The debt ceiling could hurt your 401(k). Here's what you need to know
Some estimate a default on government loans could cause the S&P 500 to drop about 22%, wiping out years of earned wealth for millions of retirees.
LEARN MOREMay 22, 2023
President Joe Biden and House Speaker Kevin McCarthy met Monday to continue high-stakes negotiations over the government's debt ceiling.
The meeting is the latest in an often contentious series in which negotiators have frequently not seen eye to eye.
McCarthy said after the meeting that he and President Biden had a "productive discussion." But he said "We don’t have an agreement yet."
President Biden said he was "optimistic we may be able to make some progress, because we both agreed default is not really on the table."
The start-and-stop meetings have shown that parties may be approaching a compromise deal. Republicans don't want 2024 spending to exceed 2023 levels. Democrats don't want to make additional cuts beyond a point that would keep year-to-year spending flat.
If negotiators can strike a deal on the budget, Congress could vote separately on raising the debt ceiling, which would allow for more borrowing.
Senate Majority Leader Chuck Schumer has said he will convene the Senate from recess to vote on a deal if it's necessary.
But McCarthy has said a deal will need to be done this week to have enough time to pass it in the House and move legislation to the Senate.
Meanwhile, in a Monday letter to congressional leaders, Treasury Secretary Janet Yellen repeated warnings that the Treasury is facing a hard deadline.
"We estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government's obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1," Yellen wrote.
What will happen to Social Security if government defaults on debt?
The current gridlock on the nation's debt ceiling could hurt the 67 million Americans collecting Social Security.
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