Recently, treasury secretary Janet Yellen’s op-ed made news by suggesting that government checks could soon stop reaching recipients unless Congress raises the debt ceiling.
Yellen wrote, “Nearly 50 million seniors could stop receiving Social Security checks for a time.” A bill has been given the go-ahead by the House of Representatives to suspend the debt limit and fund the government temporarily. But that legislation may not be passed in the Senate. The government may possibly shut down on October 1 if lawmakers cannot reach an agreement.
According to Nancy Altman, president of Social Security Works, which is an advocacy group centered around expanding benefits, social security beneficiaries won’t be impacted that much. The reason is that the program’s funds will still be available to pay their checks irrespective of what happens with the negotiations related to the debt ceiling. However, a government shutdown is capable of delaying how quickly people are able to get that money.
Altman states that social security is “sui generis” – a legal concept that implies it is on its own. She adds that as per her reading of the law, “Social Security will not be affected and shouldn’t be affected.”
Launched in 1935, Social Security has never skipped a benefit payment. One crucial reason why that won’t be modified now is that it is essentially a pension plan and has a pension trust that is not linked to the government’s general operating budget. Therefore, Altman says, “that really sets it apart and makes it more secure.”
As per data from the Social Security Administration, the asset reserves of both the trust funds utilized to pay disability and retirement benefits stood at $2.9 trillion at the end of 2020. In addition, Altman shared that funds from payroll taxes would still continue to be received by the government even if the debt ceiling isn’t raised.