Obscure Law Contains Debt Limit Escape Hatch for Social Security

Author: David Lerman
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Treasury may be able to keep sending out retirees’ benefit checks if borrowing cap isn’t raised in time. It won’t be easy

It’s a time-worn argument for raising the debt limit: Without increased borrowing authority, Social Security checks would stop flowing.

“Addressing the debt limit is about meeting obligations the government has already made, ensuring vital payments to Social Security recipients are uninterrupted and continuing to support our veterans,” Senate Majority Leader Charles E. Schumer, D-N.Y., and House Minority Leader Hakeem Jeffries, D-N.Y., said in a Feb. 13 joint statement.

Veterans benefits would in fact be at risk. But Social Security checks could still be issued — with some difficulty.

A 1996 law provides an escape clause from the debt limit that allows the Treasury Department to pay Social Security benefits, along with Medicare payments, even if there is a delay in raising the debt ceiling. It allows for the Social Security and Medicare trust funds to be drawn down to keep those benefits flowing until the debt limit is raised, while prohibiting those funds from being used to pay for any other government programs.

“There is a legal authority and it arguably should be used to make sure benefits are paid,” said Steve Robinson, chief economist for the bipartisan Concord Coalition, which advocates for fiscal discipline. Robinson, who wrote a paper this week to highlight the issue, said the debt limit must still be raised to enable the Treasury to pay all its bills.

Original Source: CQ Roll Call

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