Debt-limit delay would jeopardize Social Security payments

Discussion in 'Politics' started by Flopper, Jun 29, 2011.

  1. Flopper
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    Flopper Gold Member

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    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
     
  2. peach174
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    peach174 Gold Member Supporting Member

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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.
     
  3. WillowTree
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    WillowTree Gold Member

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    Fear mongering at it's finest. He threatened to stop the military pay also.. big man dat dud.
     
  4. VaYank5150
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    VaYank5150 Senior Member

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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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  5. WillowTree
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    WillowTree Gold Member

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    except obie noodle is the one who decides who gets what? never forget that.
     
  6. Flopper
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    Flopper Gold Member

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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.
     
  7. Claudette
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    Claudette Gold Member

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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: Jun 29, 2011
  8. Bern80
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    Bern80 Senior Member

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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.
     
  9. Soggy in NOLA
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    Soggy in NOLA Gold Member

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    Good. What part of having to borrow money to meet pension obligations doesn't scream "PROBLEM"?
     
  10. Flopper
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    Flopper Gold Member

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    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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