The United States of America just hit a feared milestone that is known as the debt ceiling, which some people are raising the alarm that could affect both Social Security and Medicare aid to citizens.
The United States of America just hit a feared milestone that is known as the debt ceiling, which some people are raising the alarm that could affect both Social Security and Medicare aid to citizens.
The Debt Ceiling In The US
The debt limit or debt ceiling is the entire amount of money the US can borrow to fulfill its legal obligations including Social Security and Medicare benefits, military salaries, tax refunds, interest on the nation’s debt, and other types of payments. An initial intention is to bypass a default on the federal debt, which hit its statutory limit on Thursday, January 19.
In a January 13 letter delivered by, Treasury Secretary Janet Yellen warned House Speaker Kevin McCarthy, R-Calif., Senate Majority Leader Chuck Schumer, D-New York, and other congressional leaders of the possible “irreparable harm” that could come to the American economy. The livelihoods and global financial stability can suffer tremendous issues if the problem goes unresolved.
“I respectfully encourage Congress to work promptly to rescue the full conviction and credit of the United States,” Yellen wrote. Furthermore, on Thursday, the US Government began discussing the “extraordinary measures” to avoid defaulting on its obligations, Yellen wrote in an updated letter to congressional leaders.
How To Avoid Debt Ceiling?
According to Yellen, the situation is indeed alarming as the Treasury Department cannot provide an assessment of how long the government can expect to pay the state obligations through extraordinary measures. However, Yellen also voiced that funds are unlikely will be exhausted before June. This is arguably the biggest challenge Congress will face, with negotiations over the federal debt ceiling marked as the top priority. Meanwhile, McCarthy agreed on a small measure of lifting the debt ceiling to spending cuts. If this occurs, lawmakers could try to amend programs such as Social Security or Medicare.
If any type of delay happens, it may disrupt every single person who benefits from these programs. The Social Security Administration’s hands could be tied and they would be forced to delay these payments to ensure they have enough cash on hand. Medicare expenses could fluctuate as well while other payments such as federal employee salaries could stop completely for as long as this issue is not resolved.
