The Debt Ceiling and Social Security Benefits - Motley Fool
Reaching the country’s debt ceiling is all over the news lately, with experts suggesting that the government might reach that spending brick wall as early as June 1st. When the debt ceiling is reached, the government can no longer borrow money to pay its bills, leading many to put forth scary scenarios where Social Security payments would stop. But is that really true? Well, no, according to this Motley Fool article by Sean Williams, who reminds us that in 1996, Congress enacted legislation which provides protection against Social Security benefits being cut as a result of the debt ceiling. In other words, even if the debt ceiling is actually reached to prevent the government from paying all its bills, Social Security won’t be among the obligations which suffer, and seniors will continue to get their full payments. Click here to read Sean Williams’ article.
Will Social Security be affected if the debt ceiling problem is not solved?
David:
This is certainly one of the proverbial footballs passing around the media and the halls of Congress as we inch toward the supposed June 1 deadline for a Treasury default. Unfortunately, there are no clear-cut answers we can give you, although we can point to a law on the books titled “Protection of Social Security and Medicare Trust Funds.” This appears to ensure that the U.S. Treasury would use the program’s trust fund reserves to continue benefit payments, although, again, there is no clear-cut answer to how this would occur. The problem is 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.
We remain optimistic that the debt ceiling issue will be resolved in time to avoid a default; however, we know this optimism is of little comfort to the quarter of Americans over age 65 rely on Social Security to provide at least 90% of their family income. I wish we could offer a more concrete answer to your serious question, but any ‘yes’ or ‘no’ responses would be purely speculative.
Stay tuned to this website for breaking news over the next week or so as this political brinkmanship struggles to a conclusion.
Gerry Hafer
AMAC Foundation Social Security Advisory Service
CONFIDENTIALITY NOTICE: The opinions and interpretations expressed in this message are the viewpoints of the message’s author, a trained advisor accredited under the National Social Security Advisors program of the National Social Security Association, LLC (NSSA). The author, the NSSA, and the AMAC Foundation are not affiliated with or endorsed by the United States Government, the Social Security Administration, or any other state government.