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How defaulting on the nation’s debt would affect N.H.

Senator Jeanne Shaheen met with business and municipal leaders in New Hampshire on Tuesday to discuss how defaulting on the country’s debt would impact the state. She urged business leaders to voice their concerns to federal officials to get them to act.Drew Angerer/Getty

The deadline for raising the debt ceiling is approaching, but ongoing negotiations in Washington have yet to yield a plan for the country to avoid defaulting on its debt.

That’s causing concern among the state’s congressional delegation, as well as local business and municipal leaders, about how defaulting on the country’s debt would impact New Hampshire — a scenario in which the federal government would likely be forced to delay payment on a range of its bills.

The unprecedented situation could have broad consequences on everything from health care, to Social Security and school lunch programs. Around 30 percent of the state’s funding comes from the federal government.


“It would really create chaos and uncertainty for our economy,” said Senator Jeanne Shaheen, who met with business and municipal leaders Tuesday. She said defaulting would likely impact Social Security pension plans, retirement accounts, and national security. She urged business leaders to voice their concerns to federal officials to get them to act.

“I think people need to weigh in,” she said, adding that the business community has not been as vocal about raising the alarm bell as it was the last time the country was in a similar situation in 2011.

There are other key differences that Shaheen said make her pessimistic about the chances of preventing a default: a narrower majority in the House, a House speaker beholden to the Freedom Caucus who elected him, and a smaller Democratic majority in the Senate. Plus, she said President Joe Biden is not in the same position as then-President Barack Obama was in 2011. Biden is now negotiating with the House Speaker Kevin McCarthy, but Shaheen said the contours of a deal have not emerged and the path toward an agreement is unclear.

“What I’m hearing from my Republican colleagues in Washington is that they don’t see how Kevin McCarthy can reach an agreement with the President that’s going to be acceptable and get the votes that are needed and still maintain his speakership,” she said.


The country has raised the debt ceiling 80 times since 1960, about 50 times under Republican leadership, and about 30 times under Democratic control, according to Shaheen.

New Hampshire business leaders said a default would be bad for business in the state — it could deter them from hiring or expanding.

“Any uncertainty that’s injected into the economy right now is entirely unwelcome for the business community,” said Mike Skelton, president and CEO of the Business and Industry Association of New Hampshire.

“We’re hoping we don’t get to that point,” said Thomas Bishop, director of legislative affairs at BAE.

If the US stops making payments, that would be a hit to the US GDP, according to Will Garrity Binger, who works on policy for Shaheen’s office. He said that affects people’s purchasing power — and their ability to spend whether at a grocery store or restaurant.

It could make it harder to borrow money and in 2011 it resulted in the U.S.’s credit score getting downgraded. Government contractors would also be affected by delayed payments.

Binger told business leaders to prepare for delayed payments and shore up their balance sheets.

Municipal leaders said a default would impact the state’s most vulnerable people on everything from public safety to food security and homelessness — and they worry that the responsibility for paying for needed services will fall to local governments in the event the federal government stops paying.


“Our most vulnerable residents, I think would be the most impacted when we hear about cuts to WIC and homelessness and workforce development,” said Katherine Heck, the government finance adviser at New Hampshire Municipal Association.

Berlin Mayor Paul Grenier and Franklin Mayor Jo Brown both pointed to the high percentage of students in their communities who are on free and reduced school lunch and worried about the impact to them if the government stops paying for the program.

Brown said 65 percent of Franklin’s students are on free and reduced lunch, in addition to 300 veterans in town that rely on health assistance and 85 older people who receive assistance for housing. She said Franklin depends on outside assistance, receiving 43 grants last year to meet that need.

Grenier pointed to a federal bureau of prisons facility that employs 300 people. “Having those folks go for a week or two or three without a paycheck or they don’t have the ability to pay for contracted services to the facility would be devastating,” he said.

Chris Coates, the county administrator for Cheshire county, said nursing homes “are hanging on by a string” and not in a position to withstand delayed payments.

Shaheen urged municipal leaders to spread the word about the disastrous impact a default could have on the state. “There is no guarantee that this gets done,” she said.


Amanda Gokee can be reached at amanda.gokee@globe.com. Follow her @amanda_gokee.