Debt Crisis: President Obama Holds Social Security Payments Hostage

July 12, 2011

4:03 pm, Central

Diane W. Collins



Senate Minority Leader, Mitch McConnell

"Last Choice Option"

Chicago-style politics at their best raised an ugly head today as President Obama told the public he "could not guarantee Social Security checks would go out on August 3rd." The President's reason? No agreement has been reached regarding an increase in the debt ceiling and according to Secretary Geithner's August 2nd [X-Date] Treasury won't have the capital available to meet those payments. Of course, Obama failed to mention the real reason he can use the Social Security "threat." The President has refused to sign any short term legislation which would allow the Treasury to meet its obligations on August 3rd while congressional leaders proceed with negotiations. Obama's inflammatory remarks will run on CBS News with Scott Pelley tonight.


Republicans are aware debt talks are breaking down and President Obama and his administration will continue to spread fear putting the full faith and credit of the United States in jeopardy in order to reach their political goals. As we have reported Senate conservatives introduced the Cut, Cap and Balance Act, S.1340 on July 7th to protect the American people. It is currently backed by 21 senators. In addition, Senate Minority Leader, Mitch McConnell stated next week Senate Republicans will be on the floor advocating a straight balanced budget amendment, S.J. Res 23 that requires the federal government to live within its means. S.J. Res 23 is backed by all 47 Republicans. In a press conference today House Republicans announced their intention to introduce a balanced budget amendment to the Constitution on the House floor July 18th.


Sen. McConnell went on to offer his "Last Choice Option" if the debt talks break down completely. It isn't pretty... The option would give President Obama the authority to request of the Congress a debt ceiling increase ($2.4T) that will last through the end of his presidential term. According to the plan, the debt ceiling would be increased in three tranches. The first would be a request for $700B made in the next few weeks; the second would be in the fall for $900B; and the third would be in June of 2012 for $900B. A complicated political process would be employed to ensure each tranch is put into effect. Each request would be subject to a "Resolution of Disapproval," which if passed the President could veto. That veto could be sustained by 1/3 +1 in either the House or the Senate.


Included in the "Last Choice Option" is a request that Obama list spending cuts he would like to see come about. When pressed for guarantees McConnell stated there aren't any but that Senate Republicans were not willing to risk the possibility of market reaction to any potential default.



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