August 3: Day of Reckoning

On Tuesday evening, President Obama was being interviewed by Scott Pelley, who asked the President whether he could guarantee that Americans would get their Social Security checks if the debt ceiling weren’t raised:

Can you tell the folks at home that, no matter what happens, the[ir] Social Security checks are going to go out on August the 3rd?

Obama:  Well, this is not just a matter of Social Security checks. These are folks on disability and their checks. There are about 70 million checks that go out each month.

Pelley: Can you guarantee, as president, that those checks will go out on August the 3rd?

Obama: I cannot guarantee that those checks go out on August 3rd if we haven’t resolved the [debt] issue, because there may simply not be the money in the coffers to do it.

A howl of protests that the President was being disingenuous, at best, went up immediately. On Wednesday morning, Terence Jeffrey, writing for CNSNews.com, noted that according to the Daily Treasury Statement for June 30 there was plenty of income to cover all the government’s expenses for the month, with a little left over. Peter Morici, an economist at the University of Maryland, said, “You do not have to default and you don’t have to shut down the government if you choose not to.” Rep. Michele Bachmann (R-Minn.) was quick to point out that the President’s doubts about being able to pay the country’s bills and consequently being forced to default were a “misnomer:”

This is a misnomer that I believe the president and the treasury secretary have been trying to pass off on the American people, and it’s this: That if Congress fails to raise the debt ceiling by $2.5 trillion, that somehow the United States will go into default and we will lose the ‘full faith and credit’ of the United States. That is simply not true.

Rep. Allen West (R-Fla.) charged the President with bullying: “My concern is that we have a president who is not willing to do his job, and that is to prioritize the spending, that he is digging in his heels, being very intransigent, and he’s being a rigid ideologue.” Rep. Louie Gohmert (R-Texas) came close to suggesting that the President was lying:

We know from the House rules that the president never lies, but he is taking advice and information from somebody apparently who is willing to lie, because it’s just not true. The fear mongering needs to stop.

In the event that the debt ceiling debate is not resolved by Friday, July 22, there would be no time to avoid the drop dead date of August 3, and the Treasury would appear to face some daunting decisions. Jay Powell, former Undersecretary of the Treasury under President George H.W. Bush, has published an analysis of the options facing the Treasury on August 3 without a debt ceiling resolution. According to Powell, August revenues to the government will be $172 billion, while payments are expected to total $306 billion, with a shortfall of $134 billion. At least three interactive tools have been developed for those willing to make the decisions of who to pay and who to stiff have been developed here, here, and here.

No matter which one is selected, the numbers, if they are to be believed, are grim, and the choices limited. The Treasury could spend all of its revenue on just six bills that are due in August: interest on the national debt ($29 billion), Medicare ($28.6 billion), Medicaid ($21.4 billion), Social Security ($49.2 billion), defense vendor payments ($31.7 billion), and unemployment insurance ($12.8 billion). That would leave unpaid Active Military Duty pay ($2.9 billion), Veterans Affairs programs ($2.9 billion), IRS tax refunds ($3.0 billion), food stamps ($7.1 billion), federal government employees’ salaries ($14.2 billion), Departments of Education, Housing and Urban Development, Energy, and Environmental Protection ($31.3 billion), the Federal Highway Administration ($4.5 billion), the General Services Administration ($41.7 billion), the Justice Department ($1.4 billion), and “other spending” ($42 billion). In addition there would be no funds for the Small Business Administration, the Department of Labor, the Federal Transit Administration, Health and Human Services grants, the Federal Aviation Administration, the Department of Homeland Security, NASA, or the Centers for Disease Control.

Credit rating agencies Moody’s and Standard and Poor’s have stated that the United States faces a possible credit downgrade if the government is allowed to default. As the White House Press Secretary put it: “You would have to make heinous choices about which bills you would pay.”

In an effort to inform about (some would say lend support for) raising the debt ceiling, Powell’s study was presented to several Republican Senators on Wednesday evening.

A careful reader should take note of three points. First, the numbers in the Powell study have not been vetted and are merely informed estimates of revenue flow for August. Second, in the perspective of an economy that is generating nearly $15 trillion of goods and services annually ($1.25 trillion a month), the alleged estimated shortfall of $134 billion for the month of August is small change). And remember that June numbers showed revenues exceeding expenses. Thirdly, and perhaps most importantly, the government finds itself in the same position as a family whose primary breadwinner has just lost his job, and they now have to cut their standard of living by 40 percent overnight. It seems somehow just, proper, and right that the profligate government would now be faced with the same situation if the debt ceiling weren’t raised. The adjustment, long overdue, would be painful, but necessary. Extending additional credit to the family (or the government) to “get over the hump” merely pushes the day of reckoning off into the very near future, when the financial difficulty will be even more painful to resolve.

Source: New American

Related:

How about we start tightening our belt by skipping “O’s” Lavish B-day Party?

Krauthammer:  Call Obama’s Bluff

What Happened to the $2.6 Trillion Social Security Trust Fund? (Madoff would be proud)

Republicans to Vote on $2.4 Trillion in Cut With Debt Ceiling Increase  -  Obama and Dems… Still No Plan Offered~

UN Reveals Its Master Plan for Destruction of Global Economy

Debt Crisis, Ron Paul, the Fed and the IMF  

Return of the Gold Standard as world order unravels (Gold has already replaced the dollar)

Boehner Verses the Freshmen:  Debt Ceiling Battle Lines Are Drawn

Video: (you gotta see this one!)  Juan Williams Pwned: Sean Hannity Makes Williams Look Like Complete A$$  -  Sean Hannity completely pawned Juan Williams last night on Hannity. Sean asked Williams to respond to Eric Cantor’s comments on raising the debt ceiling. When Juan got through trashing Cantor, Hannity told him that actually those were Obama’s comments from 2006. Watch Juan Williams’ expression when he finds out he got totally pawned.

Video:  Congressman Joe Walsh:  The Obama Movie – Stop Lying

And as usual there is Sheila Jackson Lee… playing the race card!:  Jackson Lee:  Congress Complicating Debt Ceiling Because… Obama IS Black  -  Am hearing a lot of gag reflexes out there!!

We Need Leadership… What We Got Was: The Tantrum in a High Chair (and Then Fear Mongering to Seniors)

Every mom who has ever been at her wit’s end recognizes Barack Obama. The president who earlier nagged Congress that it was time for Americans to “eat our peas” finally threw his own peas to the floor and banged his spoon on his supper dish. Such a tantrum in a high chair is a familiar sight in a lot of kitchens.

“Enough is enough,” the president cried, frustrated by the tense budget talks at the White House. “Don’t call my bluff,” he told his Republican tormentors. “I’m going to the American people.”

If a pout and a sulk is familiar to Mom, every 2-year-old in town can understand the president’s angry frustration. Throwing your peas on the floor, particularly if they’re of the English variety, tasting of copy paper and sliding down a tiny throat like un-lubricated ball bearings, is the instant gratification every tantrum-thrower yearns for. But it’s a presidential strategy we haven’t seen before

These are not the cheers and hosannas the prince of Hyde Park imagined for himself when he agreed to step down from on high to assume the presidential purple. It’s going on three years and the natives are restless. They keep asking impertinent questions. Rep. Eric Cantor, the leader of the Republican House majority, ignited the president’s ire when he suggested the president and the Democrats take a smaller budget deal than His Excellency wants. The president—“he got very agitated,” in the telling of Mr. Cantor, who was there—did not appreciate such lack of respect for royalty.

Harry Reid, the president’s liege man in the Senate, wanted to boot Mr. Cantor from the talks. “He shouldn’t even be at the table,” the majority leader said. No tea and cookies for him. Some Democrats disputed the details in the Republican account, but there was general agreement that Mr. Obama lost his celebrated cool. And why not? So far the budget talks have been a classic standoff between the president, who is determined to raise taxes to make the welfare state grow, and the Republicans, who are determined to cut the bipartisan spending that threatens to spin the economy into an abyss of unknown depth.

The president’s tantrum can have a positive effect, however, if it captures the full attention of the public. Talk of the economy makes the average voter’s head hurt, his teeth itch, and his Jockey shorts bunch up under his belt. The economy has always been like algebra, difficult to grasp, and voters have been willing to leave the algebra to the advocates for the tax-eaters. That may be changing, as one and all begin to recognize that the good life is at risk—the car, the boat, college for the kids, tropical vacations in Maui. The exceptional nation may be at risk of becoming like the toy nations of Europe.

President Obama plays the empty threat to withhold Grandma’s Social Security check. Ben S. Bernanke, chairman of the Federal Reserve, warns of “a huge financial calamity” if Congress refuses to raise the debt limit. This echoes the lamentations of Treasury Secretary Tim Geithner as well as the new chairman of the International Monetary Fund. Moody’s, the financial service that measures such things, piles on, with the dire threat that U.S. bonds could be downgraded. Maybe. It all smells like a contrived campaign to put pressure on the Republicans to cave, just as they have the attention of the president and his frightened Democrats.

The scheme of Sen. Mitch McConnell, the leader of the Republicans in the Senate, to give the president the authority to raise the debt limit without serious cuts and bear the consequences, looks better to the Republicans than it did when he introduced it and for his trouble was scorched by some conservatives as the usual Republican sell-out artist. Democrats squealed like stuck pigs. They naturally don’t want this responsibility because they understand the eventual consequences of continuing to live it up like pigs in the slop-house. Mr. Obama wants Republicans to share the “credit” for his incompetent management of the economy.

The verdict of history, though on the way, is not quite at hand. The verdict of 2012 soon will be, and looms over everything. It’s enough to make a president, swaddled with a bad situation he made much worse, bang his supper dish with his spoon and throw his peas on the floor.

Life, Health, Prosperity,  Diane G.

h/t to Deonia Copeland and Jean Stoner

And Here is the Latest The latest demagoguery from AARP… The Senior Group That Sold Out Their Members for Profit… 

Wake up Seniors… Join One of the Other Groups!

I’m No Pushover

Congress Must Prevent Harmful Cuts to Social Security and Medicare

AARP ^ | 7/12/2011 | Government Affairs and Campaigns

Posted on Friday, July 15, 2011 9:42:50 PM by Mangia E Statti Zitto

Right now, President Obama and Congress are considering a deal to pay the nation’s bills that could cut the Social Security and Medicare benefits seniors have earned through a lifetime of hard work.

(Excerpt) Read more at aarp.org

Post #23
http://www.freerepublic.com/focus/f-news/2749323/posts?page=23#23

To: Mangia E Statti Zitto; All

Seniors may not get cost of living raises anymore and have their SS checks withheld, but Omuslim is going to take care of his muzzie bros and throw himself a big 50th B-Day party!

THIS is the sh*t that should be cut!

BILLIONS FOR JIHAD!

Obama’s 2009 Supplemental Appropriations for Iraq, Afghanistan, Pakistan, and Pandemic Flu was revised and “passed by the full committee.”
It gives billions http://creepingsharia.wordpress.com/2009/05/13/obamas-supplemental-bill-passes-gives-billions-to-enemies/  of U.S. taxpayer dollars to countries and entities that support Sharia law and/or harbor, hide and support those who want to destroy the U.S. and our allies.

Read the summary from David Obey’s office that was quietly released last week with nary a word from any media.

• $3.6 billion, matching the request, to expand and improve capabilities of the Afghan security forces

• $400 million, as requested, to build the counterinsurgency capabilities of the Pakistani security forces

• Afghanistan: $1.52 billion, $86 million above the request

• West Bank and Gaza: $665 million in bilateral economic, humanitarian, and security assistance for the West Bank and Gaza

• Jordan: $250 million, $250 million above the request, including $100 million for economic and $150 million for security assistance

• Egypt: $360 million, $310 million above the request, including $50 million for economic assistance, $50 million for border security, and $260 million for security assistance

• Pakistan: $1.9 billion, $591 million above the request

• Iraq: $968 million, $336 million above the request

• Oversight: $20 million, $13 million above the request, to expand oversight capacity of the State Department, USAID, and the Special Inspector General for Afghanistan to review programs in Afghanistan, Pakistan and Iraq

• Lebanon: $74 million

• International Food Assistance: $500 million, $200 million above the request, for PL 480 international food assistance to alleviate suffering during the global economic crisis… for people who hate us

• Refugee Assistance: $343 million, $50 million above the request, …including humanitarian assistance for Gaza. Funding for the UN Relief and Works Agency programs in the West Bank and Gaza is limited to $119 million (Note: Gaza = Hamas)

• Disaster Assistance: $200 million to avert famines and provide life-saving assistance during natural disasters and for internally displaced people around the world, including Somalia, Zimbabwe, Ethiopia, the Middle East and South Asia

•Peacekeeping: $837 million for United Nations
peacekeeping operations, including an expanded mission in the Democratic Republic of the Congo and a new mission in Chad and the Central African Republic

• Department of Justice: $17 million, matching the request, for counter-terrorism activities and to provide training and assistance for the Iraqi criminal justice system
The mainstream media remains silent on this but the International News has now picked up the story http://www.thenews.com.pk/top_story_detail.asp?Id=22164
— and then there is Obama’s $108 billion IMF bailout scheme http://michellemalkin.com/2009/05/13/obamas-100-billion-imf-bailout-scheme/
in addition to the Supplemental.

And THIS is what Obama is doing to American taxpayers:

THE BIGGEST TAX HIKE IN AMERICAN HISTORY:
http://www.atr.org/days-thebr-largest-tax-hikes-history-a5370
PDF Version:
http://www.atr.org/files/files/090310pr-jan2011taxes.pdf
Obama gives your tax dollars to rebuild Muslim mosques around the world
http://canadafreepress.com/index.php/article/26990#

ACCORDING TO THE ASSOCIATED PRESS, THE OBAMA ADMINISTRATION WILL GIVE AWAY NEARLY $6 MILLION OF AMERICAN TAX DOLLARS TO RESTORE 63 HISTORIC AND CULTURAL SITES, INCLUDING ISLAMIC MOSQUES AND MINARETS, IN 55 NATIONS. See the State Department document here.
http://exchanges.state.gov/media/pdfs/office-of-policy-and-evaluations/ambassadors-fund/afcp2010list.pdf

23 posted on Friday, July 15, 2011 10:14:11 PM by patriot08

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About Ask Marion

I am a babyboomer and empty nester who savors every moment of my past and believes that it is the responsibility of each of us in my generation and Americans in general to make sure that America is as good or even a better place for future generations as it was for us. So far... we haven't done very well!! Favorite Quotes: "The first 50 years are to build and acquire; the second 50 are to leave your legacy"; "Do something that scares you every day!"; "The journey in between what you once were and who you are becoming is where the dance of life really takes place".
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One Response to August 3: Day of Reckoning

  1. Valerie Curl says:

    Perhaps this Politico article by Jerome H Powell, Visiting Scholar at the Bipartisan Policy Center and a former Under Secretary of the Treasury for Finance under President George H. W. Bush, will confirm the Treasury shortfall for you.

    http://www.politico.com/news/stories/0611/58026.html

    Here’s the relevant except:
    “One day in early August, the Treasury Department will lack sufficient cash to pay all of its obligations going forward. For simplicity, we call this day the X Date. In May, Treasury estimated the X Date as Aug. 2, which has proved reasonably accurate. Based on more recent data, our analysis shows that the date may fall as early as Aug. 2 but could arrive a week later. Treasury will provide an update shortly.

    After the X Date, we estimate that about 44 percent of August 2011 bills could not be paid. Some argue that the government can “prioritize” payments — that is, pay some bills but not others — and thereby avoid a bond default. Treasury and the Federal Reserve strongly oppose prioritization, which would require Treasury to select from among roughly 80 million monthly payments, paying the winners but not the losers.

    The United States has never prioritized or failed to pay any obligation when due during a debt limit impasse. Despite the institutional risks and the lack of clear legal authority, we assume that Treasury will attempt to prioritize payments in a last-ditch effort to avoid default.
    Federal Government Operations: For Aug. 3-31, 2011, we project inflows of $172 billion and bills due of $306 billion — a shortfall of $134 billion. As an illustration, Treasury would exhaust all inflows just by paying six major items: interest, Medicare, Medicaid, Social Security, unemployment insurance and defense vendors. Without cutting from these six, there would be no money for entire departments such as Justice, Labor and Commerce among many others, or for veterans’ benefits, IRS refunds, military active duty pay, federal salaries and benefits, special education, Pell Grants for college students or food and rent payments for the poor. An overnight 44 percent cut in spending would slash many popular and essential programs.”

    Or perhaps this article in the Hill by Mssrs. Jerome (jay) Powell and Steve Bell, Senior Director of the Economic Policy Project at the Bipartisan Policy Center, was Staff Director of the Senate Budget Committee under then Chairman Pete V. Domenici (R- retired Sen. NM), will convince you:

    http://thehill.com/blogs/congress-blog/economy-a-budget/169491-nation-in-fiscal-crisis-faces-only-tough-choices

    “At the Bipartisan Policy Center, we have just released an independent analysis of the “on the ground” facts associated with a failure to raise the debt limit by August 2, the projected date after which the government will be unable to meet all of its spending obligations. We have tried not to understate or overstate the risks. We provide no rhetoric, no political advice and no instructions to participants in the discussion, but rather our analysis.

    While we are also not in the business of making economic forecasts, our analysis is broadly consistent with that of Mr. Zandi.

    Using publicly available data, we looked at daily cash flows for the federal government going back several years. Based on this data, the government will run short of cash on August 3. There is little doubt about this time frame. Those who speculate that the date will be much later, or that Treasury has a secret bag of tricks, are simply mistaken.

    If we run short of cash, the Treasury Department will be forced to “prioritize” some payments over others. Treasury has no explicit legal authority to do so, nor is the Department’s intended institutional role to “cut” spending by failing to make payments that have been ordered by Congress. But the Treasury may have no choice given the overriding need to avoid an unthinkable bond default.

    If Congress does not act by August 2, we project that the government will be unable to pay 44 percent of its bills during the remainder of August. That amounts to a $134 billion one-month spending reduction. As our study illustrates, a 44 percent spending cut will require deep incisions to many important and popular programs. Treasury would have to choose from a universe of bad options, each one more unthinkable than the next.

    To provide one example, assume that all safety net payments are made – Social Security, Medicare, Medicaid, food stamps, tuition assistance to low and middle income families, and others – plus payments for interest on the debt. Making just those payments would leave no money to fund the Justice Department, including the FBI, the courts, U.S. Marshalls, and federal prisons. No money for the troops on active duty, or the Defense Department, or the CIA. Or the Labor, Interior, Commerce or Energy Departments. Nor for the EPA, the Federal Highway Administration or any of our 2 million civilian federal employees.

    Using different priorities, you can make a different set of payments, but the result will be no more satisfactory or fair.

    The $134 billion in unpaid bills would amount to a 10 percent decline in GDP over the month of August. Given the real concerns about falling back into recession, this hit to growth would be very ill timed.

    Another often-overlooked fact is that nearly $500 billion in federal debt matures during August. The only way to pay off this debt at maturity and avoid default is to find buyers for an equal amount of new debt and use the proceeds to pay off the existing holders. Some buyers will likely stay on the sidelines to avoid the chaos, particularly since half of our debt is sold abroad. That means higher rates and a bigger deficit — more bad things for the economy. There is also a risk that we are unable to attract enough buyers, which could mean catastrophic risks and a possible default. We do not think that this last outcome is likely, but neither is it out of the conversation.”

    Or go to the BPC and read their Debt Limit Analysis and use their Debt Tool: http://www.bipartisanpolicy.org/library/staff-paper/debt-limit-analysis

    The BPC also has a debt tool

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