Social Security advocates brace for debt default: Seniors should ‘be prepared’
As the likelihood of a US default rises, Social Security advocates warn beneficiaries to be prepared in the event of a payment disruption.
Negotiations are under way to expand the country’s ability to borrow money were in progressbut Congress and the White House have yet to agree on the way forward.
The impasse has left the US in a precarious financial position and is putting some of the most vulnerable Americans at risk.
Dan Adcock, director of government relations and policy at the National Committee to Safeguard Social Security and Health Insurance, said there was a “good chance” that was the case in the event of a payment defaultwould affect the welfare of millions of Americans.
“Seniors should be prepared if they’re financially able to,” Adcock said, adding they should consider deferring discretionary purchases “so they have enough to tide them over.”
But millions of beneficiaries have no financial room to maneuver, Adcock said, noting that about 40% of Social Security beneficiaries, including disabled and widowed Americans, get 90% of their income from the safety net program. That equates to almost 27 million people.
“Although we still have a few weeks to go before they default, if they don’t receive their payments, they won’t have enough money to cushion them,” Adcock said.
Not a matter of course
Analysts believe there is no certainty that the government will miss out on payments to Social Security beneficiaries in the event of a default. The matter would likely depend on how much cash is available if or when the debt ceiling is breached.
The staggered schedule of Social Security payments, which uses a person’s date of birth to determine what part of the month they receive, means not all beneficiaries would be equally affected by a missed or partial payment.
The White House and Republicans in the House of Representatives remain at odds after meeting Wednesday to discuss a solution to the impasse. NBC News Capitol Hill correspondent Ali Vitali reported The meeting was “tense”. Led by House Speaker Kevin McCarthy, the GOP is asking President Joe Biden for spending cuts in exchange for an agreement to raise the debt ceiling and avoid a default.
On Thursday, the White House announced that a planned follow-up meeting had been postponed.
Treasury Secretary Janet Yellen has warned that a default could occur as early as June 1st. When asked for an opinion, a spokesman for the ministry pointed this out Yellen’s recent remarks In it, she said the Treasury Department may not be able to pay bills due on the date of a default, including payments to Social Security beneficiaries and Medicare providers.
“This would truly be the first time in American history that we have defaulted on payments due,” Yellen said.
A McCarthy spokesman did not respond to multiple requests for comment filed Thursday. After Tuesday’s meeting, he told reporters there was no “new movement” in negotiating positions.
“Everyone at that meeting reiterated their positions,” McCarthy said before the White House meeting.
Mary Johnson, a political analyst with the Senior Citizens League, a bipartisan advocacy group, said she is far more pessimistic about a resolution this time than she was in 2011, when the debt crisis last hit.
By law, Johnson said, the Social Security Administration cannot spend more money than it has available, which she says seems to preclude any other possible workaround unless there is an agreement between Republicans and the Biden administration.
“We’re so extremely divided and there’s such a big chance of a stalemate,” Johnson said.
“And the longer we wait and face default, the greater the risk that Social Security benefits will be suspended and delayed or not paid out in full.”
