Medicare and Social Security at risk if debt ceiling not increased

There is a fight going on in the nation's capital. Congress and the White House are fighting over whether or not to raise the national debt ceiling. It appears to be yet another partisan argument, but the outcomes could consist of Social Security and other payments could be defaulted on if the debt ceiling isn't elevated. With a rise, the government will be able to take out even more personel loans


Congress to give up Fourth of July break to work on debt issue 


The national debt ceiling, or the credit limit of the U.S. federal government, is one of the biggest issues being considered right now. There is no way for the government to exceed $14.3 trillion right now. That number was reached in May, as reported by Reuters. Yet the government has been making expenses on it through last-minute measures. 

Increasing the debt limit is something the Congressional Republicans don't want to do. They want the fiscal policies to change first. To be able to keep working on the debt ceiling, the traditional week-long recess after the Fourth of July will not be taken by the Senate, Senate Majority leader Harry Reid Leader told CBS. Before August 4, it has to be elevated. That is the deadline. 


Warnings issued against default 


There have been warnings about what will take place without the debt ceiling being elevated although there's a month to get an agreement put in place still. Standard & Poor's has cautioned the maturing U.S. Treasury bonds would get a "D" rating if the bonds aren't paid by August 4 on top of the issues the global financial market would face. About $30 billion in interest payments will be due through Treasury bond sales for the U.S. Sheila Bair is a Federal Deposit Insurance Corporation Chairman. She said surely it is a "dangerous game" Congress is playing, according to NASDAQ.


Potential fallout in suit of default 


The American federal government is presently borrowing 40 cents of every dollar it spends, and in August of 2011 alone, the federal government is slated to spend $134 billion more than it will take in, according to USA Today. The government may not be able to make all of its expenses. It could miss up to 44 percent of them. Probably the most vulnerable citizens could possibly be hit hard very soon with the expenses even though it seems like a faraway issue to a few. Social Security expenses to retirees, disability benefits, Medicare and Medicaid benefits and other forms of social aid such as welfare and food stamps may go unfunded. Federal employees may also be furloughed and contractors, including defense contractors, may go unpaid or have their contracts cancelled. 

On August 3, the $23 billion payment for SSDI, or SSDI, and Social Security will not be paid. Social Security represents 50 percent or more of all income for 53 percent of all couples aged 65 or older and 73 percent of all individuals over the age of 65.


Articles cited 


CBS News 


USA Today 

Social Security Administration

Swiss-Cheese-GO: When the Exceptions Swallow the Rule

It was to be a new era of fiscal responsibility. In 2006, Nancy Pelosi promised that “the first thing” Democrats would do when they were in control was to reimpose Paygo rules that “Republicans had let lapse.” That didn’t quite happen. By 2008 those rules had “lapsed” twelve times for a total of $400 billion in new deficit spending. Ok, well that didn’t stick, but on the campaign trail Barack Obama promised to “reinstate pay-as-you-go budget rules, so that new spending or tax cuts are paid for by spending cuts or revenue elsewhere.” He subsequently engaged in a trillion dollar spending binge that painted the nation’s ledger red with deficit spending. Well, that was a slip up, but now he’s was super serious when he said in his weekly internet address,

“Now, Congress will have to pay for what it spends, just like everybody else. . .  After a decade of profligacy, the American people are tired of politicians who talk the talk but don’t walk the walk when it comes to fiscal responsibility. It’s easy to get up in front of the cameras and rant against exploding deficits. What’s hard is actually getting deficits under control. But that’s what we must do.”

At least he got the first part right. Polls show that Americans, especially Millennials, are tired of the federal government’s big spending ways. A February poll by Rasmussen finds that among voters 18-29,

  • 74% are either very or somewhat concerned by the federal deficit
  • 68% believe that cutting the deficit would be better for the economy than the Keynesian approach of increasing deficit spending
  • 64% believe that increasing the deficit will hurt the economy
  • 85% thinkthat the government fails to spend taxpayer money wisely and carefully
  • 87% blame politicians unwillingness to reduce government spending as the cause of the federal deficit

Our fiscally frugal generation has been let down again. Far from being responsible, Congressional Democrats have found creative ways to work around the spirit of the Paygo law. For instance, the law exempts more than 50 federal programs from its reach – including the biggest ticket items like Social Security, the Medicare doc fix, and the alternative minimum tax patch. These tidy little exceptions are worth some $2.5 trillion; money that the government is not required to offset under Paygo.

The biggest farce comes in the form of an “emergency” exception. Patricia Murphy of Politics Daily explains,

“[A]lready, the Senate has issued itself a waiver from the provisions on three of the four spending bills it has considered by declaring several bills to be emergency spending, including a $15-billion jobs bill, a $10-billion measure for unemployment benefits and $100 billion package of tax extenders.”

If everything is the exception is there really a rule? We won’t (though we could) argue that there isn’t a unemployment emergency that requires government action. But, it does not follow that the government can’t make up for that spending elsewhere. As Olsson Frank Weeda of the Peterson-Pew Commission on Budget Reform makes clear,

“You can find there are so many places in discretionary spending that have been increased tremendously over the last two, three, four years that can be cut.”

On Tuesday Tom Coburn attempted to rein in the clear abuse of the Paygo law by introducing an amendment requiring the Senate to post the full cost of Paygo violation online for the public.  Of course the Senate passed it unanimously. To vote no would have been to uncover the swiss-cheese fiscal responsibility of Paygo. Nevertheless, Coburn is less than optimistic about his amendment’s chances to create lasting change to Democrats’ free spending ways. In an emailed statement he says,

“Today, minutes after the Senate accepted my amendment to post its violations of PAYGO online, Senators signaled their intent to remove this amendment from the bill before it goes to the President.  Taxpayers are tired of this cat and mouse game on spending and will hold Senators accountable if they want to be for transparency in words but not action.”

Unfortunately, Obama and the Democrats in Congress have perfected this game of cat and mouse. They say all the right things in public yet continue to drown our generation in red ink. Paygo is a good idea to get us back on track. There should be no exceptions.

by Brandon Greife, Political Director of the College Republican National Committee

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The Fourth Rail of American politics, or why we must stay sane on healthcare

(Yes, I know that electric trains generally only have a powered third rail. I'm just extending the metaphor.)

One of the most tired phrases in politics is "Social Security is the third rail of American politics."  The problem is that it's true - Bush figured that out by squandering all of his political capital trying to reform it back in 2005.  It turns out that old people vote and they can be easily scared when the spectre of taking away their government checks is brought up.

We face a similar problem with health care.  It's obvious that the system doesn't work, and not just for people with pre-existing conditions and those who lose coverage.  It costs too much and isn't portable.  The lack of a true national market and the employer coverage model is a failure.  Too many people lack coverage and those people stick hospitals with huge bills for admissions that could have been solved with a visit to the family doctor, if they had one.

That being said, there are a lot of solutions better than Obamacare.  We've heard them before on this site and others and they aren't the point of this post.  The problem is that if Obamacare is defeated, no politician in their right minds will touch the healthcare issue with a 10-foot pole.  In persuing the worthy goal of defeating one specific bill, the issue has been demagogued to the point of insanity with threats of "death panels" (Sen. Isakson (R-GA), who put the provision nominally at issue, thinks this is nuts), "keep government away from my Medicare (note: WTF?) and all sorts of hyperbole about the continued "existence of the republic."

And don't think for a minute that every accusation about killing grannies and such lobbed against government can't be lobbed at private insurers.

So instead of a debate on what to do, we have people holding up pictures of Obama with a Hitler mustache shouting down elected officials before they can answer questions.  We have liberals convinced that people who oppose Obamacare are foam-at-the-mouth dittoheads and birthers organized by lobbyists.  And they're partially correct - many (not all) town hall shouters have spouted a lot of nonsense and many are making this personally about the president and anger at losing the last election.  It's embarrasing to people who have real issues with Obamacare who want to and make something work instead of yelling until they're red in the face.

The window for reasonable debate has closed by conservatives who want to make this Obama's Waterloo and liberals who are circling the wagons against a perceived onslaught of crazies.  The next reform proposal from either side will fall into the same pattern.  Eventually, everybody with power to do anything will throw their hands up.

Now healthcare is a "third rail," just like Social Security.  There are other, smaller, third rails to contend with.  Our primary system is rigged to prevent any serious talk about ethanol.  Serious agriculture subsidies reform is stymied because the committees that make ag policy are filled with congressmen from districts that feed off the USDA teat.  We can't have a serious discussion about Israel for long without someone getting called an anti-semite or a zionist likudnik stooge.

The problem?  You can't cut the size of government with all of these third rails in the way.  Everything has to be on the table.

Healthcare isn't just a sixth of the U.S. economy, it's a very big chunk of government spending.  The problem with the deficit hawkery I've heard recently is that it's small bore.  Spending freezes avoid the difficult choices about what exactly we want to cut.  Pork appropriations, non-military foreign aid and arts funding seem like ripe targets for popular cuts, but they make up a vanishingly small part of the budget and won't change the overall fiscal picture.  Survey after survey shows that people think government is too big, but they don't want to cut funding for Medicare, Medicaid, Social Security education, defense or anything specific beyond the amorphous "waste."  The only real solution is to slow and reverse the growth of healthcare costs while still providing the care people demand, and we are in the process of blowing it for the next several decades by turning a deadly serious issue over to the loudest, angriest, least reasonable wing of the movement, destroying any hope of comprimise a la Wyden-Bennett.

In the zeal to stop a bad new policy, we have guaranteed decades of the bad old policy.  Good job guys.

New Video Exposing Obama-Style Health Reform Sets Standard for the Debate

This new health reform video produced by Colorado's Independence Institute (disclosure: my employer) is a great example of combining original research with short, viewer-friendly animation to convey a clear message about the dangers of greater government intervention in our health care.

It tells the story of Oregon's experience with Medicaid rationing, specifically how organized special interest groups were able to use their lobbying power to give higher priority to providing coverage for more politically correct treatments (eg, substance-abuse, birth control, weight loss) while treatments for others got lower priority or no coverage at all.

This video is a sequel to a similar animated piece on Obama Care that highlighted the dangers of health insurance mandates, using the Massachusetts story and a bus hitting

We need to keep framing the story with honest arguments based in real-world policy examples that are easily accessible to everyday voters. Yes, I'm biased, but this is excellent work from a state-level think tank -- I'd like to see more emulating this strategy.

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