VERIFYING what a U.S. default could mean for your Social Security check

If Congress doesn’t raise the debt ceiling, the U.S. government could default on its financial obligations as soon as June 1. 

President Joe Biden, U.S. Treasury Secretary Janet Yellen and many economists have warned that a default would lead to catastrophic impacts on the nation’s economy. 

As concerns over a potential default grow, some VERIFY readers are wondering what it would mean for them. Several people, including Andy and Shanta, asked if the U.S. government would miss Social Security payments in the event of a default. 

THE QUESTION

If the U.S. defaults, would Social Security recipients receive their checks?

THE SOURCES

• U.S. Treasury Department
• Bipartisan Policy Center
• The Council of Economic Advisers (CEA), an agency in the Executive Office of the President
• Thomas Kahn, distinguished faculty fellow at American University’s Center for Congressional and Presidential Studies
• Jack Lew, U.S. Secretary of the Treasury 2013-2017, testimony before Senate Finance Committee

THE ANSWER

While it’s possible that Social Security recipients would still receive their checks, it’s unclear who would be paid first or at all in the event of a default. The federal government hasn’t outlined a framework for prioritizing certain payments over others. 

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WHAT WE FOUND

The United States has never defaulted on its obligated payments over failure to raise the debt ceiling. That means there is “no established playbook for the Treasury Department if Congress fails to raise or suspend the debt limit,” the Bipartisan Policy Center says.

If the Treasury cannot borrow money and exhausts its cash on hand, the government can only pay its bills using incoming revenue from things like taxes. But, given the government’s large annual deficit, spending typically exceeds revenue. In this situation, the government couldn’t make all of its payments on time or in full, the Bipartisan Policy Center explains. 

Experts like Thomas Kahn, a distinguished faculty fellow at American University and former staff director of the House Budget Committee, say this would put monthly Social Security checks at risk of arriving late or not at all in the event of a default. 

The Council of Economic Advisers (CEA), an agency within the Executive Office of the President, also said in a 2021 blog post that “Americans may not receive their Social Security payments on time, or even at all” if the U.S. defaults. Treasury Secretary Yellen echoed these concerns during an event in late April 2023. 

But there’s no definitive answer. That’s because there isn’t a precedent or legal framework that allows the Treasury to choose which bills it will pay. 

“We don’t have a prioritization,” Kahn told VERIFY. “And if we were to default, the Treasury would be in a terrible bind. They've been asked this question and they have answered by saying, ‘No, we don't have any prioritization because we don't anticipate a default and we will not default.’”

In testimony before the Senate Finance Committee in 2013, amid a debt ceiling standoff during President Barack Obama’s second term, then-Secretary of the Treasury Jack Lew told Congress it isn’t logistically possible to prioritize some bills over others.

“We write, roughly, 80 million checks a month. The systems are automated… because, for 224 years the policy of Congress and every President has been: we pay our bills,” he said. “You cannot go into those systems and easily make them pay some things and not other things. They were not designed that way, because it was never the policy of this government to be in the position that we would have to be in if we could not pay all our bills.”

That means in a default scenario, who gets paid may simply be up to chance. Which revenues happen to enter which accounts at which times will determine which automated payments will actually be able to be made.

Apart from Social Security payments, finance and economics experts also told VERIFY the federal government may have to miss or delay payments such as those to Medicare beneficiaries and government workers’ salaries.

But, again, there’s no way to know who would be paid first or whether specific payments – such as those for Social Security – would not be made.