Debt Ceiling Fears and Reality
July 28th, 2011 - 46 Comments
Smeal’s Ed Ketz and co-blogger Anthony Catanach weigh in on their blog on the threats and rhetoric swirling in the debt ceiling debate. In particular, they question the August 2 deadline and President Obama’s assertion that Social Security payments may be delayed:
First, Geithner’s August 2 date is artificial. We see this in part because he set one date and then he switched to a later date, seemingly to give his side more heft in the debate. The problem with either date is that the U.S. government has almost $2 trillion in discretionary spending. As discretionary means “optional, not obligatory, non-compulsory,” if no agreement is achieved by August 2, the Obama administration will not have to default on its bills. Instead, it can reduce the discretionary spending, just as ordinary families with strained budgets may have to forego eating out or going to the theater. Indeed, if the Treasury Department defaults, it will be due to a political calculation and a stubborn unwillingness to reduce discretionary spending.
President Obama recently stated that Social Security checks might not be sent out in August if the debt ceiling is not raised. This Social Security scare is artificial and part of the political rhetoric. Again, there is almost $2 trillion in discretionary spending and the White House merely needs to decide which things get paid and which things are delayed. We assume he thinks Social Security is a priority.
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