In an interview with CBS news, President Obama raised the possibility that Social Security benefits might not be paid if the government does not raise the debt limit:
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.
It’s understandable that Obama might want to use cuts in Social Security checks as a stick with which to beat congressional Republicans–as opposed to, say, agricultural subsidies. But how likely is this to play out in reality?
In my reading of things, not very. First, recall that, unlike other federal programs, Social Security has its own dedicated tax that it doesn’t need to share. By itself, the payroll tax would cover around 93 percent of all Social Security payments.
Second, recall the Left’s references to the 14th amendment of the Constitution. Liberals initially read the amendment as saying that the debt limit was unconstitutional, which turned out to be incorrect. In fact, though, the 14th amendment does say that government debts are binding and should be paid. “The validity of the public debt of the United States, authorized by law … shall not be questioned.”
And it just so happens that the Social Security trust fund is holding $2.6 trillion of special issue Treasury bonds, which are backed by the full faith and credit of the government and are even subject to the debt limit. In other words, the trust fund puts Social Security in the first tier of creditors, along with Wall Street and the Chinese, while most other federal spending programs would have to scramble for what is left.
So, in his haste to scare retirees, the president pointed to a program that is in fact one of the least likely to cut benefits even if the debt limit is not increased.