SOCIAL SECURITY LAW: US Treasury Secretary Warns of Default, Defer SS Payments

January 19, 2011

Washington, D.C. - US Treasury Secretary Timothy Geithner has warned Congress of a default on federal fund, causing a fall back on Social Security, if the national debt ceiling will not be raised.

The United States has reached $14 trillion debt, including Social Security obligations.

Geithner wrote a letter to Congress stating that failure to increase the national debt ceiling would result to a default, according to reports.

Geithner clarified that the US might not be able to pay its debt on time, and will need expansion on borrowing power. The recent decision of Congress to increase spending and reduce revenue will necessitate an increase in debt ceiling.

United States spends $300 billion on monthly bills and collects $180 billion as monthly revenue. Hitting the debt limit will enable the country to pay only 60 cents of its obligations.

Such fiscal status will compel US Treasury to defer payments on Social Security, Medicare, and tax refunds. Social Security beneficiaries will have to search for other sources of income.

However, critics have commented that the current Secretary remained persistent in persuading Congress to prevent default and provide financial aid to retirees, the disabled and unemployed citizens.