New York City may lose about $3 billion a month in social security, Medicare and Medicaid payments to the elderly, poor and disabled if the U.S. Congress fails to extend the debt limit, city Comptroller John Liu said.
The city’s borrowing costs may rise and its pension-fund investments may lose value in the aftermath of a congressional failure to compromise over the issue, he said.
Liu recommended the immediate creation of an emergency “Debt Ceiling Task Force,” with representatives of his office, Mayor Michael Bloomberg’s budget office and the City Council to deal with a potential failure to extend the debt limit.
New York City, where officials anticipate borrowing more than $9.3 billion for capital projects this fiscal year, “stands to be affected by the growing market turmoil and to a greater extent by fallout if the current failures in Washington are not resolved promptly,” Liu said in the statement.
President Barack Obama today said Republicans and Democrats are in “rough agreement” on their plans to raise the nation’s debt limit with just four days before a threatened U.S. default and the time for compromise is “now.”
About 1.1 million elderly and disabled city residents receive Social Security payments averaging $1,063 a month, totaling about $1.16 billion, Liu said in an e-mailed advisory on the impact of the debt limit.
Federal and state funds accounted for $1.8 billion, or 81 percent, of Medicaid expenses in June, Liu said.
3 Million Individuals
“Any delay in the receipt of Medicaid funding would impact the financial condition of hospitals, service providers and the city’s Medicaid population of close to 3 million individuals,” he wrote in the statement.
Any halt in Medicare benefits for about 1 million elderly enrollees in the city could reduce revenue to the city’s public hospital system by more than $50 million a month, he said. Delays in federal public assistance payments totaling about $44 million a month, and another $20 million in state support, could affect “millions of people and thousands of service providers,” Liu said.
The city’s pension funds would be able to pay their beneficiaries with more than $7 billion in short-term securities the funds hold, Liu said. The funds’ investments and asset allocations “will need to be reviewed for the longer term implications” of a failure to extend the debt limit, he said.
Representatives of the mayor and City Council Speaker Christine Quinn didn’t immediately respond to requests for comment about Liu’s statement.
The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.