During an interview with with CBS News President Obama said he couldn’t guarantee that Social Security checks will go out after August 3rd. Clearly the move is a scare tactic to force Congress into reaching a deal, but what Obama is threatening is both illegal, unconstitutional and financially illogical. There is no reason Social Security checks shouldn’t go out and no reason to frighten seniors on a fixed income with this nonsense.
What Obama indicated is wrong on multiple levels.
First, it is unconstitutional. The section 4 of the 14th amendment says:
Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
Clearly Social Security is a pension. Simply refusing to pay it is unconstitutional and “questioning the validity of the public debt.” Not paying Social Security benefits would be effectively defaulting on the trillions of public debt held by the Social Security trust fund.
Second, not sending out the Social Security check is illegal. Current law requires the President to send them. There are ways around the debt ceiling, like minting a trillion dollar coin, so the Social Security checks can still be paid.
Lets say though, that the administration refuse to use any possible work around and believes the debt ceiling is Constitutional. This would still mean due to an inherent mathematics conflict the administration would be force to break some laws. He would either break the law by going beyond the debt ceiling or break law by paying the monies required by law. The only way Obama can guarantee the Social Security checks go out is if in this situation he choose to make the irrational decision to break the Social Security law instead of the debt ceiling law, which is constitutionally suspect.
Finally, it defies financial logic. The Social Security Trust Fund currently holds $2.5 trillion in assets. The program doesn’t need new tax revenue or new general government borrowing to have enough funds to keep paying out benefits in the short term.
Going back to the constitutional issue. If for some reasons the government is unable to make good on the debt it has already incurred to the Social Security trust fund, causing the stopping of payments to a pension, that would be beyond any doubt a violation of the 14th amendment.
Obama is fully capable of guaranteeing Social Security checks go out on August 3rd. All he needs to do is send them out like he is currently required by law to do. The only reason Social Security checks can’t be guaranteed to go out is if Obama personally chooses to both break current law and violate the constitution by not sending out the checks.