Debt Ceiling Issue: Medicare And Social Security Are At Risk

debt ceiling issue puts social aid payments at risk

The Congress of the United States is currently locked together with the president in a struggle over raising the debt ceiling for the American government. This battle seems to be just another partisan squabble, though the effects could have a great impact on the Social Security. Besides, if the debt ceiling isn’t raised, other payments could be defaulted either.

The credit limit of the US government, called debt ceiling, has been one of the major economic and political issues to arise for the past year. Under the law, it is not allowed for the government to exceed over $14.3 trillion in debt. According to Reuters, the limit was reached in the middle of May.

Some members of the Congress, mostly Congressional Republicans, were against the raising of the national debt limit with no substantial changes to fiscal policies.

Concerns Issued Against Default On National Debt

The debt ceiling is to be raised before August 4, and even though there is a month to forge the negotiation of debt limit raising, there are already concerns being issued against allowing the US government to default on its debt. The country has $30 billion in interest payments due on short term cash advance loans which are acquired via sale of Treasury bonds being issued a “D” rating in case they are not paid out on August 4.

Potential Effects

The experts say that various forms of social aid, including Medicaid, Medicare, disability benefits, Social Security payments to retirees, food stamps and welfare, may just go unfunded by the federal government in case the debt limit is not raised. Some federal employees, like defense contractors, may have their contracts cancelled or go unpaid. This will lead to the increased number of unemployment that would stretch all over the country making people search for some cash advance to feed their families.