12:16 p.m. ET, May 23, 2023
How a debt default could affect you
A poster at a bus shelter shows the national debt in Washington, DC, on May 21.
Mandel Ngan/AFP/Getty Images
Social Security payments: Payments to about 66 million retirees, disabled workers and others receive monthly Social Security benefits could be delayed in a debt default scenario, though it’s possible Treasury could continue making on-time payments because of the entitlement program’s trust fund, said Shai Akabas, director of economic policy at the Bipartisan Policy Center.
Almost two-thirds of beneficiaries rely on Social Security for half of their income, and for 40% of recipients, the payments constitute at least 90% of their income, according to the National Committee to Preserve Social Security and Medicare.
Other government payments could also be affected, including funding for food stamps; federal grants to states and municipalities for Medicaid, highways, education and other programs.
Federal employees and veterans benefits: More than 2 million federal civilian workers and around 1.4 million active-duty military members could see their paychecks delayed. Federal government contractors could also see a lag in payments, which could affect their ability to compensate their workers.
Also, certain veterans benefits, including disability payments and pensions for some low-income veterans and their surviving families, could be affected.
How much damage would be done would depend on how long the…
Read More: Debt ceiling negotiations continue as default deadline looms: Live updates