Social Security is starting 2023 in the political crosshairs over proposals to raise the retirement age to help stabilize the program’s finances. Now another battle is brewing over whether to cut Social Security funding in exchange for an increase in the federal debt ceiling, which the U.S. will hit by Thursday, Jan. 16.
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Congress will need to raise the debt ceiling to prevent the United States from defaulting on its financial obligations. This isn’t unusual. Since 1960, Congress has acted 78 different times to permanently raise, temporarily extend or revise the definition of the debt limit, according to the U.S. Department of the Treasury.
The ceiling was last raised in December of 2021 to $31.381 trillion, according to the Committee for a Responsible Federal Budget. The $2.5 trillion increase approved was expected to last until at least July 2023. Instead, on Jan. 13, Treasurey Secretary Janet Yellen penned a letter to Congress writing, “will need to start taking certain extraordinary measures to prevent the United States from defaulting on its obligations.”
The problem this time is that key Republicans have hinted that they will not support a higher debt ceiling unless the plan includes spending cuts to Social Security and Medicare. They point to data showing that the federal Old-Age and Survivors Insurance Trust Fund, which pays retirement benefits, will become depleted in 2034. After that, as GOBankingRates has previously reported, payroll taxes will only cover about 78% of retirement benefits.
In an opinion column for The Hill in November, Nancy Altman, co-director of Social Security Works, wrote every Republican who is in contention to lead the House Budget Committee told Bloomberg that they “plan to demand Social Security and Medicare cuts in return for raising the debt limit.”
If so, they are likely to get plenty of pushback from Democrats and other Social Security advocates. As Altman noted, similar moves by Republican leaders to cut Social Security and Medicare in both 2011 and 2013 fell short “due to massive grassroots opposition.”
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Altman was among those who wanted Democrats to lift the debt ceiling during the current lame-duck Congress, while they were still in control of the U.S. House.
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This article originally appeared on GOBankingRates.com: Why Debt Ceiling Debate Puts Social Security on the Line — and How It Could Play Out
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