The Social Security trust funds are set to run dry by 2034, which would trigger a big cut to scheduled Social Security benefits. Lawmakers have therefore been thinking more seriously about legislation and other means to shore up the program.
As it goes in politics these days, lawmakers are naturally at odds over the best way to save Social Security, with many Democrats favoring heavier taxes, and many Republicans favoring cuts to benefits they believe are no longer sustainable.
The matter has now crept its way into the ongoing debt ceiling debate, which involves Senate Majority Leader Chuck Schumer (D-N.Y.). Here's the must-read Schumer quote on Social Security.
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A debt ceiling proposal that impacts Social Security
The debt ceiling is the total amount of money the U.S. government can borrow to meet its already approved and existing obligations, such as Social Security. It's been well known that the U.S. government technically hit the debt ceiling in January. However, U.S. Treasury Secretary Janet Yellen previously said the government could cover its obligations until roughly early June without raising the debt ceiling.
Given that time is quickly passing, lawmakers are starting to move on bills to raise the debt ceiling because if the U.S. were to actually default on its debt, it would be a disaster. Recently, in what is being viewed as a political victory for House Speaker Kevin McCarthy (R-Calif.), the House narrowly passed a bill that would raise the government's borrowing limit by $1.5 trillion or until March 31, whichever happens first. But the bill also imposes trillions of dollars worth of spending cuts.
According to Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, McCarthy's bill would slash the Social Security Administration's (SSA) budget by at least 23%.
Now this doesn't mean that benefits would be cut, as Social Security benefits are mandatory spending by the government and largely funded by a payroll tax and the Social Security trust funds. However, a cut to the SSA's budget would reduce its funds for staffing and customer service, which is a big part of the program because it can impact how quickly decisions are made regarding benefits.
For instance, the average wait time on the SSA's toll-free phone line is currently 35 minutes. There are also more than one million requests for disability claims waiting on decisions from the SSA, and the average wait time for a decision is seven months.
The must-read Schumer quote
Since concerns over the debt ceiling started, the Biden administration and many Democrats in the Senate have been pretty clear that they don't want the debt ceiling to be used as a bargaining chip for either party's political agenda, and Schumer reinforced that recently.
"These measures, and they're truly extreme, have no place in a debate about avoiding default," Schumer said during a recent Senate hearing. "I urge Speaker McCarthy to stop wasting any more time on this DOA, dead on arrival, bill. Time is running out for Congress to work together to avoid catastrophe."
This is good news for retirees because while the proposed bill wouldn't cut benefits, it would add to the many troubles the SSA already faces, which would spill over and impact retirees. This also shows that any debt ceiling bill that includes cuts to Social Security in the near term is unlikely to pass.
