WASHINGTON — Social Security payments to millions of retirees and people with disabilities could be threatened if President Obama and Congress can't agree to increase the government's debt limit by Aug. 2, a new analysis shows.
Although the Treasury Department likely could avoid delaying Social Security checks, the analysis by the Bipartisan Policy Center points up the depth of the cuts that would be needed if the $14.3 trillion debt ceiling isn't raised.
It shows that in August, the government could not afford to meet 44% of its obligations. Since the $134 billion deficit for that month couldn't be covered with more borrowing, programs would have to be cut.
If Social Security, Medicare, Medicaid, unemployment benefits, payments to defense contractors and interest payments on Treasury bonds were exempt, that would be all the government could afford for the month. No money for troops or veterans. No tax refunds. No food stamps or welfare. No federal salaries or benefits.
The problem here is obviously congressional Republicans who have steadfastly refused to increase the debt limit. There are now 22 House Republicans who have effectively pledged to oppose any increase whatsoever. If John Boehner loses six Republicans, then he won't be able to muster enough votes to increase the debt limit without Democratic support.
The thing to keep in mind here is that if we do reach the debt limit, it's not entirely clear what the legal obligations of the White House would be—in other words, whether they would actually be legally obligated to restrain spending. The issue is that reaching the debt limit involves the collision of contradictory legislation (the conflict between legislation that authorized spending and legislation limiting the debt limit). Plus, you also have constitutional questions about whether the debt ceiling is constitutional in the first place. So it's not entirely clear what the law requires, and the Obama administration should be reserving every legal option it has in order to avoid the damage that could be caused if Republicans fail to raise the debt limit.