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Heritage Network
Obama
Needlessly Scares Seniors: Social Security Checks and the Debt Limit
October 7, 2013
by Romina Boccia
President Obama is needlessly scaring seniors by suggesting that their
Social Security benefit checks may not arrive on time if the U.S. runs
out of borrowing authority at the debt limit. The 57 million Americans
who receive Social Security benefits should know that their benefits
will not be affected—unless President Obama and the Treasury
deliberately choose not to pay them.
President Obama threatened Social Security benefits last week, saying,
“In a government shutdown, Social Security checks still go out on
time.… In an economic shutdown, if we don’t raise the debt ceiling,
they don’t go out on time.”
Here are three reasons why President Obama and the Treasury can
continue to issue Social Security payments at the debt limit:
The Full Faith and Credit Act. The House of Representatives passed H.R.
807, allowing the Treasury to pay all public debt obligations and
Social Security benefit payments after the debt limit has been reached.
If the President and his allies were truly worried about defaulting on
the debt and about not being able to meet Social Security payments,
they could quickly take up this bill and assure America’s creditors and
Social Security recipients that they need not worry.
The Social Security trust fund. Treasury could redeem Social Security
trust fund bonds early to pay benefits at the debt limit. Treasury used
this option in 1985 to meet Social Security payments at the debt limit,
and a law from 1996 authorizes the Treasury to redeem Social Security
bonds early for the purpose of “payment of benefits or administrative
expenses.” By making room under the debt limit from redeeming trust
fund bonds early, Treasury is able to borrow additional funds from the
public to make benefit payments.
Revenues. Treasury will collect more than enough revenue in fiscal year
2014 to meet all debt obligations and most non-debt obligations on an
annualized basis. After prioritizing interest on the debt, the Treasury
could fund $2.8 trillion in additional obligations with projected
revenues. This would cover, for example, Social Security and disability
payments ($848 billion), discretionary defense programs ($582 billion),
Medicare ($505 billion), Medicaid ($298 billion), and $517 billion of
all other obligations—in total, more than three-quarters of the
non-interest budget.
While Social Security is in desperate need of reform, there are at
least three reasons why Social Security benefit recipients should know
that President Obama and the Social Security Administration are scaring
them needlessly.
Read this and other articles at the Heritage Network
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