Media conservatives are accusing the Obama administration of “threatening” Social Security benefits after the president observed in an interview that he could not guarantee that benefits could be paid if the debt limit were not increased. Economic experts agree that failure to increase the debt limit would force the federal government to prioritize its legal obligations and strain its ability to pay Social Security benefits.
After Obama Warned That Social Security Benefit Payments Could Be Missed If The Debt Ceiling Is Not Raised ...
Obama: “I Cannot Guarantee That Those [Social Security] Checks Go Out On August 3 If We Haven't Resolved This Issue.” From the July 12 edition of CBS Evening News with Scott Pelley:
PELLEY: Can you tell the folks at home that no matter what happens, the Social Security checks are gonna go out on August the third? There are about $20 billion worth of Social Security checks that have to go out the day after the government is supposedly gonna go into default?
MR. OBAMA: Well, this is not just a matter of Social Security checks. These are veterans' checks, these are folks on disability, and their checks. There are about 70 million checks that go out each month.
PELLEY: Can you guarantee, as president, those checks will go out on August the third?
MR. OBAMA: I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it. [CBS News, CBS Evening News, 7/12/11, via CBSNews.com]
... The Right-Wing Media Accused Obama Of Threatening Seniors
Fox Nation: “Obama Threatens To Withhold Social Security Checks From Seniors And Vets.” Fox Nation linked to Obama's comments to CBS with the following headline:
[Fox Nation, 7/12/11]
Drudge: “Obama Threatens To Hold Up Social Security Checks.” The Drudge Report linked to Obama's comments to CBS with the following headline:
[Drudge Report, 7/12/11]
Breitbart TV: “Obama To Hold Senior And Vets Benefits Hostage For Tax Increases.” Andrew Breitbart's website Breitbart.tv embedded the CBS video with the following headline:
Hannity: Obama Is “Resorting To Desperate Scare Tactics” And “Trying To Scare Seniors.” Discussing the comments on Social Security payments, Sean Hannity accused Obama of “resorting to desperate scare tactics” and “trying to frighten the American people into supporting a deal.” He also said:
HANNITY: First of all, first the president tried class warfare, corporate jets. It's right out of the old handbook. These are different times. Now he's trying to scare seniors, because that is absolutely, positively false what he said. [Fox News, Hannity, 7/12/11]
Krauthammer: “If [The President] Wants To Threaten Social Security, He Can Do That.” On the July 12 edition of Fox News' Special Report, Fox News contributor Charles Krauthammer claimed that Obama “holds the upper hand.” He continued:
KRAUTHAMMER: He holds it for two reasons. He controls who will get the checks on August 3 and who won't. And if he wants to threaten Social Security, he can do that. Whether he has to actually withhold those checks or not is a moot point. As long as he threatens it, it will scare the hell out of any Republican anywhere. [Fox News, Special Report with Bret Baier, 7/12/11]
Asman: “Today, The President Made A Threat” About Social Security. On the July 12 edition of Fox Business' America's Nightly Scoreboard, host David Asman said of Obama's comments on Social Security payments:
ASMAN: Kicking off tonight, today, the president made a threat. But his threat was really an admission that his whole big government program has failed. [Fox Business, America's Nightly Scoreboard, 7/12/11]
But Economic Experts Agree That Social Security Benefits Are At Risk
Harvard Economist Frankel: Choosing Not To Pay Certain Bills “Would Mean Failing To Honor Legal Obligations” Including Social Security. Jeffrey Frankel, a Harvard economist who serves on the National Bureau of Economic Research, criticized claims that “come August 3, the federal government could retain its top credit rating if it continued to service its debt by ceasing payment on its other bills.” According to Frankel:
But this would mean failing to honor legal obligations that have already been incurred (paying suppliers for paper clips that have already been bought, paying soldiers their wages for last month's service, sending social security recipients their checks, etc.). This is like observing that the cliff is not a 90 degree drop-off, but only 110 degrees. It doesn't matter: the car would still go crashing into the ocean far below. The government's credit would still be downgraded and global investors would still demand higher interest rates to hold US treasuries, probably on a long-term basis. [Jeff Frankels Weblog, 7/11/11]
Former Treasury Official Powell: Efforts To “Prioritize” Legal Obligations Would Strain Ability To Pay Social Security Benefits. Jerome H. Powell, a Treasury Department undersecretary during the George H.W. Bush administration, wrote in a Politico op-ed:
The United States has never prioritized or failed to pay any obligation when due during a debt limit impasse. Despite the institutional risks and the lack of clear legal authority, we assume that Treasury will attempt to prioritize payments in a last-ditch effort to avoid default.
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. [Politico, 6/29/11]