President Obama said Tuesday he can't guarantee that senior citizens will receive their Social Security checks on August 3 if Republicans and Democrats do not reach an agreement in weeks ahead on reducing the debt ceiling, CBSNews.com reported.
A follow-up question asked, 'can you guarantee as president those checks will go out on August the 3rd?' Obama said: 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.
The debt talks hit an impasse Monday after House Speaker John Boehner, R-Ohio, said it was Democratic insistence on a revenue increase that has prevented him from marshaling support for a debt deal in his caucus, which includes many members of the conservative/liberatarian Tea Party faction.
So far, Tea Party members have given little sign that they intend to compromise and accept a modest increase in revenue via closing tax loopholes and/or eliminating selected subsidies: the Tea Party considers each a tax increase -- something faction members took a pledge to not do.
Further, President Obama added on Tuesday that the Social Security payment to senior citizens would not be the only payment affected by a U.S. Government default.
This is not just a matter of Social Security checks,Obama said, CBS News reported. These are veterans' checks; these are folks on disability and their checks. There are about 70 million checks that go out.
Various political analysts, including New York Times Columnist David Brooks, a Republican, have characterized the Tea Party's stance as more of a psychological protest than a practical, governing alternative.
Republicans argue that Congress should substantially cut government spending to cut the budget deficit. Meanwhile, Democrats insist that revenue increases must be a part of the talks for any meaningful and enduring deficit reduction to occur.
On Aug. 4, the U.S. Treasury Department is due to pay off $30 billion in maturing short-term debt. In theory, the United States could prioritize debt payments, but U.S. Treasury Secretary Timothy Geithner warned lawmakers in Congress that the prioritization tactic would still cause investors to shun U.S. Treasury securities, commonly known as Treasuries.
Geithner has also repeatedly underscored that failing to raise the debt ceiling will have no constructive outcomes for the nation's fiscal condition, the task of deficit reduction, and U.S. and global stock and bond markets.
Major credit rating services S&P, Moody's Investors Service, and Fitch Ratings also have said a failure to raise the debt ceiling may have an adverse effect on global confidence in American securities.
Political/Public Policy Analysis: Tuesday's episode of 'As the Nation's Credit Rating Turns' saw more heated rhetoric on both sides of the aisle. Republicans in the Senate characterized the White House offer as not amounting to much, because it contained a revenue increase. The GOP has the upper-hand in the negotiations, but it's playing with fire: if it isn't careful it will be blamed for both preventing senior citizens from obtaining their Social Security checks and for triggering a default by the U.S. Government. Put the chance of a U.S. Government default on a 0 to 100 scale at about 40%.