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The No Social Security Payments Myth

By: streiff (Diary)  |  July 15th, 2011 at 10:22 AM  | 

RESIZE: AAA

In the past couple of days both President Obama and Senator Harry Reid have claimed that unless the debt ceiling is raised that there is no guarantee that Social Security checks will go out in August.

This is true as far as it goes. However, if Social Security checks don’t go out it will only because Obama has decided he’d rather send the money to a friendly organization like Planned Parenthood or the SEIU or continue trashing the US economy by funding his EPA than allow Social Security checks to be issued.

The fact is that absent a debt ceiling the US can, indefinitely, pay principal and interest on our debt — thereby avoiding default; obligations under Social Security and Medicare; and active duty military salaries. It can do this and still have $40 billion per month to play with. You can run your own permutations of what will happen using this calculator.

None of this is to say that all will be peachy keen as a lot of tough decisions will be have to be made by the White House. But as a man who professes to relish making the gutsy call we’d think he’d look forward to deciding whether to fund unemployment insurance or pensions or his personal chef and housekeeping staff.

What you are witnessing with this claim is an administration in disarray, one that will do or say anything. So they may very well decide that not paying Social Security checks is a great idea. We should not, however, concede that choice is brought on by a failure to increase the debt ceiling. Because it isn’t. If Social Security checks don’t go out it will be because Obama has decided it is to his political advantage to hurt as many Americans as possible.

COMMENTS

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  • izoneguy

    And explain to the American people that the “Social Security Trust Fund” is a myth – a lie…..

    All the SS taxes that get taken out of American’s paychecks are supposed to go to the “account” – when in fact the workers today are paying benefits for those already retired.

    The truth is – America borrows money to pay for SS, MediCare & Medicaid.

    Obama wants the revenues that flow in to the Treasury to pay for ObamaCare and union pensions.

    This is what needs to stop – Republicans – don’t find Obama’s Marxist agenda!!!!!

    • streiff

      current payments from SS go to pay claimants and the excess is required to be invested in government securities. The cash generated by the sale of securities goes into general revenue and has for some decades and the bonds are retained to be sold to pay benefits.

      • izoneguy

        Why would the debt ceiling need to be raised to pay SS claims?

        • streiff

          and as the bonds held by SSA mature and the proceeds sent out as payments, the amount of debt decreases allowing the Treasury to resell that amount of debt.

  • Death_of_the_Donkey

    while the government may in fact take in enough revenue to cover those expenses in a given month, it does not take that money in up front and thus payments would have to be delayed until we received the money (perhaps day, perhaps weeks). So, while yes you are technically correct, delayed payments would still wreck havoc and my guess is that the vendor payments that would then be not paid (making the assumptions of payment priorities you made above) would very likely crash the market and put us right back into recession (thus upping unemployment expenses, reducing revenues, etc).

    • streiff

      of how “debt” works. You did see the part about paying “principle” right?

      • Death_of_the_Donkey

        and didn’t question that we wouldn’t repay principle, but that still doesn’t solve the problem of our revenues coming in sporadically and not necessarily matching up with payments to go out (I assume that debt/interest would be paid first and not delayed). However, my statements of what is likely to happen from delayed vendor payments still stands, the markets would crash and we would see another recession that would exacerbate the problem.

        • streiff

          just shows you don’t.

        • JSobieski

          There are many AAA companies that “slow pay”—GE being a prominent example.Eventually there will be problems, but those problems won’t happen immediately. The idea that a couple of days would result in a crash is laughable.

    • ddstrain

      the government living “paycheck-to-paycheck”. Most families have been paycheck-to-paycheck for years, making hard decisions on what gets funded now and what gets pushed off; what we really need versus what we would like to have; necessity v. desire.

      We have to prioritize the slim resources we have… so should the boneheads in DC.

    • unclefred

      The government gets the vast majority of income tax, Fica, and Medicare upfront. The exception is very small employers who do pay on a weeks delay after their payroll. Most large employers actually have the money for these payment transferred from their account 24-48 hours in advance as part of most bank’s direct deposit processing. The banks play with the float for a day or two and then it passes to the federal banking system. I don’t know what percentage of payrolls are weekly or biweekly vs monthly, but I”’ bet that monthly is a small minority of payrolls.

      SS checks go out monthly, there is more than enough flow to cover those. So I assume do veteran’s pensions, which can also be covered. None of the other items on the list are on so rigid payment schedule such that a week or two shift in payment would disrupt anything.

      • streiff

        as principle payments to debt is made, the level of debt goes down allowing Treasury to immediately sell that debt again. What’s the term???? Roll-something.

  • msctex

    “No guarantee” is an open-ended, no-harm-no-foul tactic designed only to frighten anyone dumb enough to believe any word that comes out of Obama or Reid’s mouths, and that includes the articles. We are due for a storm of like-minded “Could,” & “Might” articles and speeches, all imagining doom but offering nothing concrete.

    This is Class Warfare 101, aimed at the old people.

    I’d call it reprehensible, but this sort of thing is so commonplace now it would devalue the word.

  • Tbone

    demanding SS checks be issued from the SS “Trust” fund. Having run businesses with large trust accounts, when you designate an account a “Trust” account under most state laws, the money better be there when it is time to pay it out.

  • talgus

    that is being forced to do SOMETHING when every bone in his body wants to just vote present.

  • kestrel

    “If Social Security checks don?t go out it will be because Obama has decided it is to his political advantage to hurt as many Americans as possible.”

    You are exactly right, and it is grotesque. This is pure Soviet-style, bullying of vulnerable people, from a man with the conscience of Mengele.

    We are fighting tyranny, pure and simple.

  • jeffreywturner

    Seniors need to be reminded constantly that if they don’t receive their checks, its because Barack Obama CHOSE to pay his own interest groups instead of them.

    The same goes for military members. Though they aren’t as politically powerful as seniors, their plights are important to a very sizable chuck of the American public, and the public needs to be reminded that if our troops don’t get paid it is because Barack Obama CHOSE to pay his own interest groups instead of them. In fact, military pay is made on the 15th and last business day of each month, so there will be plenty of money “in the coffers” by the time it is needed to pay the troops, and they won’t even have that excuse.