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Debt-limit delay would jeopardize Social Security payments

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Old 06-29-2011, 09:49 AM
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Debt-limit delay would jeopardize Social Security payments

WASHINGTON — Social Security payments to millions of retirees and people with disabilities could be threatened if President Obama and Congress can't agree to increase the government's debt limit by Aug. 2, a new analysis shows.

Although the Treasury Department likely could avoid delaying Social Security checks, the analysis by the Bipartisan Policy Center points up the depth of the cuts that would be needed if the $14.3 trillion debt ceiling isn't raised.

It shows that in August, the government could not afford to meet 44% of its obligations. Since the $134 billion deficit for that month couldn't be covered with more borrowing, programs would have to be cut.

If Social Security, Medicare, Medicaid, unemployment benefits, payments to defense contractors and interest payments on Treasury bonds were exempt, that would be all the government could afford for the month. No money for troops or veterans. No tax refunds. No food stamps or welfare. No federal salaries or benefits.

Want to protect the social safety net? That would be possible — but only if Treasury stopped paying defense contractors, jeopardizing national security. Plus virtually every federal agency and employee.

"We should be honest with ourselves what this would be like, and the answer is it would be chaotic," said Jay Powell, a former top Treasury official in President George H.W. Bush's administration. "There is no way to avoid really serious pain."

The Bipartisan Policy Center studied Treasury Department receipts and spending for August 2009 and 2010 and found that the government likely would not have enough revenue to make the full $23 billion payment to Social Security recipients due Aug. 3. That's the first Wednesday of the month, when a majority of Social Security and Supplemental Security Income checks go out.

Things wouldn't improve much as the days pass. The first major interest payment to creditors would be due Aug. 15 — $29 billion, more than the $22 billion due to arrive in revenue.

On that day, Treasury would have to roll over nearly $500 billion in maturing debt — necessitating an auction which, by that time, might have fewer takers than usual. If demand declines, interest rates would rise.

As the center foresees it, the picture would get worse: layoffs and lawsuits. Global market reaction and media glare. A possible downgrade in the U.S. credit rating, perhaps followed by the loss of market access.
The effect on the country, said former Republican senator Pete Domenici of New Mexico, would be "irretrievable."

Debt-limit delay would jeopardize Social Security payments - USATODAY.com
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Old 06-29-2011, 10:00 AM
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The Dems need to stop playing games with taxes being raised.
Reid is being stubborn and will not compromise.
He knows that it will not pass in the house to raise any taxes now.
Even when the Dems were in the majority they could not get anything passed to raise taxes right now.
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Old 06-29-2011, 10:01 AM
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Fear mongering at it's finest. He threatened to stop the military pay also.. big man dat dud.
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Old 06-29-2011, 10:19 AM
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The GOP wants to eliminate Social Security anyway. This is all part of their plan. Nothing new here?
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Old 06-29-2011, 10:21 AM
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Quote: Originally Posted by VaYank5150 View Post
The GOP wants to eliminate Social Security anyway. This is all part of their plan. Nothing new here?
except obie noodle is the one who decides who gets what? never forget that.
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please please please don't throw me in the tittie bar! Originally Posted by Salt Jones
98% of blacks are racist. Why do you think we laughed at all the white people killed on 9/11/01 or as we call it "New Christmas".
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Old 06-29-2011, 10:33 AM
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Everyday we hear how inefficient and inept the federal government is. To expect that the government could handle a crisis of this magnitude in a logical efficient manner is nonsense. The mostly likely result would be chaos.

It is the responsibility of congress to decide how the taxpayer’s money is to be spent, which programs are to be funded and how much is to be allocated. When congress shirks it’s duty, then the administration is left to decide how it will cover obligations. Does the government layoff employees and pay up to a year in severance pay only to rehire them when a deal is struck? Do they withhold payment to states, which are under huge financial pressure? Do they miss contract payments and risk lawsuits and penalties? Do they forgo payment of interest on government obligations causing a default, which would raise interest on all new debt? Delaying Social Security payments may have big political consequences but less financial lost.
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Old 06-29-2011, 10:34 AM
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Who says they will chose to cut SS or Medicare or the paychecks to the military??

The party in power will chose what to cut.

Of course if you claim your going to have to cut SS, Medicare or paychecks to the military and are doing so because you can't reach an agreement with the GOP then of course its the GOP's fault. Right??

Of course it is.

Last edited by Claudette; 06-29-2011 at 10:37 AM.
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Old 06-29-2011, 10:55 AM
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There are a lot of thins that could be done to cut the budget deficit and overall debt and still keep many social programs intact. But allowing our already horribly fiscally irrespnsible government to borrow yet more money it will have a hard time paying back without government drastically changing how it does business is not a workable long term solution.
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Old 06-29-2011, 10:57 AM
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Quote: Originally Posted by Flopper View Post
WASHINGTON — Social Security payments to millions of retirees and people with disabilities could be threatened if President Obama and Congress can't agree to increase the government's debt limit by Aug. 2, a new analysis shows.

Although the Treasury Department likely could avoid delaying Social Security checks, the analysis by the Bipartisan Policy Center points up the depth of the cuts that would be needed if the $14.3 trillion debt ceiling isn't raised.

It shows that in August, the government could not afford to meet 44% of its obligations. Since the $134 billion deficit for that month couldn't be covered with more borrowing, programs would have to be cut.

If Social Security, Medicare, Medicaid, unemployment benefits, payments to defense contractors and interest payments on Treasury bonds were exempt, that would be all the government could afford for the month. No money for troops or veterans. No tax refunds. No food stamps or welfare. No federal salaries or benefits.

Want to protect the social safety net? That would be possible — but only if Treasury stopped paying defense contractors, jeopardizing national security. Plus virtually every federal agency and employee.

"We should be honest with ourselves what this would be like, and the answer is it would be chaotic," said Jay Powell, a former top Treasury official in President George H.W. Bush's administration. "There is no way to avoid really serious pain."

The Bipartisan Policy Center studied Treasury Department receipts and spending for August 2009 and 2010 and found that the government likely would not have enough revenue to make the full $23 billion payment to Social Security recipients due Aug. 3. That's the first Wednesday of the month, when a majority of Social Security and Supplemental Security Income checks go out.

Things wouldn't improve much as the days pass. The first major interest payment to creditors would be due Aug. 15 — $29 billion, more than the $22 billion due to arrive in revenue.

On that day, Treasury would have to roll over nearly $500 billion in maturing debt — necessitating an auction which, by that time, might have fewer takers than usual. If demand declines, interest rates would rise.

As the center foresees it, the picture would get worse: layoffs and lawsuits. Global market reaction and media glare. A possible downgrade in the U.S. credit rating, perhaps followed by the loss of market access.
The effect on the country, said former Republican senator Pete Domenici of New Mexico, would be "irretrievable."

Debt-limit delay would jeopardize Social Security payments - USATODAY.com
Good. What part of having to borrow money to meet pension obligations doesn't scream "PROBLEM"?
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Old 06-29-2011, 11:19 AM
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Quote: Originally Posted by Bern80 View Post
There are a lot of thins that could be done to cut the budget deficit and overall debt and still keep many social programs intact. But allowing our already horribly fiscally irrespnsible government to borrow yet more money it will have a hard time paying back without government drastically changing how it does business is not a workable long term solution.
Using the debt limit requirement in the Constitution to control spending makes no sense. It is Congress that has approved government financial obligations. Now Congress is deciding whether they will honor their obligations.

The place to control spending is through the budget. If the budget process does not work, the process needs to change.
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Old 06-29-2011, 11:42 AM
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Quote: Originally Posted by Claudette View Post
Who says they will chose to cut SS or Medicare or the paychecks to the military??

The party in power will chose what to cut.

Of course if you claim your going to have to cut SS, Medicare or paychecks to the military and are doing so because you can't reach an agreement with the GOP then of course its the GOP's fault. Right??

Of course it is.
House Republicans have refused to raise the debt limit without concessions from Senate Democrats. Whether voters hold the Republicans or Democrats responsible for any resulting financial crisis depends on whether there is a crisis and how serious it is. If the crisis is serious enough to cause a major sell off in stocks and bonds and triggers another recession you can bet voters will hold Republicans responsible for a failed risky plan to bring about deficit reduction.
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Old 06-29-2011, 11:46 AM
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Quote: Originally Posted by Flopper View Post
House Republicans have refused to raise the debt limit without concessions from Senate Democrats. Whether voters hold the Republicans or Democrats responsible for any resulting financial crisis depends on whether there is a crisis and how serious it is. If the crisis is serious enough to cause a major sell off in stocks and bonds and triggers another recession you can bet voters will hold Republicans responsible for a failed risky plan to bring about deficit reduction.
Americans oppose raising the debt ceiling.

Americans Oppose Raising Debt Ceiling
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Old 06-29-2011, 11:48 AM
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Quote: Originally Posted by VaYank5150 View Post
The GOP wants to eliminate Social Security anyway. This is all part of their plan. Nothing new here?
Don't forget that by ending Social Security we can make more puppy stew.
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1. You cannot legislate the poor into prosperity, by legislating the wealth out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it.

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work, because somebody else is going to get what they work for, this is the beginning of the end of any nation.
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Old 06-29-2011, 11:50 AM
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Quote: Originally Posted by WillowTree View Post
Quote: Originally Posted by VaYank5150 View Post
The GOP wants to eliminate Social Security anyway. This is all part of their plan. Nothing new here?
except obie noodle is the one who decides who gets what? never forget that.
Congress controls the purse strings, the president only suggests
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Old 06-29-2011, 11:51 AM
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Quote: Originally Posted by Robert View Post
Quote: Originally Posted by VaYank5150 View Post
The GOP wants to eliminate Social Security anyway. This is all part of their plan. Nothing new here?
Don't forget that by ending Social Security we can make more puppy stew.
or Soilent Geen
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