Critical deadlines are coming up for the federal government to approve funding for government operations for 2021-2022 and to raise the limit on the government's spending ability (the "debt ceiling").
Congress often fails to pass its annual spending bills on time to provide funding for the next year. When that happens, Congress generally passes what's called "continuing resolutions," which allow the government to continue to spend money until Congress passes the spending bills.
But Social Security spending is considered "mandatory," and the Social Security Administration doesn't rely on an annual spending bill for its funding. This means that Social Security will continue to send benefit checks and process new claims for Social Security benefits, even if the federal government "shuts down."
The issue surrounding the federal debt limit is separate from the annual spending bill fights that can lead to government shutdowns. The federal debt, reported to be at about $28.4 trillion in September 2021, is the amount of money that the government owes for spending on payments such as Medicare, Medicaid, Social Security, military salaries, veterans' benefits, public education, and tax credits. The government has spent up to its limit, so it has to stop spending money immediately—unless Congress raises the limit. In fact, Congress raises the debt ceiling every couple of years and the U.S. has never defaulted on its debt payments.
If Congress does allow the U.S. to default, the government won't be able to pay its employees or veterans or continue paying for services like food stamps and the child tax credit. The stock market and the unemployment rate are also expected to suffer.
While the government should still be able to pay out Social Security benefits, since the money comes from current employees' payroll taxes and the Social Security Trust Fund, payments could be delayed. And no one is sure what will happen with SSI payments, which are paid out of the general fund, if Congress doesn't raise the debt ceiling. While Congress would no doubt prioritize making SSI payments, no one can anticipate what will happen if the crisis goes on long enough.
If the government does shut down, the Social Security Administration will continue holding disability hearings and sending monthly checks, but it will temporarily stop providing "non-mandatory services," including requests for benefits verifications, corrections to earning records, or replacement Medicare cards. It would also stop processing overpayments and bias complaints along with other non-essential activities.
September 30, 2021