Choice and Accountability
By John D. Turner
14 Jul 2011

The job of President of the United States is all about making decisions – sometimes difficult decisions. The implementation of these decisions is carried out by many different people in charge of many different agencies throughout the Federal Government, but the responsibility for the decisions themselves rest with the Chief Executive, the POTUS.

The President makes many decisions in the course of his or her presidency. At the beginning of next month, the President may have to make decisions that will affect millions of Americans; decisions triggered if and when Congress is unable to come to an agreement on the continuing budget and debt ceiling limit debate.

August 3rd we are told, is the drop-dead date. On that date the U.S. government, currently at the limit of its ability to borrow money to finance our continuing deficit, will have, so we are told, exhausted all means of creative bookkeeping and robbing Paul to pay Peter and will have to either raise the debt ceiling or begin to start not paying some of its bills.

Even though political rhetoric and media “enthusiasm” has been terming this “default”, the truth is that the U.S. will not be defaulting on its loans. Like most households, the U.S. government takes in money (receipts), and spends money (debts) every month. Unlike most households, the money the government spends each month greatly exceeds the amount it takes in each month. In fact, this imbalance between income and spending has been going on for 33 straight months, and shows no sign of magically coming into balance this month or any other month this year.

So what will happen on 3 August this year? Assuming no last second deal emerges, the Democrats hold fast to raising taxes and making insignificant cuts while the Republicans hold fast to making cuts, not raising taxes, and holding the debt ceiling hostage, come August 3rd the President will have to start making some hard choices about which bills the United States will pay, and which it will defer.

Some bills must be paid. The interest on the national debt is the main one. This is the bill that, if not paid, would cause the U.S. to default. The good news is that the government is currently taking in more than sufficient money to pay that, so we don’t have to worry, at least for now, about that.

How much money does the U.S. take in every month? Well, it varies, depending on tax receipts, but it is roughly around $200 billion per month. Interest on the national debt is around $29 billion, so as you can see, we can easily make payment on our debt; there should be no danger of defaulting on our loans. This is important, as defaulting on our loans would be very bad indeed.

Everything else, even the so-called “entitlement” programs are bills that, technically, do not have to be paid. There are of course, ramifications to not making the payments but deferring them does not mean that the government is insolvent or in default.

One of the big “entitlement” bills that comes due each month is Social Security; the so-called “third rail” of politics. Democrats have made great political hay with old folks every election cycle by telling them that “Republicans are going to cut your Social Security.” Old folks fall for this line every time, and who can blame them? For many it’s the only check they have to live on. Democrats are always telling retired people that the Republicans are cutting their Social Security.

A few years back, even though Republicans were proposing a large increase in Social Security payments, the Democrats still were claiming that the Republicans were trying to cut Social Security. How could that be, you ask? Simple. The Democrats were proposing an even bigger increase. Since the Republican proposal was smaller, the Democrats framed it as a cut - from the amount they were proposing.

Operating on that premise, anything is a cut; all you have to do is wait until the opposition publishes their number, then propose an even bigger one yourself. It’s a win-win for the Democrats. If the Republicans prevail, Democrats can claim they cut whatever it was (you got less than the Democrat proposal, right?) If the Democrats win then they can claim credit for getting you the big bucks you deserve.

Keeping this history in mind, it was a bit of a shock to hear President Obama apparently touching that “third rail” of American politics, when he told CBS News that he “cannot guarantee that those [Social Security] 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.”

President Obama telling seniors that he might have to cut their Social Security checks? Not just cut them, but eliminate them completely? As you might expect, this sent a shiver of fright through the senior citizen community. Wow! Isn’t he afraid of senior citizen backlash? Isn’t he trying to get elected to a second term of office?

Well yes he is. But of course, it isn’t he who is responsible for withholding those checks. He would very much like to ensure that senior citizens receive that to which they are entitled, but he just can’t. You see, those dastardly Republicans have tied his hands. It is their insistence on not raising the debt ceiling and on maintaining tax breaks for rich folks flying around on private jets and such that is causing the problem. It certainly isn’t anything he has done causing the problem, nor is there anything he can do about it.

But there is of course something you can do. Get on your phone and call your member of Congress. If your representative is a Democrat, encourage them to keep fighting for you. If he or she is a Republican, particularly a tea party Republican, then give them a piece of your mind. Tell them to quit be an obstruction and cooperate with the Democrats. Tell them there is an election coming up and if your Social Security check is not in the mail, your vote won’t be for them. Just remember that Democrats are for the “little guy” and that it is those Republicans who will be responsible for your pain when that check doesn’t arrive.

Just one problem; President Obama is lying to you. Remember what I said earlier about the “hard decisions” and who makes them? When he says that there simply may not be the money in the coffers to do it, what he is not telling you is that if there isn’t it is because he made the decision to spend the money elsewhere.

As I said above, the government takes in approximately $200 billion each month. The government can spend as much as it takes in; it just can’t borrow additional money to pay for more. And it is the President who determines which bills to pay and which to defer. Let’s take a look for a minute at some numbers. This is the cost for various “core” government programs, including “entitlement” spending on a monthly basis:

This totals around $134 billion, leaving around $66 billion to spend on everything else. While $66 billion may sound like a lot of money, compared to what we have been spending it is small potatoes; lots of government programs would have to be cut. In fact, whole departments might have to be shuttered.

As you can see, the money to ensure that Social Security checks go out is there. The checks can be paid. All it means is that something else will have to be deferred. Will that be painful to someone else? Yes, undoubtedly. But to say the money isn’t there is not exactly truthful. What the President isn’t saying, but what is true is that if the money is not there, it is because he decided to spend it somewhere else.

It’s easy to be the candy man when you have a checkbook with an unlimited account balance. You can make everyone happy! It’s when you only have so much to spend and more to spend it on than you have, that the hard decisions come into play. For most of us, who don’t have an unlimited expense account, this is the reality we live in every day.

Politics is sometimes referred to as “the art of the possible.” There is always a way to do what you want (or at least to get some or most of what you want) if you can just find the right leverage to make it happen. And what better leverage than that old tried and true population of old folks, living out their “golden years” on a fixed income? All you have to do is provide the proper stimulus to get them to jump in the direction you want.

The President and the Democrats want them to jump in their direction; the direction of raising the debt limit, the direction of spending without bounds, the direction of blaming Republicans for not being able to pay their checks and for the problems of the economy in general. How can one really call it a “debt limit” if every time we reach it, we just move it a few notches higher?

We have an election cycle coming up. How can one buy votes if one is constrained by the amount one can spend? How can we pass out favors if there is no money? What’s a free-spending liberal Democrat to do with a box of rubber checks?

I suppose that technically speaking, Mr. Obama can say that it isn’t his call; Treasury will prioritize what gets paid and what doesn’t. Which means that one thing that will have to get paid is at least some of the costs of running the Treasury department. However, the Treasury department works for Mr. Obama. He is the boss. As President Truman once famously said, “The buck stops here.” If Mr. Obama wants Social Security recipients to be paid, they will be paid. If they aren’t paid, he can’t just point a finger at Treasury and say “not my fault – those guys did it;” not when they work for him.

Interestingly, this has happened before; in 1996. Back then, during a similar budget standoff, the Treasury Secretary informed Congress that he would be unable to pay Social Security recipients their March 1996 payment. Immediately Congress swung into action, passing a law allowing Treasury to borrow money specifically for the purpose of making that payment and exempted the amount borrowed from the debt limit. What has been done once can obviously be done again, which would leave the President with the choice of signing the bill or vetoing it.

“Choice” Mr. President; it’s your choice to pay Social Security recipients or not. “Accountability” Mr. President; the buck stops on your desk.

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