Starting next week, paper check payments for Social Security, federal tax returns, and more, will be a thing of the past, a move that will have an outsized negative impact on low-income, elderly and rural Americans, as well as be a financial hit to the forest products industry, U.S. Sen Jeanne Shaheen said Monday.
Shaheen joined Maine’s congressional delegation in a letter that urges the U.S. Treasury Department and Office of Management and Budget to delay the implementation of an executive order that requires the government to stop issuing paper checks beginning Sept. 30 for all payments include Social Security benefits, tax refunds, vendor payments, and more.
The letter, sent Monday, points out that more than 5 million households across the United States do not have a checking or savings account at a bank or credit union, and that the move will particularly affect low-income households, older Americans, and others who are reliant on cash and paper checks.
“Hundreds of thousands of older and disabled adults frequently opt to receive government benefits, including earned benefits like Social Security, through paper checks,” the letter says. “More than 120,000 veterans and survivors receive their disability compensation, survivor benefits, and other compensation through paper checks.”
The letter [see below] is signed by Shaheen, D-NH, as well as U.S. Sen. Susan Collins, R-Maine; U.S. Sen. Angus King, I-Maine; Rep. Chellie Pingree, D-Maine 1st District; and Rep. Jared Golden, D-Maine 2nd District. The five also stress the impact to the forest products industry in the two states.
Executive order 14247 was signed March 28 and goes into effect Tuesday, Sept. 30. The Trump administration said it is part of an effort to cut government costs and reduce fraud. Payments will be made through direct deposit or with prepaid debit cards. Tax payments to the federal government will also have to be electronic, rather than by paper check.
According to the federal government, around 400,000 Social Security recipients get their benefits by check and about 5 million taxpayers got a paper check refund this year.
Fiscal Service Chief Disbursing Officer Linda Chero said in a news release last month that paper checks can get “lost, stolen, altered, or delayed, we encourage those still receiving paper checks to make the switch today.” The fiscal department of U.S. Treasury provides a page explaining how to open a bank account and sign up for digital Social Security payments.
But the letter from Shaheen and her Maine counterparts says that people need time to make the necessary changes that will allow them to access digital payments.
“We are concerned that the accelerated implementation schedule of E.O. 14247 does not provide adequate time for our constituents to transition to electronic payments and may impede them from receiving their hard-earned benefits and other critical payments from the federal government,” the letter says.
Rural Americans and those living on tribal land “have geographic and digital infrastructure challenges that prevent them from using traditional and technology-based financial services,” the letter adds.
According to the Federal Communications Commission, 22.3% of Americans in rural areas and 27.7% of Americans on tribal land don’t have reliable broadband coverage, limiting their ability to use internet-based financial services.
“In addition, rural and tribal areas often lack easy geographic proximity to brick-and-mortar banking branches and automated teller machines, making it difficult to access financial services, including bank accounts,” the letter says. “Farmers, small business owners, and others in these areas frequently rely on paper checks to conduct their regular business with associates and the government alike.”
The Social Security Administration has lost more than 20% of its staff this year, the U.S. Treasury plans to cut more than 20% of its staff by the end of the year, and Veterans Affairs has cut 3.5% of its staff, with more planned. Those who want to slow the paper check elimination process down point out that those who want to change to digital payments may not be able to get it done in time because lack of adequate staff to make the change.
Eliminating federal paper check payments will also have an impact on the forest products industry in New Hampshire and Maine, the five lawmakers noted.
The domestic forest products industry manufactures more than $435 million worth of products — including paper products that would be negatively affected by the move – and directly employs more than 925,000 people across the country, many of whom live in rural areas, the letter says.
“This industry produces essential items that Americans use every day, from paper to packaging,” the five lawmakers note. “Continuing the use of paper checks supports our domestic pulp and paper industry, as well as consumer choice for individuals and businesses. We believe that digital delivery and paper checks should exist in a complementary manner.”
New Hampshire’s forest product industry generates nearly $1.4 billion in annual output, employes nearly 8,000 and generates about $2.4 billion indirectly, according to the University of New Hampshire Extension. In Maine, the impact is even greater. The forest products industry contributes more than $8 billion annually to the state’s economy and employs nearly 14,000 directly and 39,000 indirectly.
In July, U.S. Sen. Elizabeth Warren met with Social Security Administration Commissioner Frank Bisignano, and secured a commitment that paper checks would still be issued for those who needed them. But the next month, the SSA issued a notice confirming paper check payments will end on Sept. 30, with no acknowledgment of the agreement Warren had reached with Bisignano.
In July, the SSA had agreed to directly contact beneficiaries who still receive paper checks to encourage a switch to electronic payments as well as continue issuing paper checks to recipients with no other means of payment, such as those with mental impairments, those living in remote areas with limited banking access, or those age 90 or older.