White House warns of state and local government funding cuts without debt ceiling increase

BY KATHRYN WATSON

The White House is warning state and local governments that the consequences for them will be dire if Congress doesn’t raise the debt ceiling and the U.S. goes into default.

In a memo, the White House said that if the U.S. can no longer pay its obligations and defaults, “billions of dollars in state aid and state-run but federal funded programs could be halted.”

The memo comes as Republicans insist they will not vote to raise the debt ceiling, while the White House is urging Congress take a bipartisan vote to do so. The Treasury Department estimates that borrowing authority will expire in October, after which the U.S. will not be able to pay its bills.

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