President Obama and congressional leaders have spent day after day huddled over the gigantic mathematics problem of how to rein in the nation's annual deficit and growing debt. Obama has pushed for a grand plan to cut $4 trillion from the federal budget over the next 10 or 12 years, and congressional leaders have fought with him, and among themselves, over what it should look like.
Meanwhile, the clock ticks toward Aug. 2, when the nation's borrowing will bump up against the congressionally imposed debt ceiling. House Republicans say they were sent to Washington with a mandate to shrink a bloated federal government and won't raise the debt limit without major spending cuts. Obama told CBS News that without a debt ceiling increase he can't promise that the federal government will be able to send out Social Security checks on Aug. 3.
Senior groups have chided Obama for the threat. "While there may be disagreement over different policies, there should be no disagreement that it would be both irresponsible and immoral to fail to make Social Security benefit payments to seniors who have worked and contributed over their lives to earn their benefits," said AARP Vice President Nancy LeaMond.
If a large deal is reached, it could cut the Social Security and Medicare programs. If the stalemate continues and the nation can't afford to pay its bills, the default of the federal government could tank stock and bond prices, hurting the portfolios of older people who must live off those assets. And even if Congress concedes and raises the debt ceiling without tackling the larger fiscal problems, those issues will grow in importance.
"Every course of action is going to include significant changes for someone 50 and older in their relationship with the federal government," says Michael Franc, vice president of government studies at the Heritage Foundation. "It's going to be either rewritten by the action of the president and Congress or its inaction."
If no action is taken, Social Security and Medicare will continue on their long-term path to financial stress, Franc points out, as health care costs rise and boomers retire.
The pressing threat of default
But as the tense talks between Obama and congressional leaders convene each afternoon, the more pressing threat of default has taken the spotlight.
The Bipartisan Policy Center released a study recently showing that in August, the federal government expects to take in $56 in revenue for every $100 it owes.
"The bills are coming due. Something won't get paid," says Chad Stone, chief economist for the Center on Budget and Policy Priorities. "We are definitely playing with fire here."
About one-third of Social Security recipients rely on those government checks for all or nearly all their income, says AARP legislative policy director David Certner.