I'm generally a big fan of brooklynbadboy, but I take great exception to this diary on today's comment by President Obama that if the debt ceiling is not raised by August 2, the Social Security checks due to be mailed on August 3 may not go out.
BBB's argument is that President Obama is righteously using the powers inherent to his office combined with the bully pulpit to play some "hardball" and turn up the heat on the Republicans to compromise. I respectfully beg to differ . . .
(my apologies in advance for a lot of virtual SCREAMING in this diary, but this issue just boils my blood!!!)
For me, the most important war being waged in the area of federal finances is that the powers that be are attempting to break down the sense of entitlement that the American people have towards their Social Security and Medicare benefits. Most people view these as public insurance programs, and as such, they see a sort of implied contract that "entitles" those who have paid in to the benefits that they were promised. If, for example, you buy flood insurance for your house, you are entitled to be paid according to the terms of that policy if the insured-against events do indeed come to pass. Nobody thinks that an insurance company can unilaterally decide after receiving decades of payments to change the terms of the payout.
But there's another view out there, and that is that Social Security and Medicare are just like any other social welfare program, subject to the whims and budgetary pressures of the day. Many of us, for example, may not particularly care for laws requiring that welfare recipients work in order to qualify for their assistance, or limiting the amount of time that a recipient receive benefits, or any number of other changes that have occurred over the years, but nobody really questions that the government can do those things, and in fact, a substantial majority believe that it should.
So, it's no wonder that cuts to Social Security and Medicare have long been considered "third rails" in American politics, whereas cuts to programs to assist the poor, or student loans, or any number of other programs seem to occur on an almost annual basis, with nary a peep from all but the most committed activists.
And what's more, the American people are from a fiscal standpoint absolutely correct to reject any and all cuts to these entitlement programs in the short and medium term. Those programs both enjoy historical accounting surpluses, and are projected to remain in the black for decades to come. Yes, in the long term, there are issues that need to be addressed, but those could be solved with minor tweaks phased in over years and decades. As long as they remain separate accounts, there is absolutely no reason that payments to current Social Security and Medicare beneficiaries should be threatened for many years to come, no matter what happens with the rest of the federal budget.
But that is the case only if they are maintained as separate accounts. Of course we all know that their separateness has always been a matter of accounting, and not actual funds, and that the rest of the government has borrowed from those accounts in order to fund other priorities. But the "IOU's" are there, and nobody has ever questioned the obligation (though some have questioned the ability) of the government to pay them when they come due.
Now, there is no question that the rest of the federal budget is a mess. Whether you want to blame wars, tax cuts, the economy, bailouts, "out-of-control spending", military contractors, public employee unions, whatever, there are very real budgetary problems in the short term with the rest of the federal budget. And with no end in sight to the deficits, a reckoning is in order sooner or later. And so everyone in Washington is now casting their eyes towards the Social Security and Medicare accounts, which are either flush with funds or constitute another major liability (depending on how you look at it), as a place to get the money to keep the wars, the tax cuts, the military contractors and everything else in place.
So . . . it seems crystal clear to me that the big picture battle of our day is to KEEP THE LINES BETWEEN SOCIAL SECURITY AND MEDICARE AND THE REST OF THE FEDERAL BUDGET DISTINCT!!!
At all costs, the last thing that we want to do at this moment in time is to blur the lines between the federal budget and Social Security and Medicare, the two social programs that the American people feel most protective of.
But with President Obama's statement today, that's EXACTLY WHAT HE HAS JUST DONE, TO THE NTH DEGREE!!!
"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,"
http://money.cnn.com/...
THAT'S FUCKING BULLSHIT, MR. PRESIDENT!!! That's like your bank telling you when you go for a withdrawal that you can't have it because they loaned the money out. The American people have a surplus in the Social Security and Medicare accounts, and until that is no longer the case there should be no place for talk like this.
President Obama is intricately connecting current payments to Social Security recipients with current issuance of federal debt. At the most visceral level possible (by cutting off checks THIS MONTH!!!), the President is saying that today's budget woes threaten today's social security payments. A worse message I could not imagine him sending.
As a matter of fact, I'm not even sure that he's right in alleging that there's is even any possibility of Social Security checks not going out. The federal government gets revenues of $2.6 trillion a year. Bond payments on the federal debt are about $200 billion. Current payouts on Social Security amount to about $700 billion annually. How does that not compute? You can make all of the bond and social security payments and even add in Medicare and Medicaid ($800 billion), and there would still be a hundreds billions dollars in revenues left for other expenses.
In fact, if you look at Wikipedia's federal budget page, Social Security, Medicare and Medicaid are all lumped in together with bond payments as "mandatory spending" (as opposed to "discretionary spending"), which totals out to $2.173 trillion, still well-below revenues. In other words, there are enough revenues coming into the Federal Treasury on an annual basis to PAY OUT IN FULL ALL MANDATORY EXPENSES. So, what kind of "discretionary spending" is President Obama proposing to prioritize ahead of "mandatory" payments to Social Security recipients?
Not that it would matter to me, but I would even question BBB's essential point that this will be a political winner for the President. We've been through a federal shutdown before and Social Security payments were never at issue. Does President Obama not think that he'll be blamed for failing to do what President Clinton managed to do in similar circumstances, i.e. keep Social Security checks moving? Everyone will clearly understand that it's a discretionary decision on the part of the President, that he choose to do that instead of shut down National Parks, or defense contracts, or whatever. In what realm is being seen as affirmatively choosing to cut off people's Social Security checks in order to score political points in a partisan stand off a political "winner"?
Sorry, BBB, I think you're very wrong on this one. I just don't see it.
8:19 PM PT: Here's a link from Reuters showing that revenues in August will be sufficient to cover "essential" defense, plus all of the "mandatory" categories, i.e. bond payments, Social Security and Medicare.
http://blogs.reuters.com/...