Which Federal Payments Will Come Due After The U.S. Hits The Debt Limit

Which Federal Payments Will Come Due After The U.S. Hits The Debt Limit

Sarah Ewall-Wice   Wed, September 29, 2021

If the U.S. doesn't lift the debt ceiling and can't pay its bills, millions of Americans could feel the pinch. Social Security checks, veterans benefits, Child Tax Credit payments and more could be frozen.

"Anything that the government spends money on could be affected," said Paul N. Van de Water of the Center on Budget and Policy Priorities.

The U.S. Treasury is still bringing in tax revenue but it's not enough to cover what it owes – it needs to borrow to make up the difference. The department estimates its ability to pay all the bills will be exhausted if Congress does not move to raise or suspend the debt limit by October 18.

At that point, there are several different scenarios that could play out. The Treasury faces more than $75 billion in payments for Social Security, Medicare, tax refunds and salaries from October 18 through the end of the month.

Some members of Congress have called for prioritizing certain types of payments, starting with principal and interest on debt owed to the public, then Social Security payments, military pay and veterans' benefits. But the feasibility of carrying out such a plan remains in question and there is the potential for legal challenges.

"We have really no idea because we have never been there before, and we can only try to illustrate what this could look like if Treasury were actually to get to a point where it wasn't able to make all of its payments in full and on time," said Shai Akabas of the Bipartisan Policy Center.

As lawmakers battle over who is responsible for addressing the debt ceiling, here's what's at stake:

Social Security payments: October 20 and 27

About 65 million Americans receive Social Security benefits each month, including 46 million retired workers, each getting more than $1,500 a month, and more than 8 million disabled workers, receiving more than $1,200 a month each. Some $90 billion in payments are slated to go out in the course of a month.

Millions of Americans are slated to receive benefits on the third or fourth Wednesday of the month — October 20 and October 27 — just days after the United States could go into default.

Democrats scramble to pass spending and budget measures as government shutdown looms

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Which federal payments will come due after the U.S. hits the debt limit