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Two women sit at the Capitol Reflecting Pool in Washington, DC on September 26, 2021.
Samuel Corum | Getty Images
Congress is working hard on a deal to prevent the U.S. government from defaulting on its debt this month.
But the short-term deal, which was passed by the Senate and is expected to go to the House of Representatives for a vote in the coming week, only postpones the situation until December.
As a result, big questions like whether social security checks will always be issued on time have only been temporarily resolved.
“Older people can be reassured that at least in October and November, they will receive their social security on time and in full,” said Maria Freese, senior social security adviser at the National Committee for the Preservation of social security and health insurance.
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“However, they just postponed the problem until December,” she said.
What might happen then is difficult to predict.
The government borrows to make up the shortfall between its spending and what it collects in taxes. As amounts owed increase, the government must increase its debt limit in order to continue making payments.
The Senate agreement authorizes a $ 480 billion increase in the debt ceiling. The US Department of the Treasury estimates that this will allow the government to pay its bills until December 3.
Still, there is a lot of uncertainty about the exact length of the proposed $ 480 billion, according to Shai Akabas, director of economic policy at the Bipartisan Policy Center.
“At some point in the next few months, we risk not meeting all of our obligations,” Akabas said.
The Washington, DC-based think tank has crafted its own scenarios of what might happen if the United States reaches this so-called X date.
Date X, as defined by the Bipartisan Policy Center, is “the first day the Treasury has exhausted its borrowing power and no longer has enough funds to pay all of its bills in full and on time.”
In the coming months, we risk not meeting all of our obligations.
Shai Akabas
director of economic policy at the Bipartisan Policy Center
“Exceeding the debt deadline X would be quite unprecedented in modern history,” Akabas said.
The Bipartisan Policy Center has developed illustrative scenarios of how the government might prioritize payments at this point.
In a hypothetical example, the Treasury Department could make payments of $ 401 billion, including for programs like Medicare and Medicaid, Social Security, and Veterans Benefits. At the same time, he might not pay $ 265 billion for programs like Supplemental Security Income, monthly child tax credit payments, or unemployment insurance benefits.
However, due to the amount of money flowing in and out of government, it is impossible to predict how such a situation would play out, Akabas said.
“Even if you wanted to prioritize these programs, it would be very difficult to operationalize them,” Akabas said.
Social security is unique because it uses separate trust funds. However, the question arises as to whether these payments could be made while the government stops making other payments, Akabas said.
At the very least, recipients could see delays.
The AARP, a group representing Americans aged 50 and over, sent a letter to congressional leaders this week urging them to strike a deal to protect Social Security and Medicare recipients.
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