Debt Ceiling Fight Could Have Had Disastrous Impact On Social Security Payments

(UPDATE) A deal was reached on Thursday to end the government shutdown and raise the debt ceiling. It should be noted that the deal will only fund the government through January 15, 2014, and raise the debt ceiling until February 7, 2014. Many political experts say that a similar fight may play out next year, with the information in this post still relevant.

As we write this post, the federal government shutdown is ongoing and the debt ceiling fight is reaching critical stages. Senate Democrats and Republicans are currently hashing out a plan to avoid failing to raise the debt ceiling, while members of Congress have stopped talks, waiting for a Senate compromise.

If a deal is struck to raise the debt ceiling before this piece is published, there should be no impact on Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) benefits. However, if one is not reached, and the debt ceiling fight extends into this week, there could be some long-term issues when it comes to Social Security funding. Two weeks ago, the Social Security Administration (SSA) released a brief statement saying, “Unlike a federal shutdown which has no impact on the payment of Social Security benefits, failure to raise the debt ceiling puts Social Security benefits at risk.”

It remains unclear how benefits would be affected if the debt ceiling were not raised; however, the Washington Post reported some frightening scenarios last week. According to the Post, if the government were to run out of borrowing authority, President Barack Obama could keep paying bills using incoming tax receipts—something that may be effective in the short term, but would probably only allow payments for a very short period of time.

Under this plan, it is very possible that Social Security checks would be lumped into every other bill the government pays, according to the Post. Again, it is possible that under this scenario, the SSA could only make a few benefit payments to recipients before running out of money.

“If they delay payments, then Social Security just stands in line with everything else,” Shai Akabas, a senior economic policy staffer at the Bipartisan Policy Center told the Post. “Social Security does not necessarily receive any special treatment because it has its own trust fund. It gets paid out of cash, like everything else.”

Currently, organizations like AARP are pressuring lawmakers to choose to make Social Security payments a priority, should the country go into default. Under federal law, benefits are required to be paid to recipients, but so are many of the government’s other obligations—which could create a nasty legal battle with legislators forced to pick and choose which items to pay.

Even if the battle over the debt ceiling has been resolved by the time you read this piece, it should serve as a reminder that every Social Security recipient needs to let his or her elected officials know that payments are critical to the well-being of the nation. It is very possible that any solution passed by lawmakers could give leeway to raise the debt ceiling for only a few months, resulting in this political fight occurring again in early 2014.

There are currently 57 million Americans receiving Social Security benefits. If you are eligible for SSDI benefits, we suggest contacting a Tulsa Social Security disability attorney. We offer free evaluations of your case, and you may reach us by phone at (918) 265-1404.

Troutman & Troutman, P.C. – Tulsa Social Security disability attorneys


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