During a high profile interview with CBS News Tuesday, President Obama stated that government benefits such as Social Security will not be paid if Congress doesn’t come up with a solution to the debt ceiling crisis by August 2nd.
“I cannot guarantee that those checks will go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it,” said Obama.
The U.S. government has issued numerous warnings saying the lack of funding could affect the ability to pay out benefits, however, previously the president had not so openly revealed such concern, according to Charles Riley from CNN.
Treasury Secretary Tim Geithner warned Congress back in January that paying out benefits full and on time this year would not be possible.
“A broad range of government payments would have to be stopped, limited or delayed, including Military salaries, Social Security and Medicare payments, interest on debt, unemployment benefits and tax refunds,” said Geithner.
According to Riley at CNN, the U.S. reached its legal borrowing limit on May 16th. Since then they have been taking extraordinary measures to keep the country out of default.
According to Geithner the country will not have the money to pay all of its bills by August 2nd let alone pay out benefits. Prioritizing payments on benefits and other expenses starts on August 3rd for the federal government, who must supply Social Security checks for nearly 60 million Americans.
Despite lack of funding for benefits, the U.S. Treasury has guaranteed it would be able to pay back investors $29 billion in interest by August 15th.
The federal government can still pay some of its bills with tax revenue, but the longer Congress delays finalizing an agreement on the debt ceiling crisis, the more the Treasury will be stretched, according to Riley.