Debt ceiling impasse imperils safety net

[TomCADem]

Source: CNN

Social Security payments aren't the only federal lifeline that could grind to a halt if the debt ceiling impasse continues beyond Aug. 2.

The federal government supports myriad safety net programs, such as unemployment insurance, tuition grants, food stamps, child care subsidies and housing assistance. That's not to mention the nation's massive health insurance programs: Medicare and Medicaid.

* * *
The Treasury Department would not have the funds to send out between 40% and 45% of its 80 million monthly payments, which also include checks for active-duty soldiers, tax refunds, federal workers' salaries and other items, according to the center. Obama has said he can't guarantee that Social Security recipients will receive the $49.2 billion in payments set go out next month.

The problem is that no one knows what will be paid. And that has left those depending on the federal government for assistance -- and their advocates -- holding their breath while the president dukes it out with House Republicans.


Read more: http://money.cnn.com/2011/07/23/news/economy/debt_ceiling_safety_net/

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Up until now, increasing the debt ceiling has been routine. Yet, Republicans have shown a reckless willingness to use the debt ceiling to hold our Nation hostage.

[Faygo Kid]

1. The GOP sees the chance to once and for all utterly destroy the "safety net."

After they get their chance to hack at it here, does anyone believe they will stop until they end Medicare, Medicaid, food stamps, unemployment, tuition aid, et al? They won't end Social Security - they will work to privatize it, and send untold riches into the troughs of their wealthy backers.

That's who they are. That's what they do. That's why we need a champion.

Not this.

[Booster]

2. Their goal has always been to erase every good thing FDR did.

Personally, I think they've crossed a line that will set them back for eons. At least I hope that's what happens.

[freshwest]

9. +1,000. Except they'll dance over the people's corpses first. There will be no comeuppance.

[Amonester]

12. I hope you're right, but judging by the many posts that say Obama will lose

if he does this, if what they say happens, who do you think will control the three branches again on December 21, 2012?

Yep. The ho$tage takeR$ them$elve$.

So their plan is always win/win, even when they lose.

Looks like they'll get the keys to the same car they crashed the last time they drove it straight into the ditch.

And who will give them back the keys, mmmmm?

[eilen]

15. Maybe the Democratic party should allow a primary then. nt

[indepat]

3. At least Chamberlain was trying to avoid a world war, was far more honorable than most present-day

politicians, and not trying to destroy which is in vogue today on these shores. :patriot:

[reformist2]

18. Let's not exaggerate, we're not dealing with Hitler...yet.

We should be able to vote these guys out in 2012 and take back the House. At least in theory.

[italiangirl]

4. The Entitlements

President Obama,

First, I am an 80-year old senior and I am no fool. I am old enough to be your mother and it's time for a scolding.. You have struck the fear of God into the hearts of every senior and working poor by considering the "Gang of Six" proposal to reduce the deficit. Your stewardship is shocking beyond belief for the voters who put you in office. What I make on SS and 2 small pensions to live on for one month is walking-around money for them in one day. During your campaign you said that Social Security was solvent, all we had to do was raise the cap. What happened to that promise? You speak so eloquently about the plight of seniors and working poor while at the same time pulling the rug from under the most vulnerable by making deals with The Gang of Six. They are all millionaires and don't have any concept of human value, they just know how to crunch numbers. I believe you were too quick to compromise the Entitlements before getting any concessions from the Republicans. Talk about triangulating. You have spent your presidency always threading the needle. When will you ever understand the Republicans want your head ton a silver platter and want to cause embarrassment to your presidency? They want your job! Trust and compromise is something that is not in their DNA. Why are you ignoring that 80% of the country does not want the entitlements touched?

I hope you are not banking on your base by believing "Where are they going to go." I'll tell you where I am going to go, I am staying home if you follow this course attacking the entitlements. You are causing your own demise. I was a street fighter and a contributing factor for your election. You are dismantling everything the Democratic Party stands for because of your illusions of grandeur. Quoting Senator Reid: "There is a basic lack of trust with this President."

With all due respect, your leadership has been discouraging. You are not the person I voted and worked for. The backlash from your actions on Social Security, Medicare and Medicaid will be profound and I pray that you will do some soul-searching before you act. I think you should resign yourself that there is the possibility for you to become a one-term president.

By-the-way: "Eat your peas" was very insulting.

[sudopod]

6. I agree with you, but why are we calling things we've paid for "entitlements?" nt

[Igel]

16. Because they are.

Most of the money paid was for people who were receiving benefits. Most of current benefits come not from what you paid but from what workers are paying.

If you paid for the benefits you receive, you'd pretty much have to consider them a sinking fund: Then you'd have to calculate the amount of money you paid in, what the interest rate was over time, and that would be the maximum amount you could get. Any payments you get would be deducted from account. If my mother only got what she paid in + interest, she'd have stopped receiving benefits a decade ago. The point is that OASDI and Medicare/Medicaid isn't like a government-guaranteed IRA.

Meanwhile, there's the annoying little facts that the legislation stipulating benefits (a) actually calls them entitlements and (b) can and has been changed to alter the benefits. In other words, (b) says it's not a sinking fund and entails that Congress could double or halve the benefits at any time. It may be called insurance, it may function as insurance, but just as with insurance the terms can be changed and it can be cancelled.

[sudopod]

19. Upon further research, I find that your are correct in calling it an entitlement.

However, that doesn't change the fact that, though Congress has the power to cut it, that wouldn't make it right.

Not all things that are legal are edifying.

[Faygo Kid]

8. 13 posts since 2007? Keep posting, italiangirl!

Buona sera this Saturday.

[kickysnana]

10. This should have its own post. Bravo. n/t

[unkachuck]

13. K&R....n/t

[mdmc]

14. thanks for the post

..

[FreeStateDemocrat]

5. Can the Federal Reserve Bank take any action to forestall this nightmare scenario?

Or can they only create hundreds of billions for other rich bankers?

[corpseratemedia]

7. How can that happen when tens of millions of credit cards won't end up being paid?

The banks will lose big time next month. Banks contribute to both parties, do they want to see their income and stock dive, and to a large extent, the govt. is helping to keep the "free" economy alive.

[Cool Logic]

11. You are correct regarding Medicaid/Medicare...

However, SS is one of those "public debts that shall not be questioned."

[Igel]

17. The payments out are just "obligations."

The bonds held by the SSA are possibly public debts. Depends what "public debt" meant in the 1860s and how that term would apply to to a kind of bond and debt that came along nearly a century later. It boils down to what some lawyer can convince the federal judiciary the term must now mean, and what the federal judiciary can be convinced the term means. What that is is far from obvious.

Consider this:

The SS debt qualifies as public debt for the purpose of the debt ceiling.

Still, the bonds held by the SSA haven't always shown up consistently in deficit and debt calculations for budget purposes as debt.

They can't actually be owned by anybody in the public because, by law, they can only be owned by a branch of the federal government. In what sense is public debt that can't be held by the public "public"? Who would be able to question it, in any meaningful sense?

Congress authorized the IRS and other agencies to forgive debts legally owed to the government, right? If the "trust fund" is debt owed to the government, why couldn't Congress forgive it? The debt would go away--which is a strange kind of public debt. I could forgive money owed to me by the Treasury; but the government couldn't forgive money owed to me.

Moreover, the debt's only due when the SSA presents it. If the SSA doesn't present the bonds for redemption, the Treasury doesn't have to redeem them. Notice that it's unclear if the beneficiaries have any say in this.

And, of course, a naive reading would say that if the SSA did present the bonds and the Treasury refused to honor it, the SSA wouldn't be allowed to question the debt. "We presented the bonds and they didn't honor them" would be questioning the debt. Strictly speaking, it says something about speech, not fulfillment. We only infer that "shall not be called into question" refers to acts by the government and not by creditors.