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Social Security payments could vanish for 500K San Diegans if government defaults

Posted at 4:58 PM, Sep 29, 2021
and last updated 2021-09-30 01:28:45-04

SAN DIEGO (KGTV) -- More than 500,000 San Diegans on Social Security could see their payments delayed if the Federal Government fails to lift the debt ceiling by Oct. 18.

U.S. Treasury Secretary Janet Yellen told a Congressional Committee this week that the hold up of Social Security payments would be one of multiple "disastrous" consequences of the U.S. defaulting on its debt for the first time.

"It would be disastrous for the American economy, for global financial markets and for millions of families and workers whose financial security would be jeopardized by delayed payments," she said.

According to the New York Times, Yellen added that soldiers wouldn't know when they'd be paid, and interest rates could rise for credit cards, and new auto loans and mortgage payments.

In San Diego County, about 517,000 people were receiving some form of Social Security checks in 2019, according to the latest Federal data available.

Don Hotz, who lives in University City and has been retired for nine years, said the $2,100 he gets per month makes a difference.

"It's not 80 or 90 percent of my monthly income but it's pretty significant, and I know a lot of people out there are living paycheck to paycheck, and that is Social Security paycheck to Social Security paycheck now," he said Wednesday.

The U.S. has never defaulted on its debt, and likely won't given the political ramifications of a stoppage of Social Security payments, said Lynn Reaser, chief economist at Point Loma Nazarene University.

"But while we're going through this angst, it's not going to make the stock market very calm and it's going to make a lot of people nervous," she said.

Reaser added that Social Security tax payments alone are not enough to make the necessary payments, so the U.S. must borrow to fill its obligation.

Meanwhile, Congress must pass a continuing resolution to avoid a government shutdown Thursday. While a shutdown would not impact Social Security payments, Reaser it would hit San Diego, given the large military presence, federal workers, and research funding that comes into the region.