Social Security checks, Medicare doctor payments on the chopping block when there’s an early default

On June 1, the federal government is expected to pay $47 billion to doctors and other healthcare providers who treat Medicare patients. And on June 2, another $25 billion will be paid out to Social Security recipients.

That means it can afford it.

Treasury Secretary Janet Yellen has warned that unless the debt ceiling is raised soon, the government will be unable to pay a multitude of bills.

“Millions of American families who depend on payments from the federal government would likely not receive payments,” Yellen told a banking group on Tuesday. “This ranges from 66 million Social Security recipients to millions of veterans and military families who have served our country with honor.”

Yellen hasn’t given an exact date by which the Treasury Department won’t be sure it can pay all the bills. She simply told lawmakers it would be “early June and possibly as early as June 1.”

However, if Yellen’s worst-case scenario is confirmed and the Treasury Department hits a wall on June 1 or 2 without raising the debt ceiling, the Department could be forced to choose between breaching the ceiling – with potentially disastrous consequences for the economy — or exceeding the cap I am not making these Medicare and Social Security payments.

“Millions of American families who depend on payments from the federal government would likely not receive any payments.”

– Treasury Secretary Janet Yellen

The first two days of June belong to several lows in the first half of June where the combination of expected cash on hand and remaining Treasury credit room is worryingly close to what is needed — or may not even be enough — to meet the payments due.

The Bipartisan Policy Center published a set of charts Thursday illustrates Treasury challenges. According to the BPC, the department is expected to receive about $26 billion in revenue as of June 1, but is also expected to receive about $100 billion in payments, including $47 billion in Medicare spending U.S. dollar. The difference between these must be made up by borrowing or cash.

June 2 looks better, but not by much. According to BPC, the Treasury will likely receive $18 billion in revenue but have $40 billion in expenses, including $25 billion in Social Security benefits.

Despite these prospects, there has been little impetus for a temporary extension of the debt limit to give more time for negotiations. House Speaker Kevin McCarthy (R-California) said Tuesday such an extension would reflect an assumption that current talks would collapse.

“I think we now have the time to find a solution,” he told reporters. “One of the biggest problems here lies in your question itself. You’re already asking a question: ‘Well, you’re going to fail, do you want to do something in the short term?’ I prefer to look at the opposite. I’d rather tell you we’re going to make it.”

Another option would be to exclude debt spent to pay Social Security or Medicare payments from the debt ceiling — to ensure those payments can be made and to give the Treasury Department a little more leeway.

“I think we now have the time to find a solution.”

– Speaker of the House Kevin McCarthy (R-California)

This has happened before. In February and March 1996, after Treasury Secretary Robert Rubin warned Congress that his department was running out of credit under the debt limit and that Social Security payments might not default, Congress and the White House agreed to reduce debt related to those payments Debt ceiling to be exempt from the debt ceiling.

Sen. Ron Wyden (D-Ore.), chairman of the Senate Treasury Committee, which is responsible for the debt limit, was not enthusiastic about the idea. He compared it on Wednesday to a Republican Party-backed idea called debt prioritization, in which the Treasury Department chooses which bills to pay on time as money comes in.

“Once you do it, you’re going to see the Wall Street crowds and foreign creditors coming at you,” Wyden told HuffPost. “They’re going to say, ‘What about us? We have priority!’”

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