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Debt Ceiling Standoff – Social Security payments could be burdened and up to 70 million recipients of Social Security could be affected if the debt ceiling crisis will not be dealt with accordingly.
Debt Ceiling Standoff: Are Your Social Security Payments at Risk? (PHOTO: Barron’s)
Debt Ceiling Standoff
If the debt ceiling standoff is not dealt with, the U.S. government could potentially be crippled in paying its bills, Secretary Janet Yellen of the U.S. Treasury said on Monday. The U.S. government has then made extraordinary measures to continue meeting payments, remarkably, the U.S. government experienced a problem with the $31.4 trillion limit on borrowing this year, Market Watch reported.
About this matter, U.S. President Joe Biden has invited congressional leader and also House Speaker Kevin McCarthy to a meeting at the White House on May 9.
Secretary Janet Yellen said last month that a failure to deal with the U.S. debt would be catastrophic to the U.S. economy, and payments to millions of Americans like families of the military and senior citizens who rely on Social Security payments could be at risk.
Senator Mitt Romney (R-UT) released a statement about the situation. He said, defaulting on our debt is a frightening prospect and it would destabilize the economy, it could harm global commerce, and hurt the U.S. allies. He added that the president must negotiate on raising the debt ceiling 401K Specialist reported.
A former Social Security Administration executive and vice president at the Bipartisan Policy Center told CNBC last January that the Social Security Administration would delay its payments just to ensure it has still enough cash.
Will Debt Ceiling Standoff Affect Social Security Payments?
There is an “escape clause” in the form of a 1996 law. This escape clause allows the Treasury Department to pay Social Security and benefits in Medicare even if there raising the debt ceiling will be delayed. It means trust funds will be drawn down to keep benefits flowing and prohibiting them to be used for other programs of the government.
The chief of the Bipartisan Concord Coalition, Steve Robinson said that as long as there is a positive balance in the Social Security funds, the Treasury Secretary has the authority and obligation to pay Social Security benefits.
