As debt impasse grinds on, anxieties growing

Recipients of federal benefits worry that their lifeline might be at risk

July 16, 2011|By Todd Wallack and Taryn Luna, Globe Staff | Globe Correspondent

If the federal government fails to raise the debt ceiling by Aug. 2, Army National Guard Specialist Julio Rodriguez may have to go without his $2,500 monthly salary.

For Randy Green, unemployment benefits could be at stake.

Retiree Laura Kirby worries that her Social Security check will not arrive next month.

Far from the fray in Washington, D.C., over whether Congress will allow the Treasury to borrow more money, people are reacting with a mixture of concern, skepticism, and disdain at the prospect of a government default. No one - not even the country’s sharpest economists - knows just what would happen if the government started running out of money to pay its bills, and few expect that to happen. But most everyone has something to say about a worst-case scenario.

“That would be a sad day because it wouldn’t just affect me,’’ said Rodriguez. “It would affect everyone who is counting on their money and expecting the government to be squared away.’’

Rodriguez, 39, of Lowell, said he supports himself and two young daughters on his Army pay. Last year, he suffered facial nerve damage during a tour of duty in Iraq, leaving him blind in one eye.

Like many others, he believes elected officials are trying to use the debt-ceiling standoff for political gain, a way to swoop in at the last moment with a solution and take credit for averting disaster.

“You ruffle a lot of feathers, and then you look like someone who’s coming to save the world at the end,’’ Rodriguez said.

The failure to reach an agreement to raise the debt ceiling has Green, an out-of-work ironworker, contemplating an unpleasant emergency option: seeking help from his five adult children. Green, 69, who lives in Roxbury, said he hasn’t brought home a steady paycheck since February. He can’t afford an interruption in his $625 weekly unemployment benefits.

“After two weeks, I’d be in trouble,’’ Green said.

While the state generally pays up to the first six months of unemployment, the federal government is currently picking up the tab for extensions. As with many forms of federal spending, it’s unclear whether long-term unemployment benefits would be affected by a default.

“This is completely unprecedented,’’ said Jay Powell, a former undersecretary at the US Treasury under President George H.W. Bush and a visiting scholar with the Bipartisan Policy Center in Washington, D.C. “There is no playbook. There is no road map here.’’

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