I don't think so. That would be such an attempt at political suicide that Democrat-Media Complex couldn't possibly spin their way out of it. I think the President's just trying to put a bit of fear into the hearts of those who rely on Social Security for a significant portion of their income (and as he amusingly admits, bluffing). But the only way that the Social Security Administration will fail to issue checks next month is if the Treasury actively chooses to do so.
The whole piece from the Wall Street Journal is worth reading, but here are the important details:
Congress spent these surpluses[CR: from 1984 to 2009], and the U.S. Treasury issued the Social Security Trust Fund special bonds, which can be redeemed whenever the Social Security system has a current account deficit. In 2010, the Social Security system ran its first current account deficit since 1983, and for the first time since the reforms the deficit was covered by redeeming Trust Fund bonds.
By law the Treasury is bound to redeem any bonds presented to it by the Social Security Administration. And when the Treasury does, total government debt subject to the debt limit falls by the amount of the redemption—thus freeing up the Treasury's ability to issue new bonds equal in amount to the redeemed Trust Fund bonds.
In other words, Social Security bonds can be redeemed, and Social Security payments made, without raising the debt ceiling. Thomas Saving asks the logical follow-up question:
If issuing Social Security checks does nothing to immediately affect the debt limit, how is it possible that Social Security would be at the top of the expenditure cut list?
The reason is simple and stems from the constitutional question that arose from a federal program in which all citizens were required to participate. In Helvering v. Davis (1937), the Supreme Court upheld Social Security's constitutionality because "The proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way."
As a result, the federal government can apply the revenues collected from Social Security payroll taxes, and the income taxes collected on benefits collected from higher-income individuals, to any government liability.
So, when the president says that thanks to the debt ceiling "there may simply not be the money in the coffers" to send out the $20 billion in August Social Security checks, he either does not understand the way the system works, or the administration intends to spend the money on something else.
Emphasis mine. The only way that Social Security payments are not going to be made over the next few months is if the President and Treasury Secretary choose to radically alter the way that Social Security payroll taxes have been applied for the last 75 years. Please make sure everyone you know understands that fact, and assigns responsibility accordingly.