to compensate their workers.

    Also, certain veterans benefits, including disability payments and pensions for some low-income veterans and their surviving families, could be affected.

    “Such calamity would place further stress on our servicemembers, retirees, and veterans, as well as their families, caregivers, and survivors,” Rene Campos, senior director of government relations for the Military Officers Association of America, said in a blog post. “Though life in uniform is not always predictable, those who serve or have served their country expect their country to honor their commitment to service.”

    About $25 billion in pay or benefits for active-duty members of the military, civil service and military retirees, veterans and recipients of Supplemental Security Income is sent out on the first day of the month, according to the CBO.

    Americans’ investments would take a direct hit. Case in point: Markets had what was then their worst week since the financial crisis during the 2011 debt ceiling standoff after the Standard & Poor’s downgrade.

    Even if the debt ceiling impasse is resolved soon after a default, stocks could shed as much as a third of their value. That would wipe out around $12 trillion in household wealth, according to Moody’s Analytics.

    If a default occurs, yields on US Treasuries will inevitably rise to compensate for the increased risk that bondholders won’t receive the money they’re owed from the government.

    Since interest rates on loans, credit cards and mortgages are often based on Treasury yields, the cost of borrowing money and paying off debt would rise. That’s on top of the increased costs Americans are already facing from the Federal Reserve rate hikes.

    Families and businesses would also have a tougher time getting approved for lines of credit since banks would have to be more selective about to whom they loan money. That’s because their costs of borrowing money will also rise, which limits the amount of money they can lend out.

    A debt default could trigger an economic downturn, which would prompt a spike in unemployment. It would come at a particularly fragile time – when the nation is already dealing with rising interest rates and stubbornly high inflation.

    How much damage would be done would depend on how long the crisis continues. If the default lasts for about a week, then close to 1 million jobs would be lost, including in the financial sector, which would be hard hit by the stock market declines. Also, the unemployment rate would jump to about 5% and the economy would contract by nearly half a percent, according to Moody’s.

    But if the impasse dragged on for six weeks, then more than 7 million jobs would be lost, the unemployment rate would soar above 8% and the economy would decline by more than 4%, according to Moody’s. The effects would still be felt a decade from now.

    “It would be a body blow to the economy, and it would be a manufactured crisis,” said Bernard Yaros, an economist at Moody’s.

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  • Same old story with aging politicians | CNN Politics

    Same old story with aging politicians | CNN Politics

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    A version of this story appears in CNN’s What Matters newsletter. To get it in your inbox, sign up for free here.



    CNN
     — 

    Whenever a lawmaker who is advancing in years appears infirm or confused in public, or takes some time to convalesce, there are questions about their fitness for office.

    This week, it’s Mitch McConnell, the top Republican in the Senate, who froze and appeared confused during a Capitol Hill news conference Wednesday. After recovering off camera, McConnell returned to take questions and later left smiling, telling reporters that he was doing just fine and had just been “sandbagged” when he was unable to speak.

    Earlier this year, McConnell could not hear reporters at a different news conference. Plus, McConnell is known to have fallen at least three times in the past year, according to CNN’s Manu Raju.

    He slipped on ice before a meeting in Finland.

    He fell getting off a plane at Reagan National Airport in Washington.

    His fall at the Waldorf Astoria in Washington led to a concussion and broken ribs that sidelined him for weeks.

    A fall several years ago at home in Kentucky caused a shoulder fracture.

    Writes Raju of the way McConnell walks on Capitol Hill:

    McConnell, 81, was a survivor of polio as a child and has long walked with a slight limp. He walks on stairs one at a time, and at times rests his hand on an aide to assist him through the Capitol.

    It’s notable that fellow Republicans are not concerned about McConnell’s ability to continue to do his job. At least not openly.

    Democrats have increasingly turned on Sen. Dianne Feinstein, who at 90 is a shadow of the imposing figure she once cut on Capitol Hill. A long absence while she recovered from shingles gummed up their ability to move judicial nominees and some legislation and led some of her California colleagues to call for her to step down.

    At a hearing Thursday, she had to be prodded, repeatedly, by fellow Democratic Sen. Patty Murray of Washington, to vote “aye” on a procedural vote.

    Difficulties communicating are not exclusively the milieu of older lawmakers. Sen. John Fetterman of Pennsylvania won his seat despite suffering a stroke during last year’s campaign. He sought hospital care for depression this year. He now conducts interviews with the help of an iPad that transcribes questions in real time.

    There’s an awkward gray area between legitimate questions about a person’s health and ageism.

    Former South Carolina Gov. Nikki Haley got some early attention for her presidential campaign when she suggested a mental competency test for politicians over 75.

    It was ageist, constitutionally dubious and savvy politics all at the same time.

    Democrats are perpetually on defense about President Joe Biden’s age and acuity. Republicans have turned attacks against Biden, 80, into an art form, with viral videos to highlight his frequent verbal miscues.

    Haley’s proposal highlighted that these attacks on Biden occur without a whiff of irony that Republicans’ own current presidential primary frontrunner, former President Donald Trump, is 77.

    That neither Haley nor any of the other much younger Republicans challenging Trump in the 2024 primary field have so far caught fire is an indication that voters, who often skew older than the general population, don’t seem to care. They like a young and exciting candidate like, say, Barack Obama. They also like an older candidate, like, say, Ronald Reagan or Biden.

    The most powerful force in American politics isn’t age or ideas, but rather incumbency.

    As CNN’s Harry Enten wrote, the most shocking result out of the 2022 midterms was not that Democrats held the Senate or that Republicans only narrowly captured the House. It was that every single Senate incumbent who ran won. Only one incumbent governor running for reelection lost.

    I tried and failed to find a comprehensive look at whether younger or older candidates generally win congressional elections. But CNN recently published an interesting look at which generations are serving as lawmakers.

    Millennials are America’s largest generation by population, but they’re one of the smallest groups that make up Congress. That suggests baby boomers, despite reaching retirement age, are holding onto their seats.

    McConnell’s age of 81 might seem old to the average American, but it’s far from out of the ordinary on Capitol Hill, where the average age for a sitting senator, 64, is eligible for Social Security.

    McConnell has been a senator since 1985, which makes him the 12th longest-serving senator ever. He hasn’t said if he will run for reelection in 2026 or if he will continue to be the GOP leader when the next Congress begins in 2025. The only other longer-serving senator is Sen. Charles Grassley, who is 89, and who won an eighth term last November.

    Biden had more than 36 years logged as a senator when he left to become vice president in 2009. If he had stayed in the Senate, he’d now have a full half-century tenure and be about a year away from eclipsing West Virginia Sen. Robert Byrd’s Senate record of 51 years, five months and 26 days.

    Byrd died while in office in 2010, and for the final years of his time as senator, he was frequently absent or had to use double canes or a wheelchair.

    American life expectancy, despite advances in medical care, was 77.4 in 2020. It has declined in recent years, and not just because of the Covid-19 pandemic.

    Researchers point to poor average diet, lack of universal health care and access to guns as factors that keep the Americans from living longer when compared with other countries.

    But the dwindling financial security of retirement programs like Social Security and Medicare means that future generations will likely have to work longer. Their lawmakers will be right there with them.

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  • Social Security will not be able to pay full benefits in 2034 if Congress doesn’t act | CNN Politics

    Social Security will not be able to pay full benefits in 2034 if Congress doesn’t act | CNN Politics

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    CNN
     — 

    Americans’ Social Security checks will get a lot smaller in 2034 if lawmakers don’t act to address the pending shortfall, according to an annual report released Friday by the Social Security trustees.

    That’s because the combined Social Security trust funds – which help support payouts for the elderly, survivors and disabled – are projected to run dry that year. At that time, the funds’ reserves will be depleted, and the program’s continuing income will only cover 80% of benefits owed.

    The estimate is one year earlier than the trustees projected last year. About 66 million Americans received Social Security benefits in 2022.

    Medicare, meanwhile, is in a more critical financial condition. Its hospital insurance trust fund, known as Medicare Part A, will only be able to pay scheduled benefits in full until 2031, according to its trustees’ annual report, which was also released Friday.

    At that time, Medicare, which covered 65 million senior citizens and people with disabilities in 2022, will only be able to cover 89% of total scheduled benefits. Last year, Medicare’s trustees projected that the hospital trust fund’s reserves would be depleted in 2028.

    Immensely popular but long troubled, Social Security and Medicare are on shaky financial ground in large part because of the aging of the American population. Fewer workers are paying into the program and supporting the ballooning number of beneficiaries, who are also living longer. Also, health care is becoming increasingly expensive.

    Social Security has two trust funds – one for retirees and survivors and another for Americans with disabilities.

    Looking at them separately, the Old-Age and Survivors Insurance Trust Fund is projected to run dry in 2033, at which time Social Security could pay only 77% of benefits, primarily using income from payroll taxes. The date is one year earlier than estimated last year.

    The Disability Insurance Trust Fund is expected to be able to pay full benefits through at least 2097, the last year of the trustees’ projection period.

    Merging the two trust funds would require Congress to act, but the combined projection is often used to show the overall status of the entitlement.

    Social Security’s projected long-term health worsened over the past year because the trustees revised downward their expectations for the economy and labor productivity, taking into account updated data on inflation and economic output.

    However, the long-term projection for Medicare’s hospital trust fund’s finances improved, mainly due to lowered estimates for health care spending after the height of the Covid-19 pandemic. Also, the program is projected to take in more income because the trustees estimate the number of covered workers and average wages will be higher.

    Regardless, the bottom line remains that Medicare is not bringing in enough money to pay the costs it is expected to incur, said Cori Uccello, senior health fellow at the American Academy of Actuaries.

    “It’s still not a time to become complacent,” she said. Insolvency “is still less than a decade away.”

    The trustees’ reports are the latest warnings to Congress that they will have to deal with the massive entitlement programs’ fiscal problems at some point soon. But addressing their issues is politically challenging. Elected officials are hesitant to suggest any changes that could lead to benefit cuts, even though that could reduce their options in the future.

    “With each year that lawmakers do not act, the public has less time to prepare for the changes,” the trustees warned in a fact sheet.

    The programs’ shortfalls are back in the spotlight this year as President Joe Biden and House Republicans battle over how to address the nation’s debt ceiling drama and mounting budget deficits. GOP lawmakers want to cut spending in exchange for resolving the borrowing limit, while the White House has said it will not negotiate.

    In a memorable moment in his State of the Union address in February, Biden garnered public acknowledgment from congressional Republicans about keeping Social Security and Medicare out of the debt discussions.

    But “not touching” Social Security means a hefty cut in benefits within a decade or so.

    “Change is inevitable because without changes to current law, both Social Security and Medicare Hospital Insurance would go insolvent, subjecting program participants to sudden and severe payment cuts,” said Charles Blahous, senior research strategist at the Mercatus Center at George Mason University and former Social Security and Medicare trustee. “The outstanding question is whether change will be tolerably gradual, or instead highly damaging because it is too long delayed.”

    Though Biden has repeatedly vowed to protect Social Security, his latest budget proposal did not include a plan to stabilize its finances.

    However, his proposal did call for extending Medicare’s solvency by 25 years or more by raising taxes on those earning more than $400,000 a year and by allowing the program to negotiate prices for even more drugs.

    Spending on the entitlement programs is also projected to soar and exert increased pressure on the federal budget in coming years.

    Mandatory spending – driven by Social Security and Medicare – and interest costs are expected to outpace the growth of revenue and the economy, according to a Congressional Budget Office outlook released in mid-February.

    This story has been updated with additional information.

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  • These 5 states will be the first to kick residents off Medicaid starting in April | CNN Politics

    These 5 states will be the first to kick residents off Medicaid starting in April | CNN Politics

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    CNN
     — 

    Millions of Americans are at risk of losing their Medicaid coverage in coming months, but residents in Arizona, Arkansas, Idaho, New Hampshire and South Dakota will be the first to bear the brunt of the terminations.

    States have been barred by Congress from winnowing their Medicaid rolls since the Covid-19 pandemic began. That prohibition ends on Saturday, and some states are moving much more swiftly than others to kick off those deemed ineligible for the public health insurance program for low-income Americans.

    That worries advocates, who say speed will result in eligible residents being incorrectly terminated. Also, it could hamper shifting those who no longer qualify to other types of coverage.

    “This is the fable of the tortoise and the hare,” said Joan Alker, executive director of the Georgetown University Center for Children and Families. “Taking time is absolutely going to result in a better outcome for eligible children and families to remain covered. So speed is a big concern.”

    The five states will start cutting off coverage in April, followed by 14 more states in May and 20 additional states plus the District of Columbia in June. All states must complete their redeterminations over the next 14 months.

    Around 15 million people could be dropped from Medicaid, according to various estimates, though several million folks could find coverage elsewhere. Others may still be eligible but could be terminated for procedural reasons, such as not completing renewal forms. Those at risk include at least 6.7 million children, according to a Georgetown analysis.

    Medicaid enrollment has ballooned since March 2020, when lawmakers passed the Families First Coronavirus Response Act, which prevented states from involuntarily removing anyone from coverage. In exchange, Congress boosted states’ federal Medicaid match rates by 6.2 percentage points.

    The provision was initially tied to the national public health emergency, but lawmakers changed that as part of the federal spending bill that passed in December. In addition to being able to start conducting terminations in April, states will receive an enhanced federal match through the rest of this year, though it will phase down over time.

    More than 92 million Americans were enrolled in Medicaid and the Children’s Health Insurance Program in December, up 31% since February 2020, according to the most recent data available from the Centers for Medicare and Medicaid Services.

    Reviewing the eligibility of all those enrollees will be a monumental task for state Medicaid agencies, many of which are also contending with slim staffing. To gear up, they are hiring new employees, temporary workers or contractors or bringing back retirees, according to a recent survey conducted by Georgetown and the Kaiser Family Foundation.

    Most states can automatically renew coverage for at least some of their enrollees using other data, such as state wage information. But agencies must get in touch with others in their Medicaid programs, which proved challenging even prior to the pandemic. Most states are using multiple methods to update enrollees’ contact information, including working with insurers that provide Medicaid coverage to residents.

    If notices sent by mail are returned, states must make good faith attempts to contact enrollees through at least two other methods before cutting them off. And states have to adhere to additional requirements to continue to qualify for the enhanced match. If they don’t, CMS also could suspend their terminations, require they take corrective action or impose monetary penalties.

    Of the roughly 15 million people who could lose Medicaid coverage, about 8.2 million will no longer qualify, according to a Department of Health and Human Services analysis released in August. Some 2.7 million of these folks would qualify for enhanced federal subsidies for Affordable Care Act policies that could bring their monthly premiums to as low as $0.

    Some 6.8 million people, however, will be disenrolled even though they remain eligible.

    Though the federal government has given states more than a year to conduct the eligibility reviews and terminations, some plan to move much more quickly.

    Idaho, which has been monitoring enrollees’ eligibility throughout the pandemic, plans to complete its reevaluations by September, which it touts as one of the fastest timelines in the country.

    Of the nearly 450,000 Idahoans in the program, about 150,000 of them either don’t qualify or haven’t been in touch with the state in the past three years. The state began sending notices in February to those who face termination. People have 60 days to respond before they are removed.

    Those that are not eligible have 60 days from their termination date to enroll in Idaho’s state-based Obamacare exchange, Your Health Idaho. The exchange receives information nightly from the state Medicaid agency about residents who no longer qualify for public coverage but may be eligible for federal subsidies for Affordable Care Act policies.

    The exchange is reaching out to those folks weekly while they still have Medicaid and then every 15 days during the two-month special enrollment period via various methods, including mail, email and text messages, said Pat Kelly, Your Health Idaho’s executive director.

    The exchange works with 900 agents, brokers and enrollment counselors who can help folks sign up for policies. And it plans to start an advertising campaign this month highlighting the hefty subsidies.

    “We have to really help Idahoans know and understand that low-cost options are available, and most importantly, that it’s comprehensive health insurance that they can get for $0 a month,” Kelly said.

    Still, advocates in Idaho are concerned that the state’s push to unwind quickly will result in eligible residents losing coverage.

    Many people are not aware that they once again need to prove that they qualify, and the state agency is understaffed and underfunded, said Hillarie Hagen, health policy associate at Idaho Voices for Children. Renewal letters may not make it to enrollees, and those who need help may not be able to get through to customer service.

    “We are very concerned about families, and particularly children, losing health coverage without their knowledge – that they will find out when they show up to the doctor,” Hagen said.

    Aware that many people don’t know they’ll have to renew their eligibility, Arizona’s Medicaid agency last summer sent text messages and letters and made robocalls to enrollees, asking them to update their contact information. It is also working with community partners, health care providers, pharmacies and insurers. And it’s ramping up another text campaign since the prior one was so successful, said Heidi Capriotti, public information officer for the Arizona Health Care Cost Containment System.

    While the state can automatically redetermine the eligibility of about 75% of its Medicaid participants, it still has to connect with about 670,000 residents who could lose coverage because they are no longer eligible or they haven’t responded to the agency’s requests. The state plans to take 12 months to assess whether its enrollees still qualify.

    South Dakota will start terminating Medicaid enrollees in April, though some low-income adults may become eligible again in July, when the state’s Medicaid expansion program begins.

    Voters approved the broadening of Medicaid to low-income adults at the ballot box in November, over the objections of the Republican governor and legislature.

    Nearly 152,000 residents were enrolled in Medicaid in January, an increase of more than 30% from March 2020, according to the state’s Department of Social Services. But more than 22,000 people appear to be ineligible currently.

    The agency said in an FAQ that it will prioritize reviewing folks who are most likely to be ineligible because they no longer meet a coverage group or their income has increased, among other reasons.

    Those who are not eligible will be disenrolled with 10-days’ notice. If they appear eligible for expansion in July, they’ll receive a notice about it when they are terminated and sent a reminder in June. The agency is encouraging any enrollees who are determined to be ineligible to reapply after Medicaid expansion takes effect.

    But that three-month gap can wreak havoc on low-income residents’ health, said Jen Dreiske, deputy director of South Dakota Voices for Peace, which is working with the state’s immigrants and refugees to inform them of the unwinding. These folks may have to go without their heart medication or their cancer treatment. They may also be afraid to go to the doctor because of the cost.

    “Why can’t we just wait until July 1?” Dreiske said. “Our concern is that people are going to get sick or die because they’re not going to be able to access the health care that they so desperately need.”

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  • Texas sends ban on gender-affirming care for minors to governor’s desk | CNN Politics

    Texas sends ban on gender-affirming care for minors to governor’s desk | CNN Politics

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    CNN
     — 

    The Texas legislature Wednesday night voted to ban gender-affirming care for most minors, sending a bill to the governor’s desk that, if enacted, would put critical health care out of reach for transgender youth in America’s second-most-populous state.

    Senate Bill 14 would block a minor’s access to gender reassignment surgeries, puberty blocking medication and hormone therapies, and providing this care to trans youth would lead to the revocation of a health care provider’s license.

    The legislation was held up for days by protests and procedural delays by Democrats in the House. House Republicans approved an amendment that makes minor exceptions for children who had begun receiving non-surgical gender-affirming care before June 1, 2023, and underwent 12 or more sessions of mental health counseling or psychotherapy six months prior to beginning prescription drug care.

    Children to whom those exceptions apply can continue their care but must “wean” off from the treatment with the help of their doctor. The Senate vote to agree to that change was the last step required for final passage.

    “Here in Texas, we will protect our kids! Thank you to everyone who supported and helped pass my bill. I look forward to @GovAbbott’s signature soon,” bill sponsor state Sen. Donna Campbell tweeted after the Senate’s vote.

    If signed by Abbott, the ban will take effect September 1.

    Gender-affirming care spans a range of evidence-based treatments and approaches that benefit transgender and nonbinary people. The types of care vary by the age and goals of the recipient, and are considered the standard of care by many mainstream medical associations.

    Though the care is highly individualized, some children and parents may decide to use reversible puberty suppression therapy. This part of the process may also include hormone therapy that can lead to gender-affirming physical change. Surgical interventions, however, are not typically done on children and many health care providers do not offer them to minors.

    Some Republicans have expressed concern over long-term outcomes of the treatments. But major medical associations say that gender-affirming care is clinically appropriate for children and adults with gender dysphoria – a psychological distress that may result when a person’s gender identity and sex assigned at birth do not align, according to the American Psychiatric Association.

    If Abbott signs the bill, it would make Texas the fifteenth state to restrict access to gender-affirming care for trans youth this year. Florida’s Republican Gov. Ron DeSantis signed a bill banning the care in his state Wednesday and Oklahoma placed their own care ban on the books at the beginning of May. Around 125 bills that target LGBTQ rights, especially health care for transgender patients, have been introduced nationwide this legislative session, according to data compiled by the American Civil Liberties Union.

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