Free Markets, Free People

Ratcheting up the scare tactics – Obama says no guarantee Social Security checks will go out Aug. 3

So typical of how politicians tend to treat the serious matters of policy when they want to literally scare up support:

President Obama on Tuesday said he cannot guarantee that retirees will receive their Social Security checks August 3 if Democrats and Republicans in Washington do not reach an agreement on reducing the deficit in the coming weeks.

"I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it," Mr. Obama said in an interview with CBS Evening News anchor Scott Pelley, according to excerpts released by CBS News.

The Obama administration and many economists have warned of economic catastrophe if the United States does not raise the amount it is legally allowed to borrow by August 2.

If nothing else this should forever kill the nonsense about the “Social Security lockbox”.

This is akin to what you always hear when you talk budget cuts or the like.  It’s is always about cutting police, fire and education services first – not the bureaucrat in some office doing redundant work.  You can’t scare people onto your side without such tactics, apparently.

But American’s aren’t at all convinced that the debt ceiling should be raised according to Gallup.  That means it’s time to scare the old folks again.

Nice.

MJW ADDS: Just to throw some graphic wood on this fire, James Pethokoukis put together a handy little chart to demonstrate what a huge lie Obama is telling, and the Dems and the media are trying to sell:

August revenue versus expenditures

Note that all interest, Social Security, Medicare and defense payments can easily be made, and we are not in manner, shape or form in danger of default.

An excellent breakdown of exactly what budgetary issues we are facing can be found here [HT: Insty].

~McQ

Twitter: @McQandO

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43 Responses to Ratcheting up the scare tactics – Obama says no guarantee Social Security checks will go out Aug. 3

  • There he goes again…

    *I* cannot guarantee your check if *we* do not resolve this issue. So *I* will take the glory of giving you your check once *we* have done the work. Presumably then *I* will take the fall if *we* do not resolve this issue… or not, *I* am not management material after all. Well, *I* instinctively know that a common enemy is the easiest way to unite a group but *I* don’t think much beyond that.

    • Then I will blame HIM for failing to reach a negotiated settlement with the Republicans that does not further increase taxes.
       
      Cut twinkie spending.

  • And if you are at the point where you must borrow to pay “salaries” (to borrow the term from a real business), aren’t you pretty much screwed anyway? Anyone who has run a business knows that borrowing to pay salaries is a fools game, if you can even find anyone to lend the money for that purpose. When the bank manager asks to see the business plan for which the loan is to cover, he’s going to either close your accounts or laugh his ass off, and then close your accounts. If you can’t pay salaries, it is time to seriously cut costs or staff. But I guess Obama knows this already from his previous experience as a businessman? employer?? junior manager??? employee????

    • I’m not sure what you’re getting at here, but using a credit line (i.e. bank loan) is typically how salaries are paid.

      • I ain’t from Missouri, but you are going to have to show me, anyway. If you can’t cover your daily expenses without borrowing I wouldn’t lend you money, either.

        • Banks may give you a credit line for working capital, but they will require proof that you are actually earning enough money to cover normal operating expenses and that you need the credit because, for example, you receive earnings monthly while paying employees & suppliers weekly. And I doubt that the practice is ‘typical’.

        • And what do you do when your accounts receivable (typically on a 60 to 90 day float) aren’t paid in time to match salary?  What if those accounts are just paid late?  The business is on the hook for the salaries either way, and in fact they must be paid on a regular basis according to federal law.

          This is why credit-line loans for salary are among the most common forms of commercial paper out there.

          (Just as an example, look up “factoring agreement” or “payroll funding”.)

          • But we aren’t talking a credit-line to cover liquidity and possible late payments. Businesses factor those things and banks are happy to cover them if they know the business plan is sound and the funds will be there to cover the costs at some stage because they are happy to earn money off the fairly certain return. You can buy insurance for such problems. You can sell the debt to factoring companies. What Obama is talking about is raising the debt ceiling to allow payment of “salaries” when the business plan clearly shows that there is no income to ever cover those salaries as well as all other current costs. No bank is going to give a loan or credit-line on those conditions to any normal business.

            But as Bruce’s added chart shows the business plan *does* allow payment of the salaries if the recurring costs are reduced. If you showed that to your bank manager he’d tell you to come back with a revised plan to rationalize some of those costs. But Obama is of course playing a game, hoping to present the government as bankrupt and unable to pay the citizens in the hope they’ll blame the other guys and not notice that there is actually a buttload of money being used on less important spending. To stretch the analogy even further, a CEO would be booted pretty quick by a competent board for such misdirection.

          • I agree with your larger point. I was simply pointing out that your comment (“Anyone who has run a business knows that borrowing to pay salaries is a fools game, if you can even find anyone to lend the money for that purpose.”) was wrong.

            “But as Bruce’s added chart shows …”

            *sigh* My added chart, you mean ;)

          • Sorry, your chart of course! My point might have been made a little to briefly. Having been through raising money for a new company and not paying any salaries this year I’m used to not even considering a credit-line as “real” borrowing at the moment.

  • I first saw this grindingly cynical ploy many decades ago during the California tax revolution.
    The BIG GOVERNMENT types…with criminal design, IMNHO…curtailed fire and police services first.
    “Lower taxes, huh?  Let’s see how you like this…”  They should have been tried and imprisoned.
    With Obama, I suppose we can just vote him out of office.

  • The bar chart graphic may be filed under ‘Graphics you won’t see on Mainstream Media”.

    • That’s why I refer to them as the “Mushroom Media”. I suspect you can figure that one out.

  • lookerThe bar chart graphic may be filed under ‘Graphics you won’t see on Mainstream Media”.

    There is so much dishonesty here, and much of it is from MiniTru.  They are not merely letting Captain Bullsh*t lie about the situation: they are actively ABETTING his lies.  I suppose that this is why the GOP usually rolls over: they know that, no matter what happens, they will be blamed.

    • Now, just suppose for a moment a political reporter on…oh, let’s get crazy, CBS, came on tonight and talked about Obama’s threat, and then showed Michael’s chart and pointed out there’s a great deal of spending going on over and above the Social Security payment requirements and highlighted in color the additional spending, and the revenue graph line showing that the revenue exceeds etc….and pointed out that IF Obama cut Social Security spending by not sending out the checks it would be a matter of a choice he was making, rather than something the Republicans were forcing him into….<SPARK> <SPARK> <POOF> <SMOKE> <FAILURE ALERT> <OZONE SMELL>
       
      Wow, just before my internal reality sensor shorted on the vision, I started to feel a Chris Matthews tingle going up my leg.
       
      The anger routine still runs however, and it’s repeatedly sending the following alert –
      AN657 – NEVER. GOING. TO F*ING HAPPEN

    • Then post Michael’s chart on every freaking respectable internet site you have access to.

  • http://blogs.marketwatch.com/fundmastery/2011/07/12/the-u-s-treasury-will-not-default/
    This is an EXCELLENT piece that I commend to all.
    Read the whole thing.

    It should be no surprise that Geithner is peddling such nonsense and it should be no surprise that Wall Street firms and government dependent agencies such as Fannie Mae are trumpeting similar views.  They don’t want the government gravy train to stop chugging along.

    • A counter-point.
      http://www.zerohedge.com/article/t-minus-two-months-500-billion-ticking-timebomb?page=2
      The treasury can’t roll over its old debt without issuing new debt.

      • Or to be more clear, Ragspierre article says:

        Q: But, what about redeeming bonds that come due?
        A: As bonds come due, the Treasury would again use monthly income to pay them off. This would lower the debt owed beneath the so-called debt ceiling.  Then, the Treasury could turn around and issue debt in that amount up to the debt ceiling.

        As Zerohedge points out:

        And as a just released presentation by the Bipartisan Policy Center titled “Debt Limit Analysis” reminds us, aside from the actual deficit funding math, which is that in August there is a $134.3 billion cash shortfall that has to be funded with debt, there is a far greater risk. Or, put numerically, 467.4 billion far greater risks. This is the amount of debt that matures through August 31, and has to be rolled over or the US is bankrupt… in every sense of the word.

        In short, there is too much maturing debt to roll it over.  So the government will be bankrupt therefore the default is there.
         
         

         

        • Please!!  The nation cannot be “bankrupt”.
          Really, dude.
          Insolvent, yes.

          • If you prefer insolvent to bankrupt I’m okay with that.  I’m just trying to show that a default really could be in the works.  I used to think that the default talk was a ‘scare tactic’ too till I saw the problem with rolling over debt.  Sure, the interest can be paid but that is not the whole story.

        • Retiring “old debt” with “new debt” is a wash as far as the debt limit is concerned.

          • Yes, it is a wash, unless you can’t issue new debt.   It is like a person using one credit card to pay off another.  If you max out both cards and can’t get another then the jig is up.  You can’t roll over the debt anymore.

          • But the government CAN issue new debt, and be its ONLY buyer.
            We are buying 70%+ NOW.
            Duh.

          • But that’s not a debt ceiling problem, that’s a profligate government problem.

  • well, well, someone else gets it.
     
    Now if we can get grandma and grandpa to read that internet thingie and keep em off DailyKras and MSNBC.

  • Isn’t it interesting that expenditures that are, if not arguably unconstitutional, then certainly far removed from the principles underlying the founders’ establishment of the national government are the ones that apparently have the highest priority?

  • Can we stop funding the NATO to attack Libya – it appears they’ve achieved a successful conclusion to their mission.
     
    The rebels have achieved proficiency at acting like Libyan government thugs

  • Oh, great.  Now Captain Bullsh*t has stomped out of strode confidentally and disdainfully from the meeting.

    A fourth straight day of talks intended to head off a possible government default ended on a tense note Wednesday, with House Majority Leader Eric Cantor saying President Barack Obama cut him off by saying “I’ll see you tomorrow” before walking out.

    Cantor, R-Virginia, told reporters after Wednesday’s meeting that he proposed a short-term agreement to raise the federal debt ceiling, a position Obama has previously rejected.


    “That’s when he got very agitated and said I’ve sat here long enough — that no other president — Ronald Reagan — would sit here like this — and that he’s reached the point that something’s gotta give,” Cantor said, adding that Obama called for Republicans to compromise on either their insistence that a debt-ceiling hike must be matched dollar-for-dollar by spending cuts or on their opposition to any kind of tax increase.


    And he said to me, ‘Eric, don’t call my bluff.’ He said ‘I’m going to the American people with this,’ ” Cantor quoted Obama as saying.

    http://www.cnn.com/2011/POLITICS/07/13/debt.talks/index.html?hpt=hp_t1

    WAAHHH!!!  You don’t want to do what I say!  WAAHHHH!!!  So… so… I’m leaving.  You meanies.

  • As the amateur pretender walks out…

    “Eric, don’t call my bluff,” the president said, warning Cantor that he would take his case “to the American people.”
    Now there is a cardinal admission against his own position.
    What a skillful negotiator…
    “I’m bluffing, dude. Don’t you dare call me out…”

    • Evidentally the b*tch in chief threw a hissy fit when Cantor wouldn’t knuckle under.

      Good for Cantor.

      Pres. “I won” can’t take it.

      Thin skinned excuse for a man

  • He said ‘I’m going to the American people with this,’

    >>> In other words, the spendaholic in chief is going to call a prime time presser and LIE through his teeth

  • “I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it,” I’m running for reelection and in order to get reelected I gotta make it rain.   You can’t make it rain on a budget or with the change you found in the couch.  What you need is a fat wad of cash, so 17 or 18 trillion is what I’m really after.  With that i could probably make it rain for at least the 5 months leading up to the election guaranteeing my reelection.”

    • hmm my strikethrough didn’t take.  “there may simply not be the money in the coffers to do it” should be a strikethrough

  • I guess we’ll have to ask the Department of the Treasury and we’re having difficulty getting answers from them,
    ***but I see under no circumstances unless it was a political decision***

    that the administration would refuse or withhold Social Security checks because there are sufficient receipts.
    –Congressman John Huelskamp to an Obami

  • Say, whatever happened to the $2.6 Trillion Social Security Trust Fund? As Merrill Matthews of Forbes writes, “either Obama and Geithner are lying to us now, or they and all defenders of the Social Security status quo have been lying to us for decades.  It must be one or the other.”

    –Ed Driscoll

    • I’m sure you know that the Social Security Trust Fund is an accounting gimmick.  SS counts the US Treasuries in the fund as an asset and for the US Treasury (and the taxpayer) they are a liability.  So it is a wash.  Never mind the fact that SS (the government) is lending the Treasury (the government) money.  If you or I tried this in the private sector we’d be up on accounting fraud charges.
      In the end this is a bluff.  The SS checks can go out as long as checks in other places do not.  Either a large amount of spending (around 40%) needs to be cut or a default is in the cards.
      I’m hoping the GOP will stick to its guns while counting on Obama’s narcissism to force him to cave.  There is no way in hell Obama wants the legacy of, “Obama the defaulter.”  I doubt the GOP will go this route as they are addicted to the power of government spending too.

      • The NYT reports that the Deemocrats are mounting a character assassination campaign against Cantor.
        They are refusing to eat their peas.

        • Now now, you know that is not how the rules go.  You eat the peas.  Obama gets the beef and gravy.  Oh, and you’ll be picking up the tab and be thankful for it too.
           

  • Listen to the phrasing, people: He can’t guarantee that checks will go out.  He didn’t say that they won’t.  Talk about bluffing…

  • Ragspierre:
    July 14, 2011 at 06:58
    But the government CAN issue new debt, and be its ONLY buyer.
    We are buying 70%+ NOW.
    Duh.

    As pointed out, the government comes up $134 billion short in such an operation.

  • ‘I’m going to the American people with this”

    Gee, I wish I were one of the American people.