By any rational analysis, it is also an absurd threat. In 2010, Social Security income was $677.1 billion according to the Social Security Fund Trustee's Report. Social Security outgo was $584.9 billion, which means it had a surplus of income over outgo of $92.2 billion. That surplus was used to help fund the massive deficit spending on all other government programs, as the Social Security surplus has been used for decades. Because of this, of the $677.1 billion of income, $108.2 billion is interest on government bonds the Social Security Trust Fund bought to help the government finance its deficits in the general fund for decades.
The Obama administration wants to keep spending money it does not have on such things as
- the expenses of setting up the bureaucracy and rules for ObamaCare,
- setting up the bureaucracy and rules for the Dodd-Frank finance "reform",
- paying ethanol, windmill, electric vehicle, solar, and other "green" energy subsidies,
- paying higher electric and gasoline bills because it is foolishly convinced by its own propaganda that man is causing a catastrophic global warming,
- paying hordes of scientists to prove this false catastrophic man-made global warming hypothesis,
- persecuting business with reinvigorated threats of anti-trust actions,
- putting more people on Medicaid and Medicare,
- paying bloated union wages on federal contracts,
- using the Labor Department to provide site requirements to companies for their expansions while considering only Union Shop states,
- using the Justice Department to promulgate injustice against the states and the people and discrimination against those not in government-favored minorities,
- funding universities that long ago became bloated with government money and stopped educating students,
- promulgating tens of thousands of new regulations which serve no useful purpose but to increase the power of bureaucrats over the People who do not have the time to read the regulations,
- and providing funding to the United Nations, the IMF, the World Bank and many other international institutions that do not like the U.S. and hate our Constitution and concept of individual rights.
Let us suppose that he chooses not to use the federal income from income taxes, corporate taxes, capital gains taxes, tariffs, gasoline and cigarette taxes, and many other taxes to pay the $108 billion owed the Social Security Fund in current interest payments. In other words, he might make payments on interest to the Chinese and to investors, but not to the Social Security Fund. The Social Security surplus of $92.2 billion would then be turned into a small deficit of $16.0 billion. If he then did not send out that $16.0 billion, but did send out the remaining $568.9 billion of checks, this would mean that 2.8% of Social Security payments would not go out. But, there is no way that $16 billion shortfall due to the default on the interest payment would not be made up by any President not grasping at power as a lust-driven would-be dictator.
Obama's threat really has struck terror into the hearts of many Americans on Social Security. This was a totally irresponsible and pernicious act on the part of this cruel and evil man. It seems to take such people to be the strongest advocates of socialism. Despite its pretenses of caring for the needs of some of the People, those who pursue this so-called ideal as a career are never actually caring people.
This entire fuss about the debt ceiling is due to the failure of the Senate to produce a budget for over two years. The House would not produce one either until the Republicans took it over. But, the Senate and the President have ignored their budget. Since no agreement has been reached on what the government will spend in 2012, there is no basis for an agreement on what spending cuts will be made to reduce the deficit to some manageable proportion of our GDP. All we know is that the record over the last three years was for the government to spend an average of more than 24% of GDP, while before 2008, the spending was below 20% of GDP. Obama and the Democrats appear to want to continue spending much more than 20% of GDP even though that will mean huge on-going deficits. Apparently, they intend that this funding will be the result of many more continuing resolutions on spending, so they will never have to recognize that the welfare and crony mercantilist government they want is not sustainable. They can ignore the failure of big government socialism as long as they do not have to produce an actual budget. Unless, of course, we collapse as Greece is and Italy may be on the verge of doing.
A 4% of GDP reduction in government spending is more than a $600 billion reduction per year. It is clearly easy for the government to function at its 2007 spending levels, so there is no excuse for spending cuts that are not in the $600 to $700 billion per year range relative to the spending of this year and the two previous years.