Will Social Security checks keep coming if US goes broke?

Aug. 2 is the day the United States is expected to exhaust borrowing authority. But many older Americans are focused on Aug. 3. That's when a segment of the 55 million Americans who receive Social Security benefits expect to receive payments from a Treasury that could be, quite possibly, broke. [Editor's note: The original version incorrectly described what is expected for the US on Aug. 2.]

Would Congress really keep seniors from getting Social Security payments if it doesn't pass a plan to raise the US debt limit?

That's extremely unlikely, many observers say.

“If checks actually are delayed, it would be pretty catastrophic for a lot of people, which is why I don’t think it will happen,” says Richard Johnson, director of the retirement policy program at the Urban Institute, a policy analysis group in Washington.

The Treasury Department has a contingency plan if the debt limit is not raised by Aug. 2, the president’s chief of staff, William Daley, told Bloomberg Television on July 26. The details haven't been made public.

But there is one known hitch: Treasury says that it would be up to Congress – the same Congress that's deadlocked over a debt-limit deal – to make sure that Social Security payments would go out.

“Congress has committed us to these payments, and only Congress has the ability to ensure all payments are made,” writes Anthony Coley, deputy assistant secretary at the Treasury, in an e-mail to the Monitor.

There are several reasons to believe that Social Security payments will continue to be made.

For starters, Social Security is technically an off-budget program, which receives its revenue from three sources: payroll taxes, the interest from its $2.6 trillion trust fund, and taxes on Social Security recipients themselves. For now, the program brings in more revenue than it pays out, so there’s a strong case to be made that it's a self-funding entity that should be allowed to continue operating, whatever the status of the debt limit.

Second, the loss of Social Security would prove to be a big financial hit for many older Americans.

About three-quarters of seniors who receive Social Security depend on it for at least 90 percent of their income, says Mr. Johnson. In June, the Treasury paid out nearly $60 billion in Social Security benefits, with an average payment of about $1,000 per person. If those payments stopped, more than 40 percent of recipients would be pushed into poverty.

Third, seniors represent a powerful voting bloc that neither Democrats nor Republicans want to alienate.

“It would be hard for us to find somebody from either party who says that Social Security [payments] shouldn’t go out,” says David Certner, legislative policy director at AARP, a nonprofit advocacy group for seniors based in Washington. “It’s just inconceivable to me that would happen.”

Still, seniors are worried. Mr. Certner says he’s noticed an uptick in anxiety among AARP members about whether payments will continue if there's no deal on raising the debt limit, Some people could rely more on family or assets, but most recipients wouldn’t have that option, he says. As for turning to food pantries and local community assistance, he says, they are “already stretched too thin, so I don’t think that will be much help.”

At the National Council on Aging, it's personal – at least for the receptionist. After seeing television reports speculating about future Social Security payments, she went out and got her job at the council, a nonprofit advocacy group in Washington.

“I’m worried about not getting my money," said the receptionist, who declined to give her name. “I’m here trying to make a couple of extra dollars."