HARRISBURG PA – Would Pottstown School District students covered by the state Children’s Health Insurance Program be required to pay in full to visit a doctor if the federal government defaults on its debt obligations Aug. 2 (2011)? Would work on rebuilding the bridge between Royersford and Spring City PA have to stop? Would townships pay more for municipal loans?

Those are examples of questions being asked this week as Pennsylvania officials ponder the potential local effects of Washington’s failure, so far, to pass a law that raises the federal debt limit and allows the federal government to borrow more money to pay its bills.

The state Department of Insurance, heavily dependent on federal funding, thinks the children’s insurance program will continue uninterrupted. It paid the monthly premiums in advance, The Pennsylvania Independent online news service reported Friday (July 22).

The Pennsylvania Department of Transportation, which is paying for the Royersford bridge work and whose budget last year consisted primarily of federal funds, doesn’t know how the debt ceiling crisis will affect its projects, it told The Independent.

And a financing expert said that, if a default occurs, the problem for townships and other municipal borrowers may not be the cost of money, but whether money becomes available at all.

• Read a story by reporter Darwyyn Deyo, titled “Pennsylvania faces higher interest rates with federal debt downgrade” and published Friday by The Independent, here.

Most of those worried about the trickle-down extent of a federal default at this point can only speculate on the effects, The Independent indicated. They all fervently hope, though, that this too shall pass.

Both political parties in Congress were busy Monday (July 25) preparing their own versions of emergency plans to be enacted to avoid a default, according to The Associated Press. Details of the plans were “sketchy,” it said, and added that “risking a default … could have severe consequences for the U.S. economy and the world’s, too.”

“It is imperative that a resolution on the debt ceiling be achieved” before the Aug. 2 deadline, West Pottsgrove congressman Rep. Charlie Dent (PA 15th Dist.) agreed in a prepared statement. “Congress must make difficult decisions about the future of federal spending,” he urged.

But a proposal called “Cut, Cap and Balance,” which Dent favored and that he said would have returned spending to pre-stimulus levels and capped it as a percentage of the nation’s gross domestic product, did not pass the U.S. Senate. Instead, Congressional leaders say they will now opt for a more limited proposal that raises the debt limit just enough to get the country’s bills paid through year-end. President Obama criticizes that as too short a term.

“The debt deal-making has consumed Washington for weeks and has put on display a government that at times risks utter dysfunction,” The AP story said.

Composite photo from Google images