October 15, 2013

If no debt deal reached, deep pain for Maine

By Kevin Miller kmiller@pressherald.com
Staff Writer

WASHINGTON — Maine could be among the hardest-hit states in the nation if the political dysfunction in Washington leads to the double-punch scenario of a long-term government shutdown combined with a federal default, statistics show.

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Steve SanPedro, commander of Portland VFW Post 6859, is worried that the federal budget stalemate will cause problems for post members who rely on their military retirement payments to live. Many don’t have other sources of income, he said.

John Ewing/Staff Photographer

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Maine has more veterans per capita than most states and well as one of the highest percentage’s of people over age 65 and relying at least in part on Social Security benefits. Portland VFW Post 6859 Commander Steve San Pedro (left) and member Norm McLeod, 84, of Portland, discuss their concerns about financial issues should the Congress fail to compromise.

John Ewing / Staff Photographer

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To date, the two-week-old partial shutdown of the federal bureaucracy has had a modest impact, at best, on most Mainers, with the exception of people whose salaries are paid with federal dollars and some businesses that depend on tourists visiting Acadia National Park in Bar Harbor.

That could change dramatically, however, if Congress is unable to reach agreement by Thursday on increasing the country’s borrowing limit, also known as “lifting the debt ceiling.” There were signs of progress in negotiations Monday, but there also were no public breakthroughs.

Per capita, Maine has among the highest proportions of veterans, Social Security and Medicaid recipients, and residents who depend on food stamps to feed themselves or their families. The Portland area has been ranked as one of the top 25 metro regions in terms of the percentage of federal workers in the workforce.

While there is no clear road map for how an unprecedented default would play out, Americans who rely on Social Security, Medicaid or food stamps or other federal payments could see their checks delayed, reduced or cut off as federal officials try to figure out which bills to pay and which to delay.

“On a day-to-day basis, handling all payments for important and popular programs (such as Social Security, Medicare, Medicaid, defense, military active duty pay) will quickly become impossible,” wrote analysts with the Bipartisan Policy Center. The result will be “chaotic,” they wrote: unpaid bills, “winners and losers,” public uproar and international attention.

U.S. Sen. Angus King, an independent who served two terms as Maine’s governor, put the impact on Maine in broader terms.

“I can say without a doubt that the fiscal condition of the state is intimately tied to the fiscal condition of the country,” King said. “If Washington sneezes, Maine gets a cold.”

MEDICARE, MEDICAID AND SOCIAL SECURITY

Census figures show that Maine was the oldest state in the nation in 2011, with a median age of 43.5. That means Maine is among the states with the highest rates of Social Security and Medicare beneficiaries.

Treasury Secretary Jack Lew warned Congress last week that timely payments for Social Security and Medicare – as well as payments to active-duty military personnel and veterans – could be put “at risk” if the $16.7 trillion debt ceiling is not increased by Thursday.

The Bipartisan Policy Center estimated that the Treasury will owe $49 billion in Social Security benefits plus $18 billion for Medicare between Oct. 18 and Nov. 15.

Just shy of 24 percent of Maine’s 1.3 million people were receiving Social Security benefits in December 2012, according to federal statistics. Among Mainers aged 65 or older, 94 percent were on Social Security. Another 37,000 Maine residents received income-based payments through the Supplemental Security Income program.

Maine and West Virginia tied for the highest portion – 21 percent – of residents on Medicare, the federal health insurance program for Americans aged 65 and older or those with disabilities.

Additionally, 31 percent of Maine’s residents in 2010 received health coverage through Medicaid, the federal program that covers lower-income families, the elderly and the disabled. Maine was tied for second – with California and Vermont – among states with the highest Medicaid usage rates.

VETERANS

With more than 130,000 veterans in a state of 1.3 million, Maine was second only to Alaska in 2010 in terms of the percent of residents who served in the armed forces.

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