How the Debt Ceiling Debate Could Affect Your SNAP Benefits

Raising the debt ceiling used to happen as a matter of course. But it's become a political hot potato in recent years, particularly as the level of debt creeps upwards. Right now, the Republicans want to negotiate ways to cut spending before they'll agree to increase the amount the U.S. will borrow.

It looks increasingly likely that a solution will be reached, but it isn't clear what compromises will be made on the way. Read on to find out more about the debt ceiling and how it could impact your food benefits.

What is the debt ceiling?

The debt ceiling is the total amount that the U.S. can borrow. Because the U.S. spends more than it brings in, it relies on debt to meet many of its obligations. However there's a cap on how much it can borrow (a bit like the limit on a credit card), and it has already reached that limit. The Treasury is shuffling money around to stay afloat, but it can't do this forever.

Without getting into the politics, lawmakers in Washington need to approve any increases in the debt ceiling. It doesn't matter that we're talking about spending that has already been approved, there's still a limit to how much debt the country can take on. Various people have warned that a debt default could be catastrophic for the country, and the hope is that cooler heads prevail.

The debt ceiling and SNAP benefits

There are two ways the debt ceiling debate could impact SNAP recipients. Firstly, if politicians can't reach an agreement in time and the U.S. breaches its debt limit, food and other benefit payments could be delayed.

Secondly, one of the sticking points in the debt ceiling debate is that some politicians want to put tighter restrictions on the work requirements attached to benefits such as Supplemental Nutrition Assistance Program (SNAP).

1. Hitting the debt ceiling could mean delayed payments

Since January, when the U.S. reached the debt ceiling, the Treasury has been moving money around so it can continue to meet its obligations. Unfortunately, there's only so long it can do this -- Treasury Secretary Janet Yellen warns the U.S. could default on its debt as early as June.

This has never happened before. In the extremely unlikely event that it does, the government would have to prioritize certain payments. It's a bit like having to choose whether you pay your utility bill or your rent because you don't have enough in your bank account for both. In terms of your household finances, it might mean your SNAP payments don't arrive when you expect them. Social Security, Medicaid, and other federal payments could also be impacted.

It's important not to panic. Not only is it almost certain that lawmakers will reach an agreement, we also don't know what payments the Treasury would prioritize in the event that disaster struck. Even so, if you are able to squirrel away any extra cash in the coming weeks, it could help in case payments get delayed in June or July.

2. Lawmakers may agree to change SNAP work requirements

Kevin McCarthy, the Speaker of the House, wrote to President Joe Biden in March to suggest several ways the government might save money. These include reclaiming unspent COVID-19 funds and "strengthening work requirements for those without dependents who can work."

This could involve changing the age at which people need to meet work requirements. Right now, people aged 18 to 50 can only receive SNAP benefits for three months in a three-year period if they can't show they're working or training for at least 20 hours a week. McCarthy's proposal would increase this age to 56.

In response, Biden tweeted, "The House Republican wish list would put a million older adults at risk of losing their food assistance and going hungry." That figure is backed up by the Center on Budget and Policy Priorities, which says around a million individuals meet those criteria.

Bottom line

No politician wants to crash the U.S. economy and there is every likelihood that the debt ceiling will be increased. Even today, lawmakers announced that more progress has been made in their negotiations.

However, if you rely on SNAP benefits to keep food on the table, you'd be forgiven for feeling as if you're between a rock and a hard place. The consequences of not reaching a deal could be dire. But if negotiators compromise and change the benefit requirements so they can make a deal, that could have longer-term impacts for SNAP recipients.