White House warns GOP of serious consequences on debt ceiling

The White House on Friday issued a memo to state and local governments warning of potential consequences should Congress fail to raise the nation's debt ceiling in the coming days.

Biden administration officials warned billions of dollars in state aid and federal funding for state-run programs could be stopped if a deal isn't reached, including disaster relief money, Medicaid programs and child nutrition benefits.

"The U.S. economy has just begun to recover from the pandemic and a manufactured debt ceiling crisis would threaten the gains we've made and the future recovery. If the U.S. defaults on its obligations, the ripple effects will hurt cities and states across the country," the White House said in the memo, which was obtained by The Hill.

The memo outlined various programs that could be directly impacted should the nation hit the debt ceiling. 

The administration cautioned that hitting the ceiling could cause a recession, which would have a trickle-down effect of declining city and state revenues.

"If the U.S. defaults on its debt - cities and states could experience a double-whammy: falling revenues and no federal aid as long as Congress refuses to raise or suspend the debt limit," the White House wrote. "This means critical state services will be at risk for budget cuts, from education to healthcare to pensions."

The White House noted the federal government provides more than $10 billion in annual funding for state-level public health programs, as well as more than $50 billion for local school programs. Roughly $100 billion in federal infrastructure funding could also be at risk should Congress fail to raise the debt ceiling.

Government departments and agencies need to be funded with a continuing resolution to avoid a government shutdown at month's end.

Senate Majority Leader Charles Schumer (D-N.Y.) has said he plans to raise the debt ceiling under regular order, which means it needs at least 10 GOP votes to overcome a filibuster.

The White House and other Democratic officials have urged the GOP to raise the limit in a bipartisan fashion, as has been done in the past.

But Senate Minority Leader Mitch McConnell (R-Ky.) on Tuesday said that Republicans will vote in unison to defeat any government funding bill that would also raise the nation's debt ceiling.