Social security advocates warn of potential payment disruptions amid increasing odds of U.S. debt default.
Social Security Full Payments At Risk
With the odds of a U.S. debt default increasing, Social Security advocates warn beneficiaries they should be prepared in case their payments are interrupted.
As negotiations continue over whether to expand the nation’s borrowing limit, Congress and the White House have yet to reach an agreement on the path forward. The impasse has placed the U.S. in a precarious financial position, putting some of the most vulnerable Americans at risk.
Recipients could see a decrease in their payments if Congress does not figure out how the program will be funded by 2037.
Dan Adcock, Director of Government Relations and Policy for the National Committee to Preserve Social Security and Medicare, warns that millions of Americans’ benefits could be disrupted in the event of a default, adding, “Seniors should be prepared if they’re financially able…so they have enough to tide them over.”
Treasury Secretary Janet Yellen has warned a default could come as soon as June 1. When asked for comment, a department spokesperson pointed to Yellen’s recent remarks in which she said the Treasury might not be able to pay bills that come due on the day of a default, including payments to Social Security recipients and Medicare providers.
“This would be really the first time in the history of America that we would fail to make payments that are due,” Yellen said.
Most SS Beneficiaries Are Financially Strapped
Payments to Social Security recipients, as well as payments from the federal government to veterans, food-stamp recipients, and reimbursements to state governments for Medicare or Medicaid, could be delayed, credit ratings agency Moody’s said in a recent report.
Many beneficiaries have no financial room to maneuver, and roughly 40% of Social Security recipients receive 90% of their income from the program. That equates to nearly 27 million people who could face payment disruptions.
Mary Johnson, a policy analyst with the Senior Citizens League, warns of the potential stalemate, stating, “And the longer we wait and get close to default, the greater the risk to Social Security benefits being held up and delayed, or not paid in full.”
Although the possibility of missed payments to Social Security recipients isn’t certain in the event of a default, Treasury Secretary Janet Yellen warns that the department might not be able to pay bills that come due on the day of default, including payments to Social Security recipients and Medicare providers.
Government Leaders Have Opposing Views
Under the Social Security Act, beneficiaries are entitled to their full scheduled benefits. But another law, the Antideficiency Act, bans government spending in excess of its available funds. Johnson said there’s no law that specifies what actions the Social Security Administration should take to ensure benefits are paid in full and on time.
“The reality is that the Secretary of the Treasury, who is responsible for the payments, has recently stated that ‘it is unlikely’ that the federal government could continue to pay Social Security benefits,” said Nancy Altman, the president of Social Security Works, an advocacy group. “That has to be the authoritative voice on the issue.”
The White House and House Republicans remain at odds over the matter. The GOP seeks spending cuts from President Joe Biden in exchange for an agreement to raise the debt ceiling and avoid a default.
While it remains to be seen whether the nation will experience a debt default, the potential for Social Security payment disruptions leaves millions of Americans in a difficult and uncertain position.
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