Politicians plan to target Social Security starting in 2023 with plans to raise the retirement age to stabilize the program’s finances. Another debate is currently raging about whether to reduce Social Security spending in return for raising the national debt ceiling, which the United States reached on January 19.
Debt Limit Explained: How Social Security, Medicare Payments Could be Delayed
CNBC said the entire amount of money the United States can borrow to satisfy its legal commitments, such as Social Security and Medicare payouts, military wages, tax refunds, interest on the national debt, and other payments, is known as the debt limit or debt ceiling.
National Committee to Preserve Social Security and Medicare also mentioned in a statement obtained by CNBC that even a little delay might make it difficult for recipients to cover costs such as food, rent, electricity, medical care, or other essential expenses.
Jason Fichtner, chief economist at the Bipartisan Policy Center and a former top executive at the Social Security Administration, the Treasury Department may be able to give some payments, including Social Security, higher priority.
To make sure it has adequate funds on hand, the Social Security Administration may postpone payments, he added.
Medicare payments might change at the same time when other things, including the salary of government employees and SNAP (the Supplemental Nutrition Assistance Program) food benefits, could halt. According to Fichtner, the procedure may be politically “messy.”
When Was The Last Time That Debt Payment Happened?
GoBankingRates, citing an NPR report, mentioned that Congress has already raised the debt ceiling to avoid this, but according to House Republicans, they won’t approve another rise until they receive spending reductions or other concessions.
The same GoBankingRates that cited another New York Times report said the country would be making a first-ever default on its debt, forcing policymakers to decide between continuing to provide help (like Social Security) and paying interest on the loan.
The last time the United States surpassed its debt ceiling was in 2011, and the recovery of the economy took several months. The Treasury discovered that delaying raising the cap had a negative impact on the economy, the stock market, and even people’s retirement funds.