Video: How Could A Federal Default Affect Southeastern Connecticut?

Patch asked municipal employees and business spokesmen, if the debt ceiling is not raised, how would a federal default impact different populations in the area? In addition to comments made during video interviews, these spokespeople shared insights with Patch about issues that could arise if a compromise cannot be reached by August 2, the day the U.S. Treasury estimates that it will run out of funds

First selectman of Waterford Dan Steward said the town does not receive federal funds and the town's budget will not be severely impacted in the event of a federal default.  

"Hopefully they will not default, because the other piece of any kind of a default of the government will create a cost in interest and mortgage rates and various increases there, which would be more detrimental to us as we go through a bonding process," he said. 

Steward said municipal departments, like  and the Youth Services Bureau would be most impacted by a withdrawal or delay of funds. 

"They'll have more difficulty getting services for the people they usually do get services for…" he said. "Our people would have to do more work to try and find alternatives for residents who need help." 

Dr. Nicholas Fischer, superintendent of New London Schools, said approximately 16 to 18 percent of the school's budget is at stake if government defaults. Fischer said the student nutrition program, which feeds students three meals a day, would be impacted along with remedial and special education funding. 

Montville Senior Services Director Kathleen Doherty-Peck said that among others, the center runs a medical transportation program that is federally funded.

"(The service) is essential to getting seniors to their medically necessary appointments," she said. "They have no other way to get there, so now we're directly affecting the seniors' health as well." 

Tony Sheridan, the president and chief executive officer of the Chamber of Commerce of Eastern Connecticut, said a downgraded credit rating would have a detrimental ripple effect throughout the country and the state and damage an already delicate economic recovery. 

"The town budgets will be affected if the state is affected," he said. "It has ripple effect throughout the economy, any kind of a negative impact like that that would hit Wall Street, it hits everybody at some point down the line." 

John Markowitz, director of the Southeastern Connecticut Enterprise Region, said a  cancelation or delay of defense and Department of Labor funds would significantly impact the labor force in southeastern Connecticut, which, at 9.1 percent, ranks in the top 20 highest unemployment rates in the country, according to the Bureau of Labor Statistics. 

"There is a significant amount of federal funding, Department of Labor funding, that comes to the area to help with dislocated workers," said Markowitz. "It provides programs to help them get retrained and re-skilled. If those kind of services were unfunded or curtailed, that would have a significant impact on that displaced workforce."