The Risk of Default on Social Security: Implications for Millions of Americans
The ongoing political stalemate over the government’s debt ceiling in the United States could have dire implications for millions of Americans, including older citizens who need Social Security benefits to pay for basic expenses like food, housing, and healthcare. Approximately a quarter of Americans over the age of 65 rely on Social Security payments to provide at least 90% of their family income, according to the Social Security Administration.
Fred Gurner, an 86-year-old New Yorker, expressed concern that his Social Security payment might not come in June, leaving him unable to pay his $800 rent. The issue has become politicized, causing Gurner undue stress.
The Debt Ceiling and Social Security Payments
The United States has issued debt through securities since 2001 to cover the difference between spending and revenue. While the government can pass new laws requiring spending, the debt ceiling, which limits the amount of debt the government can issue, remains in place until lawmakers vote to increase it. If the debt ceiling does not increase by June 1, the Treasury will be unable to issue new debt to cover expenses like Social Security.
The Social Security Administration plans to make contributions to beneficiaries on four dates in June, and those payments are at the risk of being delayed, according to Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare. Millions of beneficiaries rely on these payments to pay their bills.
Lynda Fisher, an 80-year-old citizen, said that a delay would complicate her essential spending, calling into question the financial stability of Social Security.
The Future of Social Security
While some Republican lawmakers see the debt ceiling fight as necessary to slow government spending, some economists believe that it is a “manufactured crisis” that could threaten Social Security and the overall economy. The Social Security system currently faces over $65.9 trillion in unfunded financial obligations, based on its own report.
According to Boston University economics professor Laurence Kotlikoff, the debate over the debt ceiling is unlikely to produce a significant solution to the broader Social Security shortfall.
Once a deal is made on the debt ceiling, economists and advocates believe that Social Security recipients will eventually receive their delayed payments. However, the delay may still cause difficulty for many seniors who will be unable to pay for basic needs while they wait for their back payment.
Source: abc7ny.com
