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How could social security benefits be impacted if Congress doesn't suspend the ceiling debt?

The debt limit has been reached. As a result, the government could shut down on Oct.1, causing nearly 50 million seniors to struggle to receive SS payments.

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Treasury Secretary Janet Yellen shocked thousands of Americans earlier this week when suggesting the government could pull back from issuing social security checks if Congress doesn’t increase the debt ceiling.

“Nearly 50 million seniors could stop receiving Social Security checks for a time,” Yellen wrote.

“My reading of the law is that Social Security will not be affected and shouldn’t be affected.”

Nancy Altman

However, if you are worried social security payments could be cut too, you can breathe a sigh of relief, as the president of Social Security Works, Nancy Alman made assurances checks will continue to be issued, regardless of the outcome of the debt ceiling negotiations.

Despite social security payments working independently of the government's regular fund operations, if the government shuts down on October 1, the payments would still be sent out, but recipients might experience delays in receiving them.

Altman calms SS beneficiaries

Since Social Security was created in 1935, there has never been an instance of a payment being missed. The president of Social Security Works added that one reason why that won't change on this occasion is that it works as a pension plan, separate from the government's general operating fund. 

“That really sets it apart and makes it more secure,” Altman said.

"Even if the debt ceiling does not get raised, funds from payroll taxes would still continue to come into the government," she said. "Those contributions go toward the program’s trust funds and are used to pay benefits."

Why SS payments may be delayed?

As this situation has never occurred before, there has been plenty of speculation as to what the consequences for SS would be if the government shuts down, but no clear answer.

Maria Freese, senior policy advisor at the National Committee to Preserve Social Security and Medicare, warned American citizens over possible notable delays on SS checks - delays that could last weeks or even longer if Congress decides not to raise or suspend the debt limit.

"It is not a straight yes or no answer as to whether the debt ceiling will affect Social Security’s funds and ability to pay benefits," Freese said.

The uncertainty arises from the fact that currently, there is more money going out in payments than coming in as payroll taxes. To balance that, the program is tapping its trust funds, which are partly used to cover SSA benefits.

Lack of government workers

Therefore, if Congress can't reach an agreement to avert a government shutdown, there is a high chance that the distribution of those payments will be delayed due to a lack of government workers.

"So long as Social Security employees are deemed essential government workers who remain on the job, benefit checks will continue to go out," Altman said.

"That situation could lead Social Security to get caught up in the government bumping up against its borrowing authority, which could delay benefits," she added.

“We are in an unusual situation,” Freese said. “That’s why I think people don’t know exactly what the impact is going to be. We’ve never had this happen before.


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