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Debt Ceiling Debate Spooks Some, Not Others

LARCHMONT, N.Y. -- Although many Larchmont residents, like Clay Gordon, don't believe the United States government will default, others, like Kay Falconieri, have their concerns.

"I'd be lost without social security," said Falconieri, a Larchmont resident. "I just wish they would settle it one way or the other."

Falconieri uses the Town of Mamaroneck senior center at the Weaver Street Firehouse, where several senior citizens shared their concerns.

"It's terrifying," Christine Pacewicz said. "We're all holding our breathe."

If, in fact, Democrats and Republicans cannot end their bitter stand-off before Tuesday's deadline on raising the debt ceiling, local representatives fear the worst, but have assured their constituents that Social Security and Medicare will be taken care of.

“The treasury will still be able to pay our sovereign debt obligations," said Congresswoman Nan Hayworth (R - Mount Kisco), of New York's 19th district.

Hayworth said the local governments and organizations in Westchester County will be most likely to feel the pinch with things such as Community Development Block Grants. She said the treasury department would have to prioritize its payments and items such as Social Security, Medicaid and military paychecks would likely be at the top of the list and not grants.

“Some might have to give an IOU to their local contractors if they’re willing to take one,” she said.

While it’s been widely reported that if Tuesday’s deadline isn’t met, the government will “default,” that’s technically not true, officials say. Default happens when interest on loans is not paid, however, officials say there will be enough money from tax revenue to cover those payments.

Congresswoman Nita Lowey (D - Harrison), of New York’s 18th district, said failure to raise the debt ceiling could result in higher interest rates that could impact the cost of mortgages and credit card payments.

"Families could lose thousands of dollars from retirement savings and investments,” she said. “It is clear that Congress and the president must agree to a plan that ends the default crisis and includes responsible spending reductions that do not balance the budget on the backs of the most vulnerable Americans.”

New York State Senator Greg Ball (R, C – Patterson) said the fallout would be especially trying for the state because he feels New York does not rebound quickly from fiscal crisis.

“Historically, New York State takes twice as long to recover from an economic downturn,” he said. “So, any recovery caused by this would be doubly hard. It would go beyond lost grant money. It would cause a problem balancing the state budget. It’s odd that Washington is making Albany look good right now. But all I can say is this would be devastating at both the state and local level.”

Gordon, a Larchmont resident, refuses to speculate on what might happen if the federal government couldn't pay their bills because he hasn't seen enough evidence to indicate otherwise.

"I believe the posturing about going into default is just posturing," said Gordon, who won't panic until he sees Wall Street panicking. "It's just scare tactics. Neither side is blameless in this. Neither is above reproach, and neither are above using this issue to further their agenda."

Gordon cited recent bond auctions as a clear sign that the debt ceiling will be raised.

Local officials from the Village of Larchmont could not be reached for comment.

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