As the clock continues to tick, Republicans and Democrats are still gridlocked in their attempts to reach a comprehensive debt deal. Earlier today, in an interview that will air tonight, President Barack Obama told CBC News' Scott Pelley that there is no guarantee that Social Security checks will be mailed as planned if the two parties do not reach a deal to raise the debt ceiling by the August 2 deadline. According to CBS News, he said:
"I cannot guarantee that those checks go out...if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it...this is not just a matter of Social Security checks. These are veterans checks, these are folks on disability and their checks. There are about 70 million checks that go out."
Last month, Kentucky Sen. Rand Paul took on the president's notion that keeping the debt ceiling at its current level would cause the U.S. to default. He said:
"If (Democrats) want to spend the money, they need to be honest with the American people and say 'We've got to borrow $2 trillion because that's what we want to spend,' " Paul said. "I don't want to spend that much money."
But Paul said he's not concerned about the potential consequences of keeping the federal debt ceiling at its current limit.
"Our interest payment is about $20 billion a month," he said. "Our tax revenue is about $200 billion a month, so we're bringing in (nearly) $200 billion. We've got plenty of money to pay our interest."
This, though, even if entirely valid does not address the payment of entitlements and other government expenditures. According to CNN Money:
Consequently, the government would have to defer 44% of federal spending, a significant portion of the 80 million payments it makes every month, according to a study conducted by the Bipartisan Policy Center, a think tank in Washington founded by four former Democratic and Republican Senate majority leaders...
"Handling all payments for important and popular programs (e.g., Social Security, Medicare, Medicaid, defense, active duty pay) will quickly become impossible," the report's authors noted.
But, CNSNews.com reports that there is more than enough funding to cover entitlement. Specifically, the outlet claims that there is enough to cover the combined costs of interest, Medicare, Medicaid, Social Security, Veterans Affairs and federal wages for workers (not to mention insurance benefits). This information comes via Daily Treasury Statements published by the U.S. Treasury Department:
Specifically, according to the Daily Treasury Statements, as of the close of business on May 16, the federal government had taken in $1.333454 trillion in tax revenues since the beginning of fiscal 2011. By the close of business on July 7, tax revenues for fiscal 2011 had grown to $1.629630 trillion. Therefore, between May 16 and July 7 the federal government took in a total of $296.176 billion in new tax revenue.
In that same time period, total interest payments on the national debt equaled $14.632 billion.
Thus, the new tax revenue of $296.176 billion the federal government took in between May 16 and July 7 was enough to pay the federal government’s $14.632 billion in interest obligations during that period 20 times over.
The president has been pushing for $4 trillion in a 10-year deficit reduction proposal, but House Speaker John Boehner has told Obama that a smaller deal that falls somewhere between $2 trillion and $2.4 trillion is more realistic. The Huffington Post has more:
Senate Republican leader Mitch McConnell said Tuesday that Republicans will "do the responsible thing and ensure the government doesn't default on its obligations," but said Democrats and the Obama administration were relying on budget gimmicks to give the "appearance of serious belt-tightening."
Watch McConnell's speech, below:
While both parties claim that they will not allow the U.S. to default on its debts, it is tough to imagine how -- considering the rhetoric coming from both sides -- and amenable agreement can be forged. The stalemate that is currently overtaking the discussion centers upon major cuts in spending, which Republicans are requesting. Democrats refuse cuts to entitlement programs like Medicare, while Republicans refuse to raise taxes.
When it comes to the public's perception, a majority -- 47 percent -- say that they are more concerned with the ramifications that come along with raising the debt ceiling, while 42 percent of the nation sees a greater risk in not raising the limit. These results come from a poll that was conducted last week by The Washington Post and the Pew Research Center.