The Biden Administration, as others before it, has said that if the debt ceiling isn't increased that there will be consequences for all recipients of federal funds. They have specifically warned that the systems used by the Department of the Treasury do not allow them to prioritize one type of payments over others. For instance, they cannot decide that they will pay Social Security benefits on time but delay payments to Defense Department contractors. I'm sure they're telling the truth. However, I'm also aware that they can generally delay payments for a period of time. That happens every month. I know because it's apparent to me that I receive little or no payments of attorney fees in the last few days routinely every month. I've written about this before and have received the response that Social Security is aware of the problem and that it affects claimants as well as attorneys but that it's nothing that the Social Security Administration is doing. It's the Department of the Treasury that holds up payments. My guess is that it has something to do with routine management of the federal debt. There's probably a lot of debt refinancing at the end of each month. That this happens tells me that their systems can hold up payments for a period of time. What else can the Treasury do if the debt ceiling isn't increased other than to delay payments? At the start, payments of Social Security benefits start showing up a day late. Payments of federal employee salaries show up a day late. Payments to Defense Department contractors show up a day late. That's for starters. The delays would increase with time.
Anyway, that's my guess of what will happen but I don't know if Treasury's systems allow them to delay Wednesday's payments until Thursday and Thursday's payments until Friday, etc. Maybe they can hold up all payments for a time but cannot control which payments are released once they lift the hold.
Of course, what I'm talking about would also mean delays in payments to federal bondholders which would put the U.S. into default with massive consequence for the economy but, who cares, being tough on Biden plays well on Fox News and that's all that really matters.
14 comments:
And Biden being tough plays well on MSNBC, CNN, NYT, ABC, etc.
It is all politics and finger pointing as you note. However, this time, I have very low confidence that McCarthy can negotiate anything that will pass the House. McConnell once said "America must not default", but now he is just sitting on his hands. I suspect that at the 11th hour, something will get cobbled together, otherwise the GOP will be the party to suffer. Uninformed voters always want to blame the President, but this crisis is fully of a GOP majority in Congress' doing.
It’s never about who’s fault it is it’s all about the majority of the uneducated people clinging to their red or blue that matters.
The short answer is, wait for it, nothing.
Nothing will happen. Not one thing.
But feel free to scale Mt Molehill and yodel to your hearts content.
To be precise, McCarthy has already negotiated something that passed the House, the problem being that it was negotiated within his conference. Its up to Biden AND Schumer AND McCarthy to negotiate something together.
For optics,the white house should agree to a budget cut on a single item.
Neither party should hold the government hostage to pay the bills. This affects the most vulnerable of our population (including service members, tho they aren't vulnerable per-say, they still have bills and mortgages/rent to pay). Never EVER should this happen. Both parties are equally to blame if we default.
The Supreme Court has held Social Security payments are a constitutional property right which would give beneficiaries an avenue to pursue in the courts if delayed or withheld.
@4:41
In Flemming v. Nestor they specially held social security payments were not a property right.
@7:51 but then go check out Matthews v. Eldridge
The media always does this. Not getting sucked into this again lol. We always pay our debts and it will be the same this time as well. Not going to waste any mental energy on this. I am a SSDI recipient but fortunately I have a good emergency fund as well if I'm wrong. Everyone should have at least a 3 to 6 month emergency fund -- it's ridiculous how must of us live paycheck to paycheck. I used to -- no more.
I’m sure you’re not as smug and ghoulish as you sound. But many cannot earn enough in wages to stockpile 3-6 months expenses, and SSI recipients aren’t even allowed to save that much without having their income stream cut off.
@9:23
Fair point. I'm wrong. There is a distinction between as of yet not accrued property rights (i.e. future benefits; nestor) and current recipients/beneficiaries (i.e. current benefits, Eldridge), so current recipients/beneficiaries would indeed have an avenue to persue in the courts for delayed/withheld benefits.
Maybe writ of mandamus?
@9:37 You bring up a good point about SSI. I wasn't thinking about that situation. You are absolutely right. I apologize. (I think hit's horrible they aren't allowed to save more especially since the US Government can default.) And I am sure there are some receiving Social Benefits (Retirement or Disability) which are low enough to where the person is already be as frugal as possible and still only able to live paycheck to paycheck.
But I do find many who are "low income" like myself, who manage to spend away the money each month unnecessarily. e.g. fast food multiple times per week, buying all new stuff and never any used stuff, etc.. I used to be like that and not now. That is what I am getting at.
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