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.

There’s more on their blog, Grumpy Old Accountants.

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This entry was posted on Thursday, July 28th, 2011 at 9:53 am and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

46 Responses to “Debt Ceiling Fears and Reality”

  1. So seniors get paid social security this time but there is a “super comittee” that will look into slashing medicare and social security. Makes sense.

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    The real scary thing is that, even after exhibiting a monumental degree of incompetency, Obama will still win again next November – thanks to the Tea Party lunatics.

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