President Barack Obama and Congress are in intense discussions on raising the debt ceiling — the legal limit on how much money the government can borrow. But the negotiations aren’t going so well, leaving observers — and some participants — to consider whether there are Plan B’s, Plan C’s and Plan D’s if the negotiators can’t reach an agreement in time.
After hitting the debt ceiling earlier this year, the U.S. Treasury Department juggled accounts as a temporary measure that bought time for further negotiations. But officials now expect the debt limit to be reached on Aug. 2, 2011.
While most if not all federal accounts are affected in some way by the debt limit debate, the most urgent items for many ordinary Americans are direct transfer payments, most notably Social Security and veterans’ benefits.
Obama was asked about this in a July 12, 2011, interview with CBS News anchor Scott Pelley. Here’s their exchange:
Pelley: “Can you tell the folks at home that, no matter what happens, the Social Security checks are going to go out on August the 3rd? There are about $20 billion worth of Social Security checks that have to go out the day after the government is supposedly going to go into default.”
Obama: “Well, 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 each month.”
Pelley: “Can you guarantee, as president, that those checks will go out on August the 3rd?”
Obama: “I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue, because there may simply not be the money in the coffers to do it.”
We heard from a lot of readers who wanted us to check whether that statement was factually accurate or if Obama was using scare tactics.