Is Cantor The Obstacle To Social Security Checks Going Out In August?

From TPM Media:

Behind the scenes, leading members of both parties have concluded that House Majority Leader Eric Cantor (R-VA) is an impediment to resolving the debt limit standoff, and should back down. Now, Democrats are publicly calling for him to get real or go home.

"House Majority Leader Eric Cantor has shown that he's shouldn't even be at the table," said Senate Majority Leader Harry Reid (D-NV) in a blistering floor speech Thursday morning. "And Republicans agree."

In a press conference shortly after Reid's floor speech, one of his top deputies, Sen. Chuck Schumer (D-NY) explained the Dems' frustrations.

"He is basically standing in the way," Schumer said. "It can't just be Eric Cantor deciding everything. If Eric Cantor decides everything, I fear we'll be in default."

Of course, if Democrats would just give Cantor what he wants, there would be no problem.

More Compassionate Allowance Conditions Added

A press release from Social Security:

Michael J. Astrue, Commissioner of Social Security, today announced 12 additional Compassionate Allowances conditions involving severe heart diseases, bringing the total number of conditions in the expedited disability process to 100. Compassionate Allowances are a way to quickly identify diseases and other medical conditions that, by definition, meet Social Security’s standards for disability benefits. These conditions primarily include certain cancers, adult brain disorders, and a number of rare disorders that affect children. 

“We have reached a significant milestone for the Compassionate Allowances program,” Commissioner Astrue said. “We have an obligation to award benefits quickly to people whose medical conditions are so serious they clearly meet our disability standards. We are now able to do precisely that for 100 severe conditions.”

The Compassionate Allowances initiative is one of two parts of the agency’s fast-track system for certain disability claims. When combined with the Quick Disability Determination process, Social Security last year approved more than 100,000 cases, usually in less than two weeks. This year, the agency expects to fast-track nearly 150,000 cases.

Social Security has held seven public hearings and worked with experts to develop the list of Compassionate Allowances conditions. The hearings also have helped the agency identify additional ways to improve the disability process for applicants with Compassionate Allowances conditions. “By definition, these illnesses are so severe that we don’t need to fully develop the applicant’s work history to make a decision,” said Commissioner Astrue. As a result, beginning in August, Social Security is eliminating this part of the application process for people who have a condition on the list.

 Here is the list of the 100 conditions. I cannot find a list just of the new 12. I have said before that the whole compassionate allowances program is virtually meaningless since anyone with any of the problems would have been approved quickly anyway.

Will Social Security Checks Go Out On August 3?

Will Social Security checks go out on August 3? Probably not, unless there is an agreement on an increase in the debt ceiling. Let me lay out where the problem with doing that lies.

Eric Cantor, the House Majority Leader, that is the second ranking Republican in the House of Representatives after John Boehner, the Speaker of the House of Representatives said yesterday that  “Currently, there is not a single debt limit proposal that can pass the House of Representatives." The reason he said this is that he knows that a debt ceiling bill that only reduces spending without any tax increase must pass the House of Representatives solely with Republican votes. Nancy Pelosi, the House Democratic leader has said as much. Cantor cannot count on all or even most Republicans in the House to vote for anything that is on the table at the moment. There are many Republicans in the House who have pledged not to vote for any increase in the debt ceiling under any circumstances and many others who say they will vote for a debt ceiling increase only if Democrats agree to enormous cuts in expenditures without any tax increases even though the President would veto such a plan if it ever passed the Senate, which it would not. 

You can view this situation in differing ways depending upon your political views but something has to give. Either Democrats must cave completely or some extraordinarily rigid Republicans in the House of Representatives must cave. Complicating matters is the belief among many Republicans that nothing serious will happen if the debt ceiling is not raised by August 2. They think that they are being lied to, that the Treasury can continue to pay bills after August 2, or that the Treasury's failure to pay bills won't be that big as deal as long as bondholders are paid or that the only bills that won't get paid by the Treasury are bills for things like Medicaid and Food Stamps that they would prefer not get paid. This is all rubbish as more reasonable voices on the right acknowledge.

I am getting the feeling that we are not going to get agreement until something dramatic happens. My guess is that the dramatic event will be the stock market going into a tailspin with the Dow losing 1,000 points or more in a day. Such an event cannot be that far off.

Staffing Problem At Appeals Council

Here is an e-mail I received today from an employee at my law firm:

Appeal was fax’d to AC [Appeals Council] on  5/17/11, I followed up on 6/8/11 and there was no record of it. I followed up again yesterday and was told it was still not input. I said I will fax again and she said I should not fax again because it is taking 7 – 8 months to input.  Really

Not Looking Good

From the New York Times:

The Federal Reserve chairman, Ben S. Bernanke, warned on Wednesday of a “huge financial calamity” if President Obama and the Republicans cannot agree on a budget deal that allows the federal debt ceiling to be increased [and Social Security checks for August to go out]. Moody’s, the ratings agency, threatened a credit downgrade, citing a “rising possibility” that no deal would be reached before the government’s borrowing authority hits its limit on Aug. 2. 

And the latest bipartisan negotiating session on Wednesday evening ended in heightened tension if not outright discord. Republicans said Mr. Obama had abruptly walked out in an agitated state; Democrats described the president as having summed up with an impassioned case for action before bringing the meeting to a close and leaving.

Across Washington, officials were weighed down with a sense that they were hurtling toward a crisis. Grim-faced lawmakers spent the day shuttling from meeting to meeting in search of a way out of the fix....

For months, the Republican leaders have emphatically pledged that there would be no increase in the federal debt ceiling absent huge cuts in government spending and fundamental changes in popular social programs, all without the whiff of a tax increase.
Now, with negotiations stalled and a potential default by the United States government just over the horizon, they are being held to those promises by their own rank-and-file, leaving them in a bind that is defying easy resolution and putting them at risk of being blamed if things end badly.

Behind closed doors and by phone, they groped for a solution and struggled to assert some kind of control over the situation as rank-and-file Republican members, especially in the House, grew more confrontational. 

Panic had not yet set in, but the worry and tension were evident as seasoned lawmakers of both parties whose experience told them that Congress always finds a white-knuckle way to avert disaster wondered if this was going to be the time when it did not. 

Senate Republican Leader Doesn't Want To Cut Off Social Security Checks Because "I Don't Want To Help Barack Obama Get Reelected"

From the Huffington Post:

Senate Minority Leader Mitch McConnell (R-Ky.), under siege from conservatives over his opt-out proposal for the debt ceiling debate, defended the idea in crassly political terms during an interview on Wednesday morning....

"[W]e knew shutting down the government in 1995 was not going to work for us. It helped Bill Clinton get reelected. I refuse to help Barack Obama get reelected by marching Republicans into a position where we have co-ownership of a bad economy," McConnell said.  "It didn't work in 1995. What will happen is the administration will send out notices to 80 million Social Security recipients and to military families and they will all start attacking members of Congress. That is not a useful place to take us. And the president will have the bully pulpit to blame Republicans for all this disruption."

And The Response From The Most Extreme Right Wingers

I cannot say how widespread the beliefs expressed below are among Congressional Republicans but the fact that there are some saying this is a sign of just how difficult a position the Republican leadership finds itself in. By the way the man talking here, Louis Gohmert, is a nut job by almost anyone's standard. His history includes promoting the idea that terrorists are planting terror babies in this country and that President Obama wants to establish an international Islamic caliphate.
Update: One reader wondered why I bother to post a video of a nutjob speaking, which is a fair question. Look behind Mr. Gohmert. That's Michelle Bachmann. She may be the leading candidate for the Republican Presidential nomination. I think Gohmert is isolated within the Republican party but I'm not sure. If Gohmert is actually speaking for a sizable number of Republican members of Congress, we're all in trouble.

Will Social Security Checks Go Out In August?

I wish I could reassure everyone that there is no threat to the August Social Security checks but I can't. They are truly at risk. If the debt ceiling is not increased by August 2, money will not be available to pay the Social Security checks due out on August 3.
Neither the existence of a dedicated funding source for Social Security nor the existence of the Social Security trust fund will keep this from happening. The FICA tax receipts do not line up exactly with the due dates on Social Security monthly payments. To oversimplify a bit, the U.S. Treasury ordinarily deals with this situation by either taking money out of or putting money into the U.S. government bonds that are the only thing that the Social Security trust funds may be invested in. When the U.S. reaches the debt ceiling, this whole system that ordinarily works smoothly goes haywire. It would be much like trying to keep your family's bank account from being overdrawn if you had an account balance that was measured in pennies. You would have to worry about exactly when  your account would be credited with deposits you make and exactly when a check you write clears the bank. The money will be available to pay those Social Security benefits later in August but the money may be used, in part,  for other purposes because failing to extend the debt ceiling puts the government into a situation where it lacks the money to pay many of its bills. In this emergency situation, the President could do something that would ordinarily be illegal, using money that is supposed to go to Social Security to pay other bills. If you are a Social Security beneficiary, it may make you mad as hell to think that Social Security money would be used to pay other bills but the other bills include paying soldiers in the field and VA benefits and FBI agents and air traffic controllers, for instance. No one wants Social Security recipients to fail to get all their benefits on time but no one wants to avoid paying those other bills.

At the moment, Congress has not extended the debt ceiling. The President and Democrats have put forward a couple of plans to extend the debt ceiling in conjunction with plans to cut future budget deficits. Both plans involved tax increases directed at corporations and wealthy Americans. Republicans have rejected both plans. To the best of my knowledge, Republicans have put forward no specific plan of their own to combine an extension of the debt ceiling with cuts in future deficits although they have stated that they want to reduce future deficits solely by cutting the budget. The Senate Republican leader has put forward a plan to extend the debt ceiling without any cuts in future deficits coupled with an extremely odd plan that would allow the President to increase the debt ceiling  on his own for the next couple of years but also providing that Congress could vote to reject increases in the debt ceiling initiated by the President. This is such as odd plan that so far Democrats do not seem to know what to make of it. Among Republicans, this plan has gotten support from the Republican Speaker of the House of Representatives but is being criticized by many rank and file Republicans. There are also serious divisions among the Republican leadership in the House of Representatives since the number two Republican in the House of Representatives may be trying to undermine the Speaker.

One can say that everyone seems to be getting more serious about the debt ceiling. The prospect of Social Security checks not going out is a major reason for this seriousness. However, at this point, it is far from clear that anything can be passed in either house of Congress. One real problem is that the public and many members of Congress do not understand the gravity of the situation. My best guess is that there will be turmoil in financial markets in the near future if nothing is done -- in addition to a lot of recipients of federal benefits -- to concentrate the attention of the Congress.

Addendum:  If you happen to believe the threat to Social Security benefits is something that a lying Kenyan socialist contrived to scare Americans, I suggest you read David Frum's blog. He has solid right wing credentials.

Addendum: I keep hearing the question: How can this happen? Isn't Social Security a separate account? The answer is that Social Security is a separate account but it is a separate account at the U.S. Treasury. What happens when money is deposited into that separate account? It doesn't sit there in a huge pot of dollar bills. Normally, it is invested in U.S. government bonds. The problem is that failing to raise the debt ceiling puts the Treasury into an impossible bind. It cannot obey the law which requires it to make a lot of payments, including Social Security. The Treasury, and ultimately the President, has to pick and choose which payments get made and which do not. The Treasury also is in a bind because it cannot manage the nation's money properly since cash receipts do not match up with demands to make disbursements. Normally, the Treasury borrows short term money to make sure it can make disbursements without having to worry about when it receives money.
You can certainly look at this situation as proof that the Social Security trust funds aren't "real." However, there are real, practical problems with investing the Social Security trust funds in anything other than U.S. government bonds and there is no practical way for Social Security to do its banking with anyone other than the U.S. Treasury. There is just too much money involved for any private bank to handle it.

Addendum: The Congressional Research Service (CRS) has compiled a very complete report on the way the debt cap can affect government operations, including a detailed look at its effects on Social Security. Please read it if you want a fuller explanation of why Social Security checks may not be paid, at least in full, at the beginning of August if the debt ceiling is not lifted. The CRS is part of the Library of Congress and does research for members of Congress. It is thoroughly non-partisan.