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NYC Residents May Lose
Medicaid, Social Security on U.S. Default, Liu Says
Henry Goldman, Bloomberg
July 29, 2011
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.
To contact the reporter on this story: Henry Goldman in New
York City Hall at
To contact the editor responsible for this story: Mark
Tannenbaum at mtannen@bloomberg.net.
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