As an impasse over the federal debt ceiling fuels growing worries nationwide about the disruption of Social Security checks, veterans’ benefits and other critical services, Maine officials are concerned that a default also would lead to widespread problems for the state’s government, workforce and economy.

Some of the more than 10,000 federal employees around the state might not be called into work. If they do, they might not get paid. Other organizations that rely on federal dollars – including Maine’s state government – could be forced to lay off employees.

Clinics and health care facilities could be forced to turn away Medicare and Medicaid patients. Operations at international border crossings, seaports, prisons and airports could be disrupted. Businesses that rely on regular federal inspections like slaughterhouses, dairies and egg farms could have to halt operations.

Acadia National Park and Katahdin Woods & Waters National Monument could close if staff are told to stay home.

Perhaps most troubling is that trying to anticipate all the impacts is speculative. The United States has never defaulted on the national debt.

“I’m surprised and concerned we have reached this point and we’re still debating it,” Maine state economist Amanda Rector said. “The concept of the U.S. breaking through the debt ceiling is something I certainly didn’t think I would ever see. There are so many potential negative side effects of that.”


Rector said impacts to state government and other groups and individuals that receive federal funding will depend on which bills the U.S. Treasury decides to pay with the money it still has. But she warned that any breach, however short, could be enough to push the economy into a mild recession. Many experts have predicted a significant drop in the stock market.

“The repercussions could be just enormous,” she said. “A relatively short breach would not be as catastrophic as a really extended period. But the longer that lasts, the more those effects ripple through the economy in terms of people not getting paid, not getting the money they rely on and having to turn to credit cards.”

The prospect that a default would trigger a recession means failure to reach a deal could have an immediate impact in Maine’s State House, where lawmakers are finalizing a two-year budget of nearly $10.32 billion. That budget is based on forecasts of continued growth in state tax revenues fueled by rising wages and rising consumer prices, forecasts that could quickly change.

“The United States defaulting on its debt would have catastrophic consequences for our state, for our economy and for our people,” Gov. Janet Mills said in a statement. “My administration will continue to prepare for the possibility of a default to the greatest extent possible, but, fundamentally, Washington must act in a responsible way, put an end to the repeated cycle of manufactured crises, raise the debt ceiling, and lift the cloud of self-induced anxiety and fear generated through this needless political brinksmanship.”


The debt ceiling represents the maximum amount the government can borrow to pay its bills. The U.S. hit its current limit of $31.4 trillion in January.


Unless President Biden and Republicans in the U.S. House reach a deal and Congress votes to raise the ceiling to allow more borrowing, the federal government soon will not have enough cash reserves to pay its debts.

Treasury Secretary Janet Yellen has warned that if action isn’t taken the federal government would be unable to pay all of its debts as soon as June 1.

Much is unknown about how a default would play out.

Economists and experts agree that a default would be far more damaging than the more common government shutdowns that Americans have experienced. Although some of the impacts would be similar, a shutdown still allows for essential government services to continue.

While unable to borrow more money, the government would continue collecting revenue in the form of taxes, so some bills could still get paid, at least in the short term. It would be left to the Treasury Department to navigate which bills to pay and when, a process that would likely trigger legal challenges.

Sharon Huntley, a spokesperson for Maine’s Department of Financial and Administrative Services, which oversees the state budget, said the Mills administration is monitoring the debt ceiling negotiations in Washington and is “deeply concerned about the potential impacts on the state and to Maine people.” The agency last week put together a detailed report on possible impacts in Maine.


Huntley said a federal default would result in a pause in federal payments to Maine totaling billions of dollars a year. She said the state has enough cash to backfill a loss in federal funding for about two months, “but we would also need assurances of federal repayment for that money.”

Last year, the state received over $5 billion in federal funding. Much of that was for pandemic-related spending. Prior to the pandemic the state received more than $2.8 billion in federal funding each year.

There also are more than 2,000 state employees – about 19 percent of the state’s workforce – who rely on federal funding to pay all or some of their salaries. Federal government shutdowns in the past have forced the state to lay off some of those federally funded state workers and suspend the services they provide.

Maine also could see a higher percentage of overall job losses from a default than any other New England state, according to Moody’s Analytics. The bond rating agency projects 3,500 jobs lost in Maine as a result of a short default lasting less than a week. That’s a 1.07% drop, the highest in New England.

The projection is based on Maine’s higher percentage of federal employees, including those working at the Portsmouth Naval Shipyard in Kittery.

And there are many people across the state, and across the nation, who rely on direct federal benefits that could be disrupted.


The Maine Center for Economic Policy, a progressive advocacy group, estimates that more than 350,000 Maine residents receive Social Security, 105,000 receive federal veterans’ benefits and 88,000 receive food assistance.

It’s unclear how quickly or how broadly those benefits could be disrupted, but The Washington Post reported that the federal government might not have enough money in the first 10 days of June to cover the costs of Social Security payments, food stamps or Medicaid reimbursements to states.


Since 1960, the debt ceiling has been raised 78 times – 49 times under Republican presidents and 29 times during Democratic administrations.

With a majority of seats in the House of Representatives, Republicans are using the prospect of default to demand that President Biden cut government spending and enhance work requirements for some social service programs. There is no clear deadline to reach a deal, but some experts say a deal needs to be reached this week to allow time for Congress to act and avoid defaulting on debts in early June.

Negotiations continued Wednesday, with no apparent breakthrough.


House Speaker Kevin McCarthy said he was sending Republican negotiators to the White House to finish debt limit talks, but warned that the two sides are “still far apart,” The Associated Press reported. And White House Press Secretary Karine Jean-Pierre decried what the administration called a “manufactured crisis” set in motion by Republicans pushing “extreme proposals,” the AP said.

Sen. Angus King said in a prepared statement Wednesday that all the recent gains – low unemployment, stabilized inflation and the restoration of the country’s supply chain – “could be demolished through a reckless impasse.”

Matthew Felling, King’s spokesman, said that in addition to the impact on individuals who rely on federal programs or work in federal jobs, the impact of a default will have a broader impact on the global economy.

“Our credit rating has already gone down, so our reputation is being affected,” he said. “The entire world economy is based on the U.S. dollar and it’s wobbly.”

Sen. Susan Collins, R-Maine, also provided a written statement.

“My state offices have received calls from Mainers, including those receiving Social Security, who are concerned about what would happen if we defaulted,” she said. “We cannot allow that to happen.  Defaulting on our nation’s debt would have catastrophic economic consequences.”


Victoria Bonney, a spokeswoman for Rep. Chellie Pingree, D-1st District, said constituents have been calling and emailing their concerns, and about 1,200 have written letters to Pingree’s office. One call on Wednesday was from a retired federal employee who worried she wouldn’t be able to pay her bills this month if her check stops, Bonney said.

Bonney provided excerpts from some of the letters, although the authors were not identified.

“I have an autoimmune disease which causes debilitating, fatigue, and brain fog,” one constituent wrote. “I have been on Social Security Disability since 2017. I depend on my monthly income to pay my bills.”

“I am a semi retired nurse at age 69,” another wrote. “I am a recipient of social security. My life’s savings is in jeopardy.”

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