Should the Pending Debt Ceiling Crisis be Cause for Concern for Seniors?

You’ve probably heard that the U.S. Government is facing a funding shortfall. If Congress does not act to service its debt, in June the government could run out of money to pay all its obligations. According to Fox Business, that includes the $90 billion monthly Social Security payments made to 65 million recipients.

This scenario could be devastating for the almost two-thirds of beneficiaries who depend on Social Security for half of their income and 40 percent who rely on their benefits for 90 percent or more of their income. Fortunately, a decades-old law could protect Social Security even if the U.S. debt ceiling isn’t raised in time to avoid a default.

The article points out that a so-called “escape clause” from the debt limit enacted by Congress in 1996 allows the Treasury Department to draw down Social Security trust funds to pay benefits. It prohibits Social Security trust funds from being used for any other purpose. Meaning it can’t be tapped to help pay the government’s looming debt crisis.

But the Social Security trust fund is facing a severe shortfall of its own. New predictions show it could reach a deficit a year earlier than originally thought. The Seniors Trust wants Congress to enact the Social Security Expansion Act to ensure Social Security’s solvency for another fifty-plus years.