Failure to raise the debt ceiling, which now sits at $31 trillion, could put Social Security benefits at high risk.
If President Joe Biden and House Speaker Kevin McCarthy (R-CA) fail to reach a deal by June 1, all payments administered by the federal government could be stalled, among other consequences of a debt ceiling standoff.
If we defaulted on our debt, the middle class would hurt.
— President Biden (@POTUS) May 10, 2023
8 million jobs lost.
Social Security and Medicare payments could be halted or delayed.
Retirement accounts would be hit.
Costs would go up.
It's time to end the gamesmanship and get to work. America pays its bills.
BIDEN AND REPUBLICANS BLAME EACH OTHER FOR DEFAULT THEY INSIST WON'T HAPPEN
The earliest round of Social Security benefits for retirees over 88 is slated for the first week of June. Supplemental Security Income, for those with disabilities and senior citizens 65 and up or elders who have less than $2,000 in assets, is scheduled to go out at the same time.
Social Security benefits make up around 30% of seniors' income, according to the Social Security Administration, with the average benefit amount for retired workers being $1,827 a month in 2023.
The government depends on payroll taxes, meaning the Treasury borrows cash for the benefits from the public, and Social Security's trust funds for Social Security.
Treasury Secretary Janet Yellen cautioned that people may not receive their full Social Security payments if negotiations are not met on the debt limit.
"Whether it's defaulting on interest payments that are due on the debt or payments due for Social Security recipients or to Medicare providers, we would simply not have enough cash to meet all of our obligations," Yellen said earlier this month on ABC's This Week. "And it's widely agreed that financial and economic chaos would ensue."
In addition to delayed Social Security payments, elders who are investors with U.S. savings bonds or have funds in the stock market may also take a hit. As outlined in the Biden administration's possible economic impact report, it projects a default would shock global financial markets, as many investors would move to sell their stocks and bonds, causing prices to nosedive.
According to data from the SSA, $1 trillion in payments are expected to go out in 2023 to nearly 67 million people, including around 48 million retirees and about 7 million disabled workers.