Via Memeorandum, from CBS News, an interview between President Obama and news anchor Scott Pelley, Obama says Social Security checks may not go out on August third. He also said that Veteran’s checks and Disability checks would be affected as well. Here’s Obama’s exact words;
“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.
Mr. Obama told Pelley “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.”
The interview will air Tuesday evening on the CBS Evening News with Scott Pelley.
Mr. Obama’s comments followed remarks from the Senate’s top Republican, who said Tuesday that he did not see a way for Republicans and Democrats to come to agreement on meaningful deficit reduction as long as Mr. Obama remains in office.
Senate majority leader Mitch McConnell stated that as long as Obama remained in office, there was no way for Republicans and Democrats to come together on deficit reduction and taxes. Here’s how Senator McConnell described Obama’s choices on the debt ceiling debacle;
“The president has presented us with three choices: smoke and mirrors, tax hikes, or default. Republicans choose none of the above. I had hoped to do good, but I refuse to do harm. So Republicans will choose a path that actually reflects the will of the people, which is to do the responsible thing and ensure that the government doesn’t default on its obligations,” he said. ( emphasis mine)
Well, to us out here in “fly-over country”, it sounds like more of the same, more of the same and more of the same. Let’s hope Republicans in both Houses keep their resolve and stand firm.
After posting this story, I went out to my shop to finish a couple of cabinets for my Wife. I had just started brushing on the stain when it occurred to me that Obama made no mention of the other entitlement programs. I guess those payments are sacrosanct and can’t be touched. Well, at least he isn’t trying to use our troops as hostages again.
Update II; Via Instapundit, an article by Kurt Brouwer where he explains that the government won’t default on the interest of the national debt, or it’s payments to Seniors, Vets and Disabled persons. Interestingly enough, the other entitlement programs would face cuts in funding.
Despite all the rhetoric and posturing we see in the media and in Washington D.C., it is safe to say categorically that the U.S. Treasury will not default on its debt after August 2nd, even if the debt ceiling is not raised. Not only will the Treasury be able to pay interest on U.S. debt obligations, but there is money for other essential programs as well. However, there will be some serious cutting that has to happen because spending clearly exceeds revenues.
I believe a debt ceiling limit extension will be enacted. However, let’s consider what might happen if the debt ceiling limit is not raised. Here in a Q&A format is what I believe you need to know at a basic level.
Q: What is a default?
A: In this case, a default would be the failure by the U.S. Treasury to make payments of principal or interest on its debt in a timely manner.
Q: In a given month how much does the Treasury owe as interest on its debt?
A: Roughly about $15–20 billion (more on this in a moment).
Q: How much revenue does the Treasury take in on average in a month?
A: Roughly about $200 billion.
Q: Are you saying the Treasury could pay interest on its debt 10 times over (or more) from monthly income?
A: Yes. Therefore the likelihood of not paying interest on its debt is zero.
Q: But, what about redeeming bonds that come due?
A: As bonds come due, the Treasury would again use monthly income to pay them off. This would lower the debt owed beneath the so-called debt ceiling. Then, the Treasury could turn around and issue debt in that amount up to the debt ceiling.
Q: Why then do Treasury Secretary Geithner and others in government make such apocalyptic statement about the horrors of default.
A: I’m afraid Secretary Geithner and others in government are doing the moral equivalent of yelling “Fire!” in a crowded theater and they are doing so for political reasons rather than financial reasons. They simply do not want any interruptions in the bloated spending underway in Washington and they want to scare Americans into thinking the end of the world is nigh unless the gravy train keeps chugging along.
Math is hard for politicians
William Teach says; “The Man is shameless.”