There is a fight going on in the nation's capital. Congress and the White House are fighting over whether or not to raise the national debt ceiling. It appears to be yet another partisan argument, but the outcomes could consist of Social Security and other payments could be defaulted on if the debt ceiling isn't elevated. With a rise, the government will be able to take out even more personel loans.
Congress to give up Fourth of July break to work on debt issue
The national debt ceiling, or the credit limit of the U.S. federal government, is one of the biggest issues being considered right now. There is no way for the government to exceed $14.3 trillion right now. That number was reached in May, as reported by Reuters. Yet the government has been making expenses on it through last-minute measures.
Increasing the debt limit is something the Congressional Republicans don't want to do. They want the fiscal policies to change first. To be able to keep working on the debt ceiling, the traditional week-long recess after the Fourth of July will not be taken by the Senate, Senate Majority leader Harry Reid Leader told CBS. Before August 4, it has to be elevated. That is the deadline.
Warnings issued against default
There have been warnings about what will take place without the debt ceiling being elevated although there's a month to get an agreement put in place still. Standard & Poor's has cautioned the maturing U.S. Treasury bonds would get a "D" rating if the bonds aren't paid by August 4 on top of the issues the global financial market would face. About $30 billion in interest payments will be due through Treasury bond sales for the U.S. Sheila Bair is a Federal Deposit Insurance Corporation Chairman. She said surely it is a "dangerous game" Congress is playing, according to NASDAQ.
Potential fallout in suit of default
The American federal government is presently borrowing 40 cents of every dollar it spends, and in August of 2011 alone, the federal government is slated to spend $134 billion more than it will take in, according to USA Today. The government may not be able to make all of its expenses. It could miss up to 44 percent of them. Probably the most vulnerable citizens could possibly be hit hard very soon with the expenses even though it seems like a faraway issue to a few. Social Security expenses to retirees, disability benefits, Medicare and Medicaid benefits and other forms of social aid such as welfare and food stamps may go unfunded. Federal employees may also be furloughed and contractors, including defense contractors, may go unpaid or have their contracts cancelled.
On August 3, the $23 billion payment for SSDI, or SSDI, and Social Security will not be paid. Social Security represents 50 percent or more of all income for 53 percent of all couples aged 65 or older and 73 percent of all individuals over the age of 65.
Social Security Administration