Social Security: You Won’t Receive Your Payment If Debt Ceiling Not Raised
After a year of record-breaking stimulus spending, the United States has reached its borrowing cap.
If Congress does not suspend or lift the debt ceiling, it will be unable to make payments to Social Security, as well as the military.
Secretary of the Treasury Janet Yellen informed House Speaker Nancy Pelosi in a recent letter that the Treasury will run out of cash on Oct. 18 if Congress does not raise the debt ceiling by then.
There is little time to make judgments owing to the federal government’s fiscal year, which begins on October 1 and concludes on September 30.
The government’s main aim is to avoid a shutdown, while its secondary objective is to increase the debt ceiling.
The government must be funded, which entails that lawmakers meet to decide on how much to spend on future bills and plan for the budget for the upcoming year.
Disagreements lead to a government shutdown.
When the government decides not to raise the debt ceiling, it then runs the risk of default.
Government shutdowns are not very common, but the longest one happened in 2019 when President Donald Trump held office and it lasted for 35 days.
The conversation about increasing the debt ceiling is more complicated than shutting down the government, and also has more potential dangers.
The debt ceiling is the maximum amount of money that the United States government has authorized.
The U.S. Congress can raise or suspend it as they want to for as long as they want until a certain date when it will be reinstated at whatever level the debt is on that day.
Recommended Read: How Badly Government Shutdown Will Impact You?
In 2019, Congress voted to extend the debt limit. This extension expired on July 31st. The Treasury Department has not been able to issue new bonds since then.
This has created a problem with paying for all the spending that Congress has already approved.
To allow the Treasury to continue to pay receipts for purchases the government has already made, the debt ceiling would need to be elevated or suspended.
With the Treasury unable on its own to cover current spending, it has dipped into a contentious pot to keep operations going — Social Security.
Yellen wrote a piece for the Wall Street Journal in which she made it clear if the debt ceiling is not increased, “the Treasury Department’s cash balance will fall below an acceptable threshold in October, and the federal government will be unable to pay its obligations.”
The consequences of a default extend well beyond politics. Yellen warned that if the United States fails to honor its financial obligations, the average consumer would be hurt.
If the United States were to default on its debt, it would be bad. If we made this choice, our economy would be worse and borrowing would cost more.
It would also make America a more expensive place to live because of higher borrowing costs. That means things like mortgage payments and credit cards will cost you more.
