Default Effects: Oldest and Poorest Social Security Beneficiaries in the Crosshairs - CNBC.com
As the negotiations grind relentlessly toward a June 1 deadline, anxiety is building in the senior community regarding just what will happen should the U.S. Treasury enter default status. Amid conflicting commentary on whether or not an agreement can be reached in time to avoid a disruption in the flow of payments from the U.S. government to a variety of sources, tension appears to be building among Social Security recipients.
Quoting remarks from Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities, CNBC personal finance reporter Lorie Konish suggests in a post on cnbc.com that the disruption could affect benefit payments scheduled to go out the first week of June. The beneficiaries receiving payments that week are those who started receiving benefits before May of 1997 and are 88 years of age or older. A portion of Supplemental Security Income (SSI) recipients could also be affected, Romig notes.
Benefit payments scheduled for the second, third, and fourth weeks of the month could also be impacted if the stalemate is not resolved. Experts remain divided over the likelihood of a default, with the basic problem being the absence of precedent and, worse, no legal framework on how to handle a default situation. It is possible that Treasury may prioritize Social Security so that incoming tax revenue is first diverted to pay benefits but, again, being in unchartered waters, how this would occur is still subject to conjecture. So, while there is optimism in some quarters that the debt ceiling issue will be resolved in time to avoid a default, this optimism is of little immediate comfort to the millions of Americans over age 65 who rely on Social Security to provide at least 90% of their family income.