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Debt Ceiling will Mean Missed Social Security Checks

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Old 07-01-2011, 03:22 PM
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Debt Ceiling will Mean Missed Social Security Checks

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What will happen if the debt ceiling is not raised and the federal government runs short of cash and is unable to pay all of its obligations? Using publicly available data, the Bipartisan Policy Center has projected daily government cash flows through August 2011 to assess the effects on federal operations, as well as the market risks.

One day in early August, the Treasury Department will lack sufficient cash to pay all of its obligations going forward. For simplicity, we call this day the X Date. In May, Treasury estimated the X Date as Aug. 2, which has proved reasonably accurate. Based on more recent data, our analysis shows that the date may fall as early as Aug. 2 but could arrive a week later. Treasury will provide an update shortly.

After the X Date, we estimate that about 44 percent of August 2011 bills could not be paid. Some argue that the government can “prioritize” payments — that is, pay some bills but not others — and thereby avoid a bond default. Treasury and the Federal Reserve strongly oppose prioritization, which would require Treasury to select from among roughly 80 million monthly payments, paying the winners but not the losers.

The United States has never prioritized or failed to pay any obligation when due during a debt limit impasse. ...

Federal Government Operations: For Aug. 3-31, 2011, we project inflows of $172 billion and bills due of $306 billion — a shortfall of $134 billion. As an illustration, Treasury would exhaust all inflows just by paying six major items: interest, Medicare, Medicaid, Social Security, unemployment insurance and defense vendors. Without cutting from these six, there would be no money for entire departments such as Justice, Labor and Commerce among many others, or for veterans’ benefits, IRS refunds, military active duty pay, federal salaries and benefits, special education, Pell Grants for college students or food and rent payments for the poor. An overnight 44 percent cut in spending would slash many popular and essential programs.

Particular August days will be far worse than the monthly totals suggest. For example, on Aug. 3, we project that the government will have about $12 billion in receipts and $32 billion in committed payments, including a $23 billion Social Security payment. And Aug. 15 presents a triple threat: a $19 billion daily deficit, a $29 billion interest payment and a quarterly refunding auction to pay off a maturing $27 billion bond.
Opinion: Real implications of debt debate - Jerome H. Powell - POLITICO.com

This means that there will not be enough money on August 3 to pay out SS checks. Checks could be delayed, but many seniors will not get their checks on time, if at all.

They estimate that in August, there will be enough revenue to pay SS, Medicare and Medicaid, interest and unemployment insurance and defense contractors. There will not be enough to pay soldiers, assuming all those items are met.

Also, this is for the month of August. Revenues and expenditures are lumpy. Because we can pay SS, Medicare, etc., this month does not mean we will be able to in other months, assuming the debt ceiling is not raised. Eventually, we will not have enough money to pay SS, Medicare and Medicaid and defense entirely.


EDIT - Oops! Sorry! I see this has already been posted.

Mods, please merge with this thread!


Debt-limit delay would jeopardize Social Security payments

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Last edited by Toro; 07-01-2011 at 03:26 PM.
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Old 07-01-2011, 03:25 PM
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Quote: Originally Posted by Toro View Post
Quote:
What will happen if the debt ceiling is not raised and the federal government runs short of cash and is unable to pay all of its obligations? Using publicly available data, the Bipartisan Policy Center has projected daily government cash flows through August 2011 to assess the effects on federal operations, as well as the market risks.

One day in early August, the Treasury Department will lack sufficient cash to pay all of its obligations going forward. For simplicity, we call this day the X Date. In May, Treasury estimated the X Date as Aug. 2, which has proved reasonably accurate. Based on more recent data, our analysis shows that the date may fall as early as Aug. 2 but could arrive a week later. Treasury will provide an update shortly.

After the X Date, we estimate that about 44 percent of August 2011 bills could not be paid. Some argue that the government can “prioritize” payments — that is, pay some bills but not others — and thereby avoid a bond default. Treasury and the Federal Reserve strongly oppose prioritization, which would require Treasury to select from among roughly 80 million monthly payments, paying the winners but not the losers.

The United States has never prioritized or failed to pay any obligation when due during a debt limit impasse. ...

Federal Government Operations: For Aug. 3-31, 2011, we project inflows of $172 billion and bills due of $306 billion — a shortfall of $134 billion. As an illustration, Treasury would exhaust all inflows just by paying six major items: interest, Medicare, Medicaid, Social Security, unemployment insurance and defense vendors. Without cutting from these six, there would be no money for entire departments such as Justice, Labor and Commerce among many others, or for veterans’ benefits, IRS refunds, military active duty pay, federal salaries and benefits, special education, Pell Grants for college students or food and rent payments for the poor. An overnight 44 percent cut in spending would slash many popular and essential programs.

Particular August days will be far worse than the monthly totals suggest. For example, on Aug. 3, we project that the government will have about $12 billion in receipts and $32 billion in committed payments, including a $23 billion Social Security payment. And Aug. 15 presents a triple threat: a $19 billion daily deficit, a $29 billion interest payment and a quarterly refunding auction to pay off a maturing $27 billion bond.
Opinion: Real implications of debt debate - Jerome H. Powell - POLITICO.com

This means that there will not be enough money on August 3 to pay out SS checks. Checks could be delayed, but many seniors will not get their checks on time, if at all.

They estimate that in August, there will be enough revenue to pay SS, Medicare and Medicaid, interest and unemployment insurance and defense contractors. There will not be enough to pay soldiers, assuming all those items are met.

Also, this is for the month of August. Revenues and expenditures are lumpy. Because we can pay SS, Medicare, etc., this month does not mean we will be able to in other months, assuming the debt ceiling is not raised. Eventually, we will not have enough money to pay SS, Medicare and Medicaid and defense entirely.

failing to raise the debt ceiling?
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Old 07-01-2011, 03:25 PM
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Debt Ceiling will Mean Missed Social Security Checks

Of course it does. A lot of people are going to be very upset at the inaction of the congress on this.

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