Home Contact Register Subscribe to the Beacon Login

Monday, July 25, 2011


Originally at American Thinker


Knowingly stating a falsehood constitutes lying. Unintentionally misrepresenting reality displays a careless lack of knowledge. Our President appears to be engaged in a curious combination of both activities.

Economist and Reason columnist Veronique de Rugy analyzes three debt “default” distortions being advanced by Barack Obama and his administration lackeys.

Myth 1: If a deal is not reached by August 2, the U.S. will default on its debt.

Fact 1: The Treasury Department can prioritize payments in order to avoid a default.

[In fact,]

…after paying $30 billion in interest payments in August, Treasury could, if it ceased all other functions (see page 13 of this document), also pay for Social Security, Medicare, unemployment benefits, and payments to defense contractors.

In other words, there is absolutely no need to default as a result of not achieving a debt ceiling agreement by August 2.

Again from de Rugy:

Myth 2: If the debt ceiling isn’t raised the government won’t be able to pay Social Security benefits.

Fact 2: There are approximately $2.6 trillion dollars in the Social Security Trust Fund. Those assets can be used to pay benefits. Furthermore, there is already trillions of dollars of interagency debt that counts toward the $14.29 trillion debt limit. Treasury Secretary Timothy Geithner could convert that interagency debt into publicly-held debt, preventing not only a technical default but also preventing any delay in government payments.

So then, Obama’s threat that seniors will be cut off by granny-hating Republicans constitutes needless fear mongering. “Lie” would be a strong word to apply to a claim made by a sitting President. But when one states something that one knows to be untrue, one has lied. Granted, Obama may simply be clueless as to the possible rearrangements described by de Rugy. If cluelessness is the excuse, then Obama is something worse than a liar. He is an irresponsibly blind agenda-pusher.

Finally from de Rugy:

Myth 3: The Treasury cannot use the Social Security Trust Fund to delay a default past August 2.

Fact 3: While the Treasury cannot use money from the Social Security Trust Fund, it can “disinvest” from other trust funds to pay for benefits.

The “disinvestment” solution boils down to a surprisingly straightforward scenario. Instead of investing payroll tax revenues in the customary manner, the Treasury Department can redirect some of the intake to pay off existing bills and provide IOUs to the Social Security trust fund. The IOUs wouldn’t count against the debt ceiling. Then later, after the ceiling has been raised, the accounting would be settled, the IOUs paid off, and no default will have occurred.

Treasury confirms that the process was used in past debt crises. Geithner surely know this. Obama should know. If the President is aware of the workaround process, then he is revealing himself to be a liar by making bogus Social Security nonpayment threats to Seniors. If Obama is unaware of the accounting solution, then he is, once again, ignorant.

Neither the dishonesty nor bewilderment scenario should surprise the American people at this point.

Click here to email your elected representatives.


No Comments Yet

Post a Comment


Upload Image    

Remember my personal information

Notify me of follow-up comments?