Watch CBS News

Schumer: Debt Crisis Threatens NYers Benefits

NEW YORK (CBSNewYork/AP) -- New York Sen. Charles Schumer says failure to the national debt crisis threatens New Yorkers' Social Security and veterans' benefits checks.

Without action in Washington to raise the nation's debt ceiling by Aug. 2, New Yorkers could face an average of $1,000 more a year in higher rates on everything from credit cards to adjustable rate mortgages to car loans.

Just six days away from a possible government default, House Republicans appeared to be coming together Wednesday on a plan by House Speaker John Boehner that would increase the U.S. borrowing limit and chop $1 billion in federal spending.

Boehner has been reworking his plan after nonpartisan analysts in the Congressional Budget Office said it would only cut spending by about $850 billion over 10 years rather than the $1.2 trillion initially promised.

Senate Republican Leader Mitch McConnell said only Boehner's plan would resolve the crisis "in a way that will allow us to avoid default without raising taxes and to cut spending budget gimmicks.''

But Schumer says Boehner's plan is on life support and it's time to pull the plug.

"Instead of leading the House, Speaker Boehner is being led by a fringe in his caucus that think default is okay," said Schumer. "Well Speaker Boehner should not and we cannot let a small block of House Republicans lead the whole nation off a cliff."

Schumer says disability and tuition payments could also be caught in the crisis and says Boehner's plan could cause severe damage to whole economy.

"The Boehner plan, no matter how he tries to dress it up, would leave a cloud of default hanging over our heads for the next several months undermining confidence in US bonds. It could even cause a credit rating downgrade."

Senate Majority Leader Harry Reid also says House Republicans should stop wasting time on the Boehner plan and resume efforts on a compromise.

"They know it doesn't solve the problems," said Reid. "No one believes that the Boehner plan is anything more than a big, wet kiss to the right-wing and I mean the Tea Party."

Reid has offered a rival plan that would deliver savings of a little more than $2 trillion, a half-trillion less than promised but still more than under Boehner's plan, budget analysts reported.

Meanwhile, other lawmakers like US Representative Eliot Engel (D-NY), are calling on the president to invoke the 14th amendment, which says that the validity of the nation's public debt "shall not be questioned.''

The little-known constitutional provision gives the president the ability to prevent the nation from going into default if Congress fails to come up with a plan to raise the debt ceiling.

The White House has rejected resorting to this tactic to keep the nation from defaulting, questioning its legality.

It's a controversial move that could end up being challenged in the Supreme Court.

"Let the Supreme Court look at it. Let it go to court and let's see what happens," said Engel.

New Jersey governor Chris Christie even weighed-in on the debt ceiling debate on Wednesday, calling on President Obama to take the lead and put out his own plan.

"And then they'll come to compromise, but you can't lead from behind," Christie said.

GOP leaders planned a House vote Thursday on the reworked plan.

(TM and Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)


View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.