What could happen to Social Security payments if the debt ceiling is not raised?
The United States is approaching default. That would have serious consequences for federal government payments including for Social Security.
High-stake brinksmanship is playing out in the nation’s capital as Republican lawmakers try to extract deep cuts in federal government spending in return for voting to raise the debt ceiling. House Speaker Kevin McCarthy has been meeting with President Joe Biden and both sides say that progress has been made.
However, any deal reached between the two leaders will still have to get through Congress where contrarian lawmakers could still scupper any agreement. Treasury Secretary Janet Yellen notified Congress that the US could default on its debt as soon as June 1, which would have serious consequences for the economy and the federal government’s ability to meet its financial obligations.
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What could happen to Social Security payments if the debt ceiling is not raised?
Failing to raise the debt ceiling would have dire economic effects such as spending cuts, as well as a reliance on incoming revenues to help the government pay its obligations. A possible slash in spending if the ceiling is not raised could mean late monthly Social Security payments or reduced benefits.
This could pose financial hardship for many recipients, especially for the millions whose monthly checks serve as the main source of income. For about four out of 10 Social Security beneficiaries, the payments represent 90% of their income.
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If the US defaults, “it is unlikely the federal government will be able to issue payments to millions of Americans, including our military families and seniors who rely on Social Security,” said Treasury Secretary Janet Yellen at the end of last month.
The laws that protect payments are very clear, under the Social Security Act, beneficiaries are entitled to their full scheduled benefits. However, the Anti-Deficiency Law prohibits the government from spending more than the available funds.
As for a possible delay in Social Security payments, the length of the interruption will depend on how long it takes lawmakers to fix the fiscal situation.
The first payments that could be affected are those that are scheduled to go out on 2 June to Social Security recipients who began claiming benefits before May 1997, as well as those who receive both Social Security and Supplemental Security Income (SSI). The latter group is scheduled to receive SSI payments on the first of June. The following day their Social Security payment is due, it was moved forward one day as the 3rd, the normally set date, falls on a Saturday.
After that, Social Security payments are scheduled for the 14th, 21st and 28th with a second SSI payment, which corresponds to the 1 July payment, due on the 30th, again due to the normal set date falling on a Saturday.