July 11-12, 2011: Obama: If Nation Defaults on Debt, Social Security, Soldiers’ Checks May Not Be Mailed

President Obama tells CBS News interviewer Scott Pelley that he cannot guarantee Social Security recipients will get paid on August 3 if Congressional Republicans block the government from raising its debt ceiling by August 2. If the debt ceiling is not raised by that date, the US will go into default on the debt it owes to other nations. “I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue,” he says, “because there may simply not be the money in the coffers to do it.” The Obama administration and a large number of economists and financial leaders have warned of economic catastrophe if America defaults on its debt (see May 20, 2011); many Congressional Republicans, led by the House Tea Party Caucus, have refused to consider the idea of raising the debt ceiling (see April 30, 2011 and June 26, 2011), and some even welcome the idea of a debt default. Many Republicans and Democrats are attempting to use the debt ceiling issue to work out a larger economic approach to long-term deficit reduction. Republicans want huge federal spending cuts, mostly from social safety-net programs such as Social Security, Medicare, and Medicaid, while Democrats want smaller spending cuts balanced by increased revenue through tax increases on the wealthy and the closing of corporate tax loopholes. Obama warns: “[T]his 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.” Senate Minority Leader Mitch McConnell (R-KY) states flatly that Congressional Republicans have no intention of attempting to work with Democrats or the Obama administration to balance the budget or reduce the deficit, saying, “After years of discussions and months of negotiations, I have little question that as long as this president is in the Oval Office, a real solution is probably unattainable.” However, McConnell says Congressional Republicans would work to avoid default. “The president has presented us with three choices: smoke and mirrors, tax hikes, or default,” McConnell says in remarks on the Senate floor. “Republicans choose none of the above. I had hoped to do good, but I refuse to do harm. So Republicans will choose a path that actually reflects the will of the people, which is to do the responsible thing and ensure that the government doesn’t default on its obligations.” Obama says he would refuse to sign a short-term debt ceiling increase, a tactic advocated by Republican strategists who want to bring the issue up again, and perhaps force another economic crisis, in the middle of the 2012 presidential campaign. “This is the United States of America and, you know, we don’t manage our affairs in three-month increments,” Obama tells reporters. “You know, we don’t risk US default on our obligations because we can’t put politics aside.” [CBS News, 7/12/2011; Daily Mail, 7/13/2011] The next day, McConnell offers an “alternative” debt ceiling plan which many see as fraught with political costs for Obama and Congressional Democrats (see July 13, 2011).