Government officials are sounding warnings that Social Security payments could be halted if Congress and the White House don’t come up with a bill to raise the debt ceiling before the government goes into default.
That could happen as soon as June 1, according to comments from U.S. Treasury Secretary Janet Yellen, who also noted that the country would not reach mid-June without defaulting if a deal isn’t made.
“… my assumption is that if the debt ceiling isn’t raised, there will be hard choices to make about what bills go unpaid,” she shared on “Meet the Press” Sunday, May 21.
Previously, on ABC’s “This Week” on Sunday, she addressed the threat to Social Security.
“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. “And it’s widely agreed that financial and economic chaos would ensue.”
The treasury secretary isn’t the only one sounding the alarm on social security payments. Senate Majority Leader Chuck Schumer also addressed the issue in comments, CBS News reported earlier in May.
“Default is going to have so many problems for so many people, but we are here to highlight one, and it’s three words: Social Security shutdown,” Schumer said. “Pass a clean debt ceiling to avoid risk of great harm to seniors.”
In the past, Congress has avoided this by raising the debt limit, but House Republicans say they will not support another increase unless they get massive spending cuts. Defaulting on the debt would be a first in U.S. history and would force officials to choose between continuing assistance (like Social Security) and paying interest on the nation’s debt.
As previously reported by GOBankingRates, the White House is relying on bipartisan support to bypass House Republican leadership and raise the debt limit. President Joe Biden has said that he refuses to negotiate over the debt limit and favors Congress raising the limit with no conditions.
The last time the U.S. reached the debt ceiling was in 2011; the economy took months to recover. The Treasury found that waiting to raise the limit affected the economy, including the stock market and retirement savings.
Vance Cariaga contributed to this article.
More From GOBankingRates