If President Obama and congressional leaders cannot reach a deal to raise the federal debt limit by August 2, the federal government might be unable to borrow to meet its financial obligations. Federal policy makers, opinion leaders and the media have focused on how a federal default might affect the national economy and global markets. But at a time when states and cities are still feeling the effects of the Great Recession, not enough attention has been paid to how a default could impact their efforts to balance their budgets or borrow for critical needs.
Read the Issue Brief: The Debt Ceiling Debate: How a Federal Default Could Impact States and Cities
The Pew Fiscal Analysis Initiative has developed a fact sheet answering frequently asked questions about the federal debt limit and the consequences of defaulting on the government’s obligations.