May we live in interesting times:

[underlankers.livejournal.com]

NEW YORK -- As the Treasury Department prepares to hit the swiftly-approaching debt limit with no agreement to lift it in sight, fears are growing that the government might opt to skip the next round of Social Security payments.
Experts warn that the program is such a vital source of support for so many low-income and elderly Americans that even one delayed payment could trigger a domino effect, sending millions of households into delinquency on a broad range of bills.
"What we are talking about here," said Joan Entmacher, vice president for family economic security at the National Women's Law Center, "is not the financial markets -- not that they are not important -- but the very ability of millions of Americans to buy food, pay their utility bills, their rent or mortgage and to generally function."
If Social Security payments don't come, Entmacher said, "there are a whole series of very serious, deeply frightening consequences that could, and very likely would, follow."
There are about 54.8 million Americans who receive some form of Social Security benefits each month, according to government data (see Table 2). Most payments are made to retirees, disabled individuals and certain dependent children and adults. The first of next month's payments are due Aug. 3. Another 15 million Americans are also due veterans' benefits, federal or postal employee retirement benefits and other payments beginning on that date.
For a substantial share of the people who receive Social Security benefits, that income is essential. About 40 percent of all unmarried individuals who receive social security benefits rely on the program for at least 90 percent of their income, the Social Security Administration's inspector general found in a November 2010 report. About 90 percent of women over age 80 derive nearly all of their income from Social Security benefits.
Losing that income could prove disastrous. Households that don't pay utility bills eventually face shut off. Banks can charge account overdraft fees. And creditors also generally charge late fees for overdue payments. Credit card companies can raise a customer's interest rate due to overdue bills.



"Suddenly the credit card with 19 percent interest goes up to an unmanageable 30 percent interest," said Entmacher. "I don't think it requires too much imagination to consider what happens to American households from there."
Until now, Social Security income has not only been essential for many households but also very reliable. About 88 percent of all Social Security recipients receive their benefits via direct deposit, according to the Social Security Administration. That means government funds appear in more than 47 million recipients' bank accounts or on dedicated debit cards around the third day of each month. For some recipients, the expectation of regular payment has shaped their financial lives for more than a decade.
"Millions of people arrange their household budgets around those payments," said Entmacher. "They know that if they write a check for their rent or their mortgage and put it in the mail on August 1 or 2 then by the time the check clears their Social Security will have arrived. So, they put that check in the mail and make that payment on time."
Others have set up automatic bill arrangements that pay out just before or after the payment date. If payments don't go out Aug. 4, millions of people might overdraw their bank accounts, Entmacher said.
The average bank charges an average of $30 to $35 per overdraft, said Kathleen Day, a spokeswoman with the Center for Responsible Lending.
"We think that it would be more than unfortunate if banks choose to take advantage of people who are financially vulnerable and use this potential situation to generate overdraft fees," said Day. "Of course, we don't know what will happen yet. No one does."
Many of the nation's largest banks have, so far, shied away from public statements about the way that overdrafts would be handled if the government fails to pay Social Security benefits in the event of default.
On Thursday, Bank of America, declined to comment on what its spokesperson described as a hypothetical situation. A bank spokesperson also declined to comment on conversations the bank has had with federal regulators.
The federal agency that regulates banks has instructed financial institutions to use judgment in assessing any overdraft fees that may result from social security benefit delays, the New York Times reported Thursday. The Treasury Department declined to answer questions Thursday about what, if any, limits would be imposed on overdraft fees if social security payments are simply delayed to avoid default.
In a statement emailed to The Huffington Post, the Treasury Department indicated that it is making plans in the event that a debt-ceiling compromise is not reached in Congress before Aug. 2.:

While only Congress has the ability to ensure the government pays all of its bills, Treasury will provide more information as we get closer to Aug. 2 regarding how the government would operate without new borrowing authority if the debt limit is not increased.

There is some debate about exactly how much money the United States would have on hand to pay interest on its debts if a debt-ceiling compromise is not reached in the next few days. According to the Treasury, about $90 billion in debt matures on Aug. 4 and the government must pay more than $30 billion in interest on Aug. 15., Bloomberg reported.
"Our view right now," said Nariman Behravesh, chief economist at IHS, an economic forecasting and market analysis company, "is that the chances of default are very low mostly because the kind of financial meltdown that could occur as a result of an actual default is almost unimaginable."
Without an increase in the debt limit, the Treasury Department will have to make what could be a series of economically disruptive moves to prevent default, Behravesh said. At the least disruptive end of the scale would be a decision to furlough a large number of federal workers for a short period of time until the debt ceiling could be raised, Behravesh said. The government could also delay payments to federal contractors.
"Those are not ideal choices but they could probably be managed for a short period of time," said Behravesh. "If a compromise is reached in a day or two, they're no biggie."
Near the other end of that scale would be a delay in payments due to states for things such as roads, schools amd foster care subsidies. Skipping those payments could lead to additional public worker furloughs and a hold on state and local government spending.
Then there are the millions of social security payments due Aug. 3. President Obama told CBS News earlier this month that he could not promise that Social Security benefits would be issued if a debt-ceiling compromise is not reached.
It is possible that that furloughing government workers and delaying other payments would not raise enough cash to pay interest on the national debt, Behravesh said. In that case, social security benefits would have to be held.
"We think they would try to avoid this at all costs because it would be effectively hari-kari , and by that I do mean political suicide," Behravesh said. "But if that happens, there is no question that the consequences would, almost immediately, be enormous and painful for a lot of households."

________________

http://www.huffingtonpost.com/2011/07/29/delayed-social-security-payments-debt-default_n_912763.html

Well, I predict if they really go and do this we may see the first turnover of a entire third of the Senate and an entire House of Representatives. First proposing to end all student loans and now suspending the SS checks. Rate they're going the Piss Everybody Off Brigade will have a 100% success rate. Republicans have loathed Social Security since the 1930s and I wonder how they're going to react if Boehner's incompetence as Speaker helps ensure this happens. They'll probably blame the Soros-Obama Azathoth cult-Democratic Party and say they had absolutely nothing whatsoever to do with it, and if the Dems had only entirely eliminated the government except the army and pork spending for Republican districts that all would be well.

Comments

[sandwichwarrior.livejournal.com]

I would caution you about assuming to know your opponent's mind as you seem to have a habit of relying heavily on straw-men.

Both sides are trying to hold off till 2012 but have understimated the shear shitstorm they've stirred up. You can't use terms like crisis and class warfare and expect people to sit patiently by.

This scenario has been inevitable for sometime. What remains to be seen is if Washington takes the hint and cleans up it's act or will they dither while rome burns.

[underlankers.livejournal.com]

If the people in Washington get to this point, there's nobody I'm voting for in 2012. I mean if it's this desperate and they're all acting like spoiled brats.....

[sandwichwarrior.livejournal.com]

ergency Team Of 8th-Grade Civics Teachers Dispatched To Washington (http://www.theonion.com/articles/emergency-team-of-8thgrade-civics-teachers-dispatc,21023/)

The way I see it, Congress works for me, thier job is to see to the day to day running of the country. I am willing to accept a certain amount of evil from my governemnt, I am even willing to accept a certain amount of corruption, but I will not accept Insolence or Incompetance, and right now the government is displaying both in spades.

Remember who you work for you fuckers.

[caerfrli.livejournal.com]

if you don't vote it's a vote for your least favorite candidate

[meus-ovatio.livejournal.com]

You don't make any sense. The Democrats want to avoid the issue for 2012, which is why Democrats want to raise the debt ceiling beyond the electoral season. The only reason this is an issue is so Teapublicans can bang that drum all the day long for the next year and a half.

[underlankers.livejournal.com]

Shh....no logic and reason on Fun Friday. ;P

[sandwichwarrior.livejournal.com]

Well of course, it is in the Dems tactical interest to maintain the status quo until after the next election.

The problem is that both sides have been talking up "the Crisis" to mobilize thier respective constituancies and that is a narrative that will only strengthen the Tea-Party's position.

[underlankers.livejournal.com]

We've also had a million instances of "We have (totally absolutely not really) made a deal, all is (everything but you fuckwits) well!".

Oh please, even you do not believe such hyperventillation

[montecristo.livejournal.com]

It's Kabuki theater and you know it. As much as I would hate to give Republicans any defense at all, your statement "Republicans have loathed Social Security since the 1930s..." is pure unadulterated balderdash based upon feelings, not facts. The truth is that the Republicans have thoroughly embraced at least some forms of socialism just as badly as the Democrats have, and among those forms is Social Security. This "fight" has about as much legitimacy as professional wrestling. The politicians on all sides are just grandstanding. There is no real political contingent in Washington, outside of a few possible principled souls, who believe in actually cutting government spending. The most "outrageous" proposals I've heard involve cutting the growth rate above baseline. Please! That's not cutting; that's still growth, and even then, in these proposals the supposed "cuts" which are not will not even be phased in until the pols in office now are well retired, and that presupposes that a future Congress, for whom this Congress has absolutely zero authority to speak, doesn't reverse the cuts as they always do. No, the fight is only over whose ox is going to be politically gored before everyone agrees to continue "fighting" as usual. The default will happen; that is inevitable, but it won't happen on August third. The baloney about Social Security is a purely political move meant to frighten those who receive it. What we're seeing is merely an argument on the bridge of the Titanic about whether or not the damage is severe enough to think about abandonning ship, not an actual rush for the lifeboats.

"The whole aim of practical politics is to keep the populace alarmed -- and thus clamorous to be led to safety -- by menacing it with an endless series of hobgoblins, all of them imaginary."
— H.L. Mencken

Re: Oh please, even you do not believe such hyperventillation

[underlankers.livejournal.com]

All I know is we keep hearing about how we (don't) have all these (not really at all) deals going on.

[rasilio.livejournal.com]

Ok not to be an asshole because I do sympathise with the plight of many of these people.....


"If Social Security payments don't come, Entmacher said, "there are a whole series of very serious, deeply frightening consequences that could, and very likely would, follow."
There are about 54.8 million Americans who receive some form of Social Security benefits each month, according to government data (see Table 2). Most payments are made to retirees, disabled individuals and certain dependent children and adults. The first of next month's payments are due Aug. 3. Another 15 million Americans are also due veterans' benefits, federal or postal employee retirement benefits and other payments beginning on that date."

Wait, that is 70 million people who derive most or all of their income from government benefit plans. More than 20% of the entire friggin country and people wonder why we have a problem paying the bills.

"Households that don't pay utility bills eventually face shut off.">"

Key word being EVENTUALLY, they would have to be without checks for at least 30 days for this to be an issue in most cases.

"Banks can charge account overdraft fees. And creditors also generally charge late fees for overdue payments. Credit card companies can raise a customer's interest rate due to overdue bills.



"Suddenly the credit card with 19 percent interest goes up to an unmanageable 30 percent interest," said Entmacher. "I don't think it requires too much imagination to consider what happens to American households from there."
Until now, Social Security income has not only been essential for many households but also very reliable. About 88 percent of all Social Security recipients receive their benefits via direct deposit, according to the Social Security Administration. That means government funds appear in more than 47 million recipients' bank accounts or on dedicated debit cards around the third day of each month. For some recipients, the expectation of regular payment has shaped their financial lives for more than a decade.
"Millions of people arrange their household budgets around those payments," said Entmacher. "They know that if they write a check for their rent or their mortgage and put it in the mail on August 1 or 2 then by the time the check clears their Social Security will have arrived. So, they put that check in the mail and make that payment on time."
Others have set up automatic bill arrangements that pay out just before or after the payment date."

Again virtually every credit card in existence has a 15 - 25 day window before you are even considered late and then you have to be 30 days late before any negative action is taken on your account so they would need to be without checks for about 2 months before this is an issue.

As far as sending the checks out on 8/1 and expecting the money to automatically be there on 8/3, Um, I hate to tell them this but it is illegal to do it.

"On Thursday, Bank of America, declined to comment on what its spokesperson described as a hypothetical situation. A bank spokesperson also declined to comment on conversations the bank has had with federal regulators. "

Of course they are not going to comment on it. If the checks don't go out and 60 people bounce checks then it clearly was not a systematic issue but a problem with those individuals, if 60,000 people bounce checks then they'll have to do something to work with those people but they quite rightly don't want to commit to something before they know the scope of the problem.

The article you base your point on is little more than fear mongering about how horrible things might be.

In the real world it will be horrible but people will adapt and survive as they always do and while it might be possible than a small number of elderly people might actually die as a result of not getting their SS checks on time, odds are that the number would be exceedingly small.

[anfalicious.livejournal.com]

Do you guys means test welfare? Here, if you're rich, you don't get nothing from welfare, whereas to me it seems that there the qualifier is being old?

It's things like that that are why the welfare system is completely broken over there. You need to start from scratch, there's plenty of good ideas to steal from us.

[rasilio.livejournal.com]

Ok, now about the political fall out.

You're pretty much absolutely correct, If the Treasury does not pay the Social Security payments on the 3rd then we will be guaranteed to see overwhelming turnover in Washington.

Further I think the turn over would be so great in 2012 that by 2016 the Republican party at the least and possibly the Democratic party as well will have splintered.

One thing that is constantly being overlooked in this whole fight is that this is not a fight between the Republican party and the Democrat party.

Boehner and Reid would have come to some sort of compromise agreement a long time ago.

No, this is a fight between 2 wings of the Republican party because the new Tea Party Caucus absolutely refuses to play along with Boehner and he can't get enough of them to go along with any compromise plan that the Democrats would agree to.

The funny thing is of course that this is pretty much exactly everyone said that the Tea Party candidates would never do and it really is an exception to anything ANY of us has experienced in our lives, a group of politicians taking a principled stand on an issue they firmly believe in.

[a-new-machine.livejournal.com]

Yeah, I gotta say, the Tea Partiers are really surprisingly firm in their stance. I had expected wheedling and backing down from them. Of course, to me this expectation was a hopeful one, a reason not to be as worried as I would otherwise be...

[the-rukh.livejournal.com]

Don't worry, FOX will throw it in to high gear to make sure that there's plenty of sheep movement conservatives parroting their point of view.

[gunslnger.livejournal.com]

President Obama told CBS News earlier this month that he could not promise that Social Security benefits would be issued if a debt-ceiling compromise is not reached.

Sounds to me like it would be Obama's fault, since the debt-ceiling doesn't prevent the gov't paying it's obligations, it just prevents more borrowing. If Obama chooses to not pay SS, that's on him. I don't know who would be making that choice though, it may be entirely up to Geithner.

[a-new-machine.livejournal.com]

NPR had a story on the Treasury trying to prioritize payments. Because it's never been done before, they can only set one tier of prioritization in their software, and that tier will be for bonds, to prevent default. They're not entirely sure how to prioritize everything else, or if it'll just be a "first come, first served" basis.

[anfalicious.livejournal.com]

He should just say "OK, all foreign bases are being closed as of tomorrow" and watch the Tea Party jump on board.

[rasilio.livejournal.com]

Unfortunately that would not actually help him in the short term since the process of shutting down bases and relocating troops and equipment actually creates a short term increase in costs several times the size of just maintaining the status quo.

Long term it would be a great idea, but in the immediate term it would hurt more than help.

[musicpsych.livejournal.com]

Just cut all funding to red states/districts. Wouldn't that be giving them what they want? I remember reading that on average, red states receive more tax money than they pay, and blue states pay more than they receive. And yet red state/district voters are the ones who are screaming about cutting taxes. Fine! Let's do it. Maybe that will be a reality check.

[underlankers.livejournal.com]

Amen, brother. I been preaching that for months. It'd be a case of "Be careful what you wish for."

[geezer-also.livejournal.com]

While that sounds great on paper, the people most affected by that would be the "blue" poor that live in those red states.

[rasilio.livejournal.com]

Kinda hard to do since it would mean shutting down pretty much all of the military outside of Washington DC and California, and possibly Florida depending on whether it is red or blue this year.

I mean you do realize that those "red states" get a significant chunk of their funding because they are the only places empty enough to host military bases and that the funding for those bases makes up a huge chunk of the federal money going into those states right?