Obama: I Cannot Guarantee We’ll Be Able To Pay Social Security After August 2nd

CBS News is out with a preview of an interview with President Obama that will air tonight in which the President states the government may not be able to make Social Security payments after August 2nd if the debt ceiling isn’t increased:

President Obama on Tuesday said he cannot guarantee that retirees will receive their Social Security checks August 3 if Democrats and Republicans in Washington do not reach an agreement on reducing the deficit in the coming weeks.

“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,” Mr. Obama said in an interview with CBS Evening News anchor Scott Pelley, according to excerpts released by CBS News.

The Obama administration and many economists have warned of economic catastrophe if the United States does not raise the amount it is legally allowed to borrow by August 2.

Lawmakers from both parties want to use the threat of that deadline to work out a broader package on long-term deficit reduction, with Republicans looking to cut trillions of dollars in federal spending, while Democrats are pushing for a more “balanced approach,” which would include both spending cuts and increased revenue through taxes.

Republicans will dismiss this as fearmongering, and they may be right, but the reality is that we’ve never been through this before and a deadline that falls at the beginning of the month makes things very difficult and very dicey.

FILED UNDER: Barack Obama, Congress, Deficit and Debt, Economics and Business, Politicians, Quick Takes, Social Security, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. ponce says:

    Haha,

    Hold that treasonous weasel Cantor’s feet to the fire, Obama!

  2. PJ says:

    @Doug:

    Republicans will dismiss this as fearmongering, and they may be right, but the reality is that we’ve never been through this before and a deadline that falls at the beginning of the month makes things very difficult and very dicey.

    Evidence of the Consequence of Default

  3. JKB says:

    So the current FICA is being diverted into non-Social Security/Medicare expenditures like Obama’s golf outings?

    It is one thing to put excess Social Security taxes into the “lockbox” but this sounds as if they are going to divert Social Security taxes to keep paying off their friends instead of toward their intended purpose.

    Interesting.

    Here is a graphic showing Obama’s earlier position

  4. Falze says:

    Of course it’s fearmongering. As those that have actually looked at our tax receipts and obligations has noted (check out Noel Sheppard’s detailed look at Newsbusters):

    “So far in fiscal 2011, we have brought in $1.48 trillion in receipts and only made interest payments of $275 billion…

    …our current tax receipts are running about ten percent ahead of last year’s…

    Consider that last August, we brought in $164 billion in receipts. As it should be equal to or greater than that this year, we will easily afford the roughly $35 billion of interest expense without raising the debt ceiling.

    Our monthly Social Security and Medicare outlays in May were $51 billion. Assuming they’re close to the same in August, we’d still be left with $78 billion to pay military members, and a variety of other things.”

    I realize you’re all distracted by that new photo spread of Sarah Palin, Doug, but try to catch up instead of just parroting this ‘shove granny off the cliff BS’ that you liberals are so very in love with. The only way he wouldn’t pay out Social Security in August is if he CHOOSES not to, the money’s there for our debt payments, Social Security, Medicare, and military pay.

  5. Drew says:

    I suspect the widows and orphans will be slaughtered for food first…….

    This is Democratic “raise taxes or else” for 4 decades now.

  6. HelloWorld! says:

    I have to fault Obama here. Why won’t social security checks go out? Social Security is solvent and should have the money already allocated. Our govt is raiding a funded program to pay debts on unfunded money spent already. Thats not right. SS shouldn’t even be in the mix for talks or payments.

  7. ponce says:

    This is Democratic “raise taxes or else” for 4 decades now.

    Taxes have been falling for 4 decades now.

  8. David M says:

    Having the president spell things out in detail is news, but no one should be surprised. USA Today had a good writeup on the likely problems a couple weeks ago, and there really aren’t many good options.

  9. hey norm says:

    Fear-mongering?
    Condaleeza Rice: “We don’t want the smoking gun to be a mushroom cloud.”
    Now that’s fear-mongering. And the so-called republicans didn’t hesitate to respond – sent 4000 troops to their death and spent over $2T. Now they don’t want to pay the credit card bill.
    And Obama is picking on them. Boo friggin’ hoo.

  10. Dan Rather says:

    So when push comes to shove and spending has to be prioritized, Obama’s first instinct is to threaten to rip the money out of the hands of the elderly and disabled by shutting down a government program that the Democrats have repeatedly claimed is both solvent and self-funded.

    Wow.

    While it’s not surprising to me, I’ll bet his actions serve as a wake up call to quite a few people.

  11. Falze says:

    @hey norm: I guess when you’re wrong on the facts, change the subject. Remember when that Republican bastard Lincoln suspended habeus corpus! Grrr! Look, Watergate!

  12. mantis says:

    the money’s there for our debt payments, Social Security, Medicare, and military pay.

    So we just shut the doors on Homeland Security, then? And well just have to shut down the FAA, the ports, unemployment insurance, school lunches, scientific research funding, all oversight of mining, waterways, waste management, energy, and much more? We’ll just have to shut down a lot of schools and layoff millions of government workers while we’re at it. Plus all those poor suckers on Medicaid? Screw em, right?

    Yeah, there’s a recipe for economic recovery. You betcha.

  13. David M says:

    Falze, did you stop and think about all those numbers you posted? The receipts aren’t all going to arrive before the payments are due…

  14. hey norm says:

    Ok Falze – I’ll bite…what facts am I wrong on?
    You called Obama’s statement fear-mongering. I pointed to real fear-mongering…fear-mongering that had a huge impact on todays debt…the current topic of conversation.

  15. hey norm says:

    @ David M.
    Falze also skipped principle payments…but whatever. Econoomics aren’t their strong suit.

  16. ponce says:

    Falze also skipped principle payments…but whatever.

    He also got his numbers wrong.

    The government has paid $385,871,949,498.62 in interest so far in FY 2011:

    http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

  17. @Falze :

    Let’s take a quick look at short term debt obligations that either need to be rolled over or have their principal paid in August:

    8/4 4 week T-bills $28 billion

    8/11 4 Week T-Bills $28 billion

    8/18 13 week T-Bills $27 billion

    Just do a super-duper quick cursory glance through the Treasury’s website, I just ate up your :

    “Our monthly Social Security and Medicare outlays in May were $51 billion. Assuming they’re close to the same in August, we’d still be left with $78 billion to pay military members, and a variety of other things.”

    Default is not paying either the agreed upon interest at the agreed upon time OR the agreed upon principal at the maturation of the note. There is no $78 billion kitty to distribute among other priorities if the debt which comes due in August is not able to be rolled over at effectivel 0% interest.

  18. Falze says:

    @mantis: Pretty much, yeah. Look, Watergate! None of those things are what Obama, the media, and the Democrats are whining about publicly – they’re talking ‘default on our debt’ and now they’re talking ‘Social Security’.

    Look kids, Big Ben, Parliament! Obama doesn’t seem concerned about any of those things, either, does he?

    Medicaid? Seriously? Better pay a little closer attention to funding lines, bud.

  19. Falze says:

    @David M: What on earth are you talking about? You’re one of those people that thinks GE didn’t pay taxes last year, right? Just because they only made installment payments and didn’t have any extra payments due at the end of the year? You realize that all tax receipts don’t just come in on tax day, right? We’re not talking about OK, I can pay the light bill, but until my welfare check clears I can’t pay the cable… Did it occur to you that the money and the bills all sort of slop over month to month so using the figures I cited it’s not like Oops, hard deadline here, no more money until end of the month!

  20. Falze says:

    @hey norm: Sorry for generalizing a bit, I assumed that you were changing the topic because you didn’t like the way the facts were breaking against you. If I was wrong, I apologize for that particular remark.

    And it was Doug that brought up fearmongering originally.

  21. Falze says:

    @ponce: Umm, no, you included June, the slightly older version stops in May. Nice try, though. The June data was added 7/7 and Noel’s analysis was 7/5. Bzzt. Try again.

  22. Falze says:

    @Dave Anderson: T-bill payouts can be made up with the sale of new ones, the appetite for which doesn’t seem diminished.

  23. stonetools says:

    Heh, if the Republicans are right and we run the federal government like a household, then we’ll HAVE to stop cutting checks come August 1 “when the money runs out”. Its the prudent, budget-balancing thing to do . Only we won’t be cutting back on the cable bill, we’ll be deciding whether to fund the FBI, the FAA, the Veterans Administration, or Medicare. Welcome to the Terror Dome, mofos. We are going to really find out for sure what “Limited Government” is like. Your rhetoric done caught up with you.
    We ought to stop checks to the defense contractors first. That would get Wall Street real excited. Then we’ll stop deposit insurance on the banks, just to bring back fond memories of what 1929, laisezz faire style capitalism was REALLY like.
    By then, the teatards will be fricking BEGGING the President to sign a clean debt ceiling bill.

  24. Dan Rather says:

    Taxes have been falling for 4 decades now.

    Not according to the sources I found.

    U.S. tax revenues have gone up pretty steadily for more than the past 4 decades (Tax Policy Center chart), both in current dollars and constant (FY2005) dollars.

    U.S. income tax revenues, both personal and corporate, have also increased pretty steadily over the last 4 decades (Historical Tables, Budget of the United States Government, Fiscal Year 2012, Table 2.1).

    The % composition of federal revenue for personal income tax has varied within the 41-50% range, and corporate income tax has varied within a 6-16% band over the last 4 decades (Historical Tables, Budget of the United States Government, Fiscal Year 2012, Table 2.2), but neither shows a notable decreasing or increasing trend.

    What source are you using as the basis for your claim, ponce?

  25. dunce says:

    The executive decides which checks to write and which to not write on payments that are not mandated by law so obama will bear the full onus of the backlash if social security checks stop.

  26. Falze says:

    @stonetools: Ummm…they already brought up a “clean debt ceiling bill”. The Democrats voted against it.

  27. David M says:

    Wow, based on the pushback in this thread, its seems like the conservatives really don’t want anyone to think they are stopping the social security checks.

    @Dan Rather: That tax revenues increase as the economy grows is irrelevant. Federal tax rates and revenues as a percentage of GDP are more useful indicators.

  28. Tom Mathers says:

    Can’t say it better than Jim G:

    “Yesterday Obama lamented those who “say irresponsible things” for “short-term political gain.” Today: Granny will starve in 3 weeks!”

  29. Falze says:

    @David M: What, you mean the truth? Yeah, I guess you could say the conservatives, already portrayed ludicrously as shoving granny off a cliff, are pushing back against such lies.

  30. Falze says:

    @David M: Taxes vs. GDP is only relevant if you think that the government should grow as fast as GDP.

  31. mantis says:

    @Falze:

    Ummm…they already brought up a “clean debt ceiling bill”. The Democrats voted against it.

    You lie! The Republicans could have easily passed it, with 97 votes for it from the Democrats. But what do you know, the Republicans all voted against it. So 97 Democrats vote for it, 82 against, and 236 Republicans all vote against it, and you blame the Democrats for it’s failure. What a hack you are.

  32. Falze says:

    Obama, 7/5: “I hope everyone leaves ultimatums and political rhetoric at the door.”

    Obama, 7/6: the debt ceiling should not “be used as a gun against the heads” of Americans to retain breaks for corporate jet owners or oil and gas companies

    Obama 7/12: The GOP is going to stop your Social Security check

    And you people are defending this guy. Think about that.

  33. Falze says:

    @mantis: I said the Democrats voted against it, not that they were responsible. You said the Democrats voted against it. Where is the lie? Big Ben, Parliament! I might have a bit mouth, but it’s not big enough for the stuff you try to stuff into it, liar.

    Are you going to try to tell me what’s in my own local newspaper again, dipstick?

  34. Dan Rather says:

    That tax revenues increase as the economy grows is irrelevant. Federal tax rates and revenues as a percentage of GDP are more useful indicators.

    David M, receipts as a % of GDP (Historical Tables, Budget of the United States Government, Fiscal Year 2012, Table 2.3) have fluctuated between 6.2 and 10.2% for personal income tax, and 1.0 to 2.8% for corporate income tax over the past 4 decades, with neither showing any notable decreasing or increasing trend.

    Do you have any source to offer which supports ponce’s original claim, David M?

  35. WR says:

    @Falze: I hate to call anyone stupid, but this is probably the dumbest thing anyone has ever written on the internet. They can’t just sell any more T-bills — BECAUSE SELLING T-BILLS IS BORROWING MONEY WHICH THEY CAN’T DO BECAUSE THE REPUBLICANS WON’T RAISE THE DEBT CEILING.

    Geeze, sorry for the yelling, but if this kind of idiocy is what’s driving the Tea Party morons, then we are doomed with no hope of rescue.

  36. Dan Rather says:

    mantis, Falze told the truth. The Republicans brought up a “clean” bill (i.e. no amendments or hidden poison pills) to raise the debt ceiling, and Democrats voted against it.

    You need to learn that there’s a difference between “a lie” and something truthful that you don’t want to hear.

  37. ponce says:

    Umm, no, you included June, the slightly older version stops in May.

    Doncha think you should have checked the latest numbers before posting them here?

    Especially seeing as the federal government paid $110,536,850,221.63 in interest last month?

  38. WR says:

    @Falze: How dare Obama tell the truth about the consequences of the Republicans’ irresponsibilty!

  39. Dan Rather says:

    So far 12 people have “liked” ponce’s claim that taxes have been falling for 4 decades, but not a single person has been able to substantiate that claim nor even bothered trying to refute the contrary evidence.

    Community-based reality.

  40. mantis says:

    I said the Democrats voted against it, not that they were responsible. You said the Democrats voted against it.

    Actually, more Democrats voted for it than against. Zero Republicans voted for it. Without any Republicans, it couldn’t have passed. Here’s what you said:

    Ummm…they already brought up a “clean debt ceiling bill”. The Democrats voted against it.

    Sure seems to imply that Democrats were the reason the clean bill didn’t pass. Not so.

    Hack.

  41. David M says:

    That the current revenue levels are historically low is pretty common knowledge, in fact it’s been posted here on OTB before.

    The clean debt ceiling bill was brought up as political theater, it wasn’t a serious proposal unfortunately.

  42. David M says:

    @Dan Rather: Your own link shows current total receipts below 15%GDP for the first time since the 1950s, proving Ponce’s point.

  43. lunaticllama says:

    @WR: I really can’t believe Falze suggested rolling over debt payments by issuing T-bills. Umm, that’s why people want to raise the debt ceiling!

    The idea that anyone here has a good grasp of how government payments and collections are staggered in detail is pretty silly. We only have a general idea of payment schedules, treasury market operations and so forth. Suffice to say, money goes and in out of government all the time and is all over the place. Nobody can categorically say what will happen after August 2, because it sounds like even Treasury is not sure how to the structure payments, etc.

    I’ll just note that pulling this stunt to decrease the deficit is insane, because if there’s even a tiny bit of doubt about full faith and credit, it will increase government borrowing costs, thus increasing the deficit. That’s clear from the 1979 debt ceiling debacle. I’m not so sure conservatives don’t see that as a feature and not a bug though.

  44. Falze says:

    @WR:

    In addition, some $467 billion in government bonds is expected to come due during August, and will have to be rolled over. Though this rollover requires Treasury to enter the debt markets to purchase new securities, it is not technically “new” debt, and so does not run afoul of the debt limit.

    The concern is that the U.S. would end up having to pay higher interest rates on this rolled over debt. That’s not a trivial concern: A 1 percent increase in interest rates could cost taxpayers more than $100 billion per year.

    Still, we should keep that in perspective — it’s less than the amount that the government expects to borrow this month. And that is sort of worst case scenario. In 1979, the federal government actually did briefly default on its debt as the result of a debt ceiling impasse (as well as technical problems).

    Relax, it’s OK to be wrong without shouting.

  45. mantis says:

    The Republicans brought up a “clean” bill (i.e. no amendments or hidden poison pills) to raise the debt ceiling, and a minority of Democrats voted against it, while all Republicans voted against it.

    FTFY.

  46. Falze says:

    @lunaticllama: Sorry, you got it wrong (and got all lathered up about it, seemingly), too. Personally, I apologize for ever responding to the original comment since it doesn’t have a large impact on the debate, certainly not as originally claimed since only the difference in interest affects debt. I didn’t realize so many people would be so very wrong and so very angry in their wrongness.

  47. Falze says:

    @David M:

    The clean debt ceiling bill was brought up as political theater, it wasn’t a serious proposal unfortunately.

    100% agree. Wish they wouldn’t waste time on stuff like that.

  48. mantis says:

    None of those things are what Obama, the media, and the Democrats are whining about publicly – they’re talking ‘default on our debt’ and now they’re talking ‘Social Security’.

    You’re pretty dim, aren’t you? My point, which you obviously missed, is that some of those things must be paid for, and the others, when not paid for, will dramatically harm the economy. So if those things must be paid for, then somethings gotta give. So it’s our debt, or Social Security, or something else.

    Medicaid? Seriously? Better pay a little closer attention to funding lines, bud.

    Well, gee, I was responding to your suggestion of what we pay for and what we decline to pay for. Medicaid was not on your list of things to pay for. Or are you trying to suggest that Medicaid is not funded at all by the federal government? If so, I’ve got news for you.

  49. Falze says:

    @mantis:

    Sure seems to imply

    Why is it that whenever you accuse someone of something I keep seeing things about “imply” from you? Why can’t you just admit that you stick words in peoples’ mouths in order to attack those instead of what they actually said, stop pretending that you know better than I do what’s in my own local newspaper sitting on my coffee table than I do, and pay more attention to what people say instead of what you want to pretend they said?

  50. Falze says:

    @mantis:

    Or are you trying to suggest

    There it is again.

    My point, which you obviously missed, is that some of those things must be paid for

    No, actually I directly answered your point:

    None of those things are what Obama, the media, and the Democrats are whining about publicly – they’re talking ‘default on our debt’ and now they’re talking ‘Social Security’.

    That is, I answered it by explaining that it didn’t reflect on my comment, which, as usual, you took to mean was something other than what I actually said, what a surprise. And, no, we don’t have to pay for those things, the government can shut down, it has before. SCOTUS has already ruled that nobody is entitled to SS, anyway, not that anyone’s suggesting it can’t or won’t be paid. We “must” pay the debt or risk default. I can’t really think of anything else that we “must” pay.

  51. Falze says:

    @WR:

    How dare Obama tell the truth about the consequences of the Republicans’ irresponsibilty!

    You mean the irresponsibility of not doing a budget for 2 years?

  52. Falze says:

    @ponce:

    Doncha think you should have checked the latest numbers before posting them here?

    Especially seeing as the federal government paid $110,536,850,221.63 in interest last month?

    It might have been tidier, but then again I clearly indicated the source which, as you can see, was written 2 days before the June figure posted. And if you want to include the June spending you also have to include the June receipts, right? In other words, while it’s nice to use figures 2 days newer, it really doesn’t impact the overall point.

  53. mantis says:

    Are you going to try to tell me what’s in my own local newspaper again, dipstick?

    You mean this entirely pathetic display in which you numbskulls try to claim a well-covered story is being covered up by the librul em-ess-em, and then when I point out its wide coverage nationally and locally, you move the goalposts to where, in your mind, I was wrong because a story didn’t happen to be in the print edition of a particular paper on a particular day? That’s really the bone you want to pick? Pathetic.

  54. mantis says:

    Why is it that whenever you accuse someone of something I keep seeing things about “imply” from you?

    I can’t answer why, because it’s untrue.

    Why can’t you just admit that you stick words in peoples’ mouths in order to attack those instead of what they actually said

    Actually, I cut and pasted what you said more than once. Here it is again:

    Ummm…they already brought up a “clean debt ceiling bill”. The Democrats voted against it.

    The Democrats voted against it. Oh sure, more of them voted for it than against, and all the Republicans voted against it, but you went with “the Democrats voted against it.” Go ahead and try to defend that as a true statement. Feel free to go all Bill Clinton style and tell us what you meant by “the.”

    No, actually I directly answered your point:
    None of those things are what Obama, the media, and the Democrats are whining about publicly – they’re talking ‘default on our debt’ and now they’re talking ‘Social Security’.

    You didn’t directly answer my point. You avoided it. If we don’t raise the ceiling and we don’t default, all sorts of things will go unpaid for. Some things, like security, pensions, and other things certainly must be paid for, and others will deliver very dire consequences if they are not. How can they guarantee that SS checks will be issued if there might not be enough money to cover them after the other necessities are paid for?

    And, no, we don’t have to pay for those things, the government can shut down, it has before.

    Not like that it hasn’t. Go back to my list and tell me how we can stop paying for all of those things and still function. Give it a try. Back up your assertions for once.

    I can’t really think of anything else that we “must” pay.

    So you’re ok with the consequences? Do you understand what those even are?

  55. mantis says:

    How dare Obama tell the truth about the consequences of the Republicans’ irresponsibilty!
    You mean the irresponsibility of not doing a budget for 2 years?

    The president has sent a budget to Congress every year. Congress has failed to pass budgets.

  56. Dan Rather says:

    Your own link shows current total receipts below 15% GDP for the first time since the 1950s, proving Ponce’s point.

    David, your observation does not in any way prove ponce’s claim that “taxes have been falling for 4 decades“. It does not even support his claim.

    1. Ponce claimed that taxes had been falling for 4 decades, not that the GDP had increased at a faster or slower rate than tax revenues;
    2. The 1950s do not fall within the last four decades; and
    3. Finding an outlying data point to compare to 6 decades ago does not constitute a trend.

    The total receipts as a % of GDP over the last four decades have bounced around in the range from 14.9 to 20.6% (specifically: 19.0%, 17.3, 17.6, 17.6, 18.3, 17.9, 17.1, 18.0, 18.0, 18.5, 19.0, 19.6, 19.2, 17.5, 17.3, 17.7, 17.5, 18.4, 18.2, 18.4, 18.0, 17.8, 17.5, 17.6, 18.0, 18.4, 18.8, 19.2, 19.9, 19.8, 20.6, 19.5, 17.6, 16.2, 16.1, 17.3, 18.2, 18.5, 17.5, 14.9, 14.9%). Even judging by this metric which you seem to prefer (rather than actual tax receipts), it is clear that taxes have not been falling for 4 decades.

    David, I’ll offer you the same advice I offered Norm a few days ago: rather than sacrificing your credibility on a hill of debunked talking points that someone else came up with, you should spend a little time doing some actual research on your own, checking out real data from primary sources. In the long run you’ll end up looking a lot less stupid, and eventually people outside the hive might actually take what you say seriously, because it won’t just be a desperate defense of a pile of inaccurate leftwing tripe.

  57. WR says:

    @Falze: Right. Who cares if old folks with no income other than Social Security can’t eat, or get thrown out of their apartments — or nursing homes? What have they ever done for Falze anyway?

  58. An Interested Party says:

    In the end, Republicans and conservatives only have themselves to blame as to why tactics like this one by the President usually work and are very effective…there are many conservatives, including commenters around here, who constantly talk about Social Security in the most negative ways, and give the strong impression that they would like to dismantle it…why would the President not use this line of thinking against the GOP…

  59. sam says:

    @Drew:

    I suspect the widows and orphans will be slaughtered for food first…….

    Actually, no. My understanding is that financial guys will be eaten first — fatter, don’t you know. All that expensive wine and stuff. (Although there is some discussion about just putting them up against the wall.)

  60. yolanda says:

    @ponce: we don,t need to fire obama the govment need to get there ack togeter . we the pepole nee there social securtity and medical like me STOP play game with other live , that all we have to take care of ourself your have money we ,i don,t it so sad to be amican

  61. smurfette says:

    It figures all of this is going on my husband has been fighting for ss disability for 7 years and he finally got a fully favorable decision and the goverment owes him a large sum of money back and he probably will never see it.

  62. smurfette says:

    I hear we might become a 3rd world country. I hope that doesn’t happen but a lot of the older folks say it could happen