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What happens if the US doesn't reach agreement on debt ceiling before the deadline?

The United States is heading towards the deadline to raise its debt ceiling. Here's what that means for you.

SAN DIEGO — As lawmakers in Washington D.C. continue negotiations, the United States is heading towards the deadline to raise its debt ceiling. Here's what that means for you.

What is the debt ceiling?

Simply put, the debt ceiling is the limit on the amount of money that the federal government can borrow to pay its bills. It currently stands at around $31 trillion: a limit that we've already hit.

When is the deadline?

While the U.S. Treasury is now taking "extraordinary measures" to stay afloat for the time being, Treasury Secretary Janet Yellen warns that if the ceiling is not raised by June 1, the U.S. could run out of cash.

What happens if the U.S. fails to pay its bills?

As the world's economic powerhouse, the United States has never defaulted on its debt. If Congress does not soon come to an agreement on raising the debt ceiling, though, economists warn it could send the global economy into chaos.

Who will be affected?

For one, anyone who is thinking of buying a home in the near future. In fact, according to Zillow, a debt default by the U.S. government could force mortgage rates to soar above 8%, driving up the buying costs of a home by at least 22%, directly impacting potential home buyers.

Will Social Security be affected?

Along with higher interest rates, a slew of federal government programs from Social Security to Medicare could be impacted if the government could not borrow to fulfill its obligations. 

In a worst-case scenario, social security benefit checks might be delayed. Economists caution that it is unlikely that it will get to that point, acknowledging that a delay of even a couple weeks could have devastating effects on senior citizens, many of whom rely on their monthly benefits to cover shelter, food and medicine.

How will families be impacted?

Military families who rely on a paycheck from a branch of the U.S. military could possibly experience delayed payments, as could veterans who rely on federal benefits. 

Other federal programs that millions of American families depend on could also be impacted, such as the Supplemental Nutrition Assistance Program (SNAP), which is also known as food stamps; federal education programs such as PELL grants; and free or reduced school lunches for kids.

Has Congress raised the debt ceiling in the past?

The debt ceiling has been raised 78 times since 1960 under both Democratic and Republican presidents, including three times during the last administration.

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