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Social Security May Be Delayed… What Is the Federal Debt Ceiling “X” Date?

As many of you may now be aware, the federal government could quite possibly reach the maximum amount of money that the U.S. Department of the Treasury is allowed to borrow as soon as December 15th. If Congress doesn’t act quickly to fix this limit, known as the debt ceiling, this could cause big ramifications on the timeliness of government payments that people rely on. According to the Bipartisan Policy Center, “Realistically, on a day-to-day basis, fulfilling all payments for important and popular programs, such as Social Security, Medicare, Medicaid, defense, and military active duty pay would quickly become impossible”.


Between December 21st and January 28th — what the Bipartisan Policy Center calls the “X date” — the Treasury Department would have insufficient cash to fund its obligations. Shai Akabas, director of economic policy at the Bipartisan Policy Center, states that “It’s very clear from that range and from the risks that we are seeing that in order to avoid significant risk of crossing the X date, Congress would need to act before they go out for the holiday recess”. There’s actually a higher amount of pressure at the beginning of that date range, due to the fact that the Treasury Department could already have low cash levels, at a time when large payments will become due at the end of the year. Within several weeks of running out of cash, the Treasury Department would be unable to pay approximately 35% of all payments due, including those to individuals and families, according to the analysis.


As a result, the government would likely have two options — prioritize some payments over others, or delay paying all of its bills. If the Treasury prioritized payments, it could fund about $317 billion in payments to programs like Medicare and Medicaid, Social Security, federal salaries, nutrition assistance and veterans benefits. But it would then fall short in about $173 billion in other payments for areas like housing and rental assistance programs, civil service and railroad retirement benefits, unemployment insurance benefits or Supplemental Security Income benefits. Alternatively, the Treasury Department could choose to delay all bills. If the debt limit were reached on December 21st, for example, Medicaid payments to states that were supposed to go out that day would not go out until December 22nd, federal salaries dated December 23rd could get pushed to December 28th and small business loan forgiveness slated for December 27th would be delayed to December 30th.


Meanwhile, Social Security checks slated for December 22nd would not be sent until December 27th. Those delays would be even longer with the next payments dated January 3rd, which would not go out until January 14th. Notably, because Social Security payments are made through dedicated trust funds, running up against the debt ceiling would not interfere with the program’s financing. The U.S. government could avoid running past the deadline to fix the debt ceiling, as it has done in the past. Most recently, President Joe Biden signed legislation on October 14th to increase the debt limit by $480 billion.


On Friday, Democratic Representative Scott Peters from California and Republican Representative Jodey Arrington from Texas, unveiled legislation aimed at changing how the government handles the issue. Their bill, called the Responsible Budgeting Act, aims to permanently diffuse the debt limit and address underlying fiscal challenges with specific proposals to reduce the debt. This proposal has been reviewed by key players in Congress and in the executive branch. So we at least have some momentum in Congress going, which will be aimed at solving this issue once and for all, and ultimately protecting beneficiaries’ pockets.

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