Entitlement programs are expected to be a contentious issue in the debt ceiling debate but there is double the danger for Social Security warns Andy Landis, author and founder of the website Thinking Retirement.
Without an increase of the debt ceiling, there is a short-term risk that the 55 million retirees who receive a Social Security check either will not receive one or will receive only a portion of what is due to them, Landis write in an article for MarketWatch.
The debt ceiling is essentially a credit limit that allows the government to borrow. If the Treasury Department cannot borrow, it will only have enough money to pay 60 percent of the nation's bills, CNNMoney reports.
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And Social Security payments are quite a hefty bill. From Feb. 15 to March 15, payments are estimated to cost about $61 billion, according to CNNMoney.
For many, it is major concern that Social Security costs are so high and that they will increase in the future.
Focus on that issue presents a long-term danger for the program that could have a significant impact on future recipients, Landis explains. Congress may only be willing to lift the debt ceiling if a deal is made to cut future Social Security payments.
Some lawmakers insist that the government needs to cut its spending and now is the time to do it. Social Security has already been cited as one of the fatty areas that should be chopped down to a more palatable size.
The rebuttal to Social Security cuts has generally been that the program will be solvent for another two decades and therefore immediate changes are not needed.
However, Landis points out, in December, during the fiscal cliff negotiations, the administration proposed changing the cost-of-living adjustment to a “chained CPI,” which some analysts believe is a better measure of inflation and thus the need for payment increases.
It is impossible to say for sure that failure to lift the debt ceiling means Social Security recipients will get stiffed or that there will be any reductions.
Furthermore, Congress may lift the debt ceiling and that may happen without any cuts or adjustments to the program for future recipients.
“My crystal ball is cloudy; it's not saying what Congress will do,” Landis writes. “With their retirement security on the line, both current and future retirees will want to pay attention as negotiations proceed.”
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