This Is What Gets Defunded If The Treasury Has To Prioritize Payments

Business Insider ^ | 07/25/2011 | Joe Weisenthal

[SeekAndFind]

It's been assumed -- but never confirmed -- that if we hit the debt ceiling, that The Treasury could prioritize payments, continuing to make bond coupon payments and entitlements, while shutting off other spending.

The Bipartisan Policy Center has put together a presentation (.pdf) on the debt ceiling, and what prioritization would look like (via Stone Street Advisors).

These two charts show it all.

[SaraJohnson]

This will give the international socialists a chance to show Americans where their priorities are.

I would guess Obama and Timmah will demonstrate they don’t much care about Americans when push comes to shove.

[greeneyes]

Active duty military should be the #2 item paid. A little tweak here and there and you have could have enough for veterans affairs. For example:

Kick the people out of social security that never paid into it. Medicaid could have a copay even if it is only $5 dollars per visit, it would help.

You could stop the extended unemployment benefits or at least reduce the amount by half. Why take a job, when it pays less than unemployment is what some people think.

With respect to Medicare, your average American has to pay a percentage of their entire income into the system.

But there is a cap for the higher wage earner, and once reached, the excess is exempted. That cap could be eliminated(phase out so there is no extra to steal for other programs).

Lower the tax rates, and broaden the base, you will get new Revenue from growth instead of new taxes on people already paying them etc etc. A lot of the 2cnd list should be eliminated or drastically cut anyway.

[musicman]

[Poison Pill]

I say pay the vets and drop unemployment bennies.

I went that route too and then added in tax refunds and the court system. I came up with 170 billion in August. The Feds will take in 200+ billion. The pubbies should start pushing a no deal scenario that makes it clear we can and will pay debt service, military, SS and other essentials. Even with unemployment added back in we don't hit $200b. This default talk needs to stop.

[SeekAndFind]

Holy ***t, are you telling me that 40% of the current US Federal receipt comes partly from TAKING from the (non-existent) Social Security lockbox?

Or correct me if I am wrong, that GREEN 40% that I am seeing is the SUM of what the government takes in from Employee/Employer FICA PLUS Borrowing from the SS trust fund?

[SaraJohnson]

Since the idiots in washington crashed the economy, food stamps and welfare have “necessiarily skyrocketed.”

The “progress” of socialism has tipped the government into a promised course of economic failure and that socialist spending is not just limited to entitlement programs. There are whole agencies dedicated to providing entitlements to the socialist machine in unions, foreign governments and globalist movers and shakers, foundations, the Universities and in corporate welfare.

Trimming here and trimming there is not going to help. We either cut the scope of government and axe the socialist “progress” or, like the Soviet Union, we don’t stand a chance. Socialism is not a viable economic system and it is directly opposed to the constitution.

[verity]

More speculation.

[Molon Labbie]

Section 8 housing debacle involving luxury living.

http://www.wmal.com/Article.asp?id=2225336

We must end the entitlement mentality for the leeches.

[Norseman]

Here’s a strategy that will please all of you who want to start taking the meat ax to the federal budget:

Pay the $50 bn due to both SS and Medicare ($100 bn total) out of their Trust Fund assets instead of out of August tax receipts. This reduces the problem to which $40 bn to cut, instead of which $140 bn.

That would actually be an amount small enough that it could probably be done, and it would be fascinating to watch the process as the Administration revealed its line item by line item priorities.

[mrsmith]

I see my confusion- I’m thinking of OSDI. It runs a surplus but the welfare components of SS- DI, HI and SMI- run deficits.
http://www.ssa.gov/oact/trsum/index.html

What bothers me about the “can’t pay SS” argument, besides thw inclusion of the welfare items, is that there are receipts coming in from it- yet that’s never mentioned. Look at this article- no mention of SS receipts- just SS expenditures.

[kabar]

Those are the receipts that come in from the payroll tax and premiums to cover SS and Medicare. As you may notice, the collections don't cover outgo. SS and Medicare are in the red, which is why the General Fund must come up with the money to cover the shortfalls in SS and Medicare Part A. 75% of the costs of Medicare Parts B and D already come from the General Fund, by law, about $225 billion a year. Premiums only cover $75 billion of the total Medicare Parts B and D expenditures of $300 billion annually.

Medicare, Medicaid, and SS expenditures total $1.5 trillion compared to $865 million in receipts. The receipts come from payroll taxes. Benefits must be paid from them including cashing in IOUs from both the HI and SS Trust Funds.

80% of the people in this country pay more in payroll taxes than they do income taxes.

[kabar]

Exactly. We are witnessing the implosion of the welfare state. The Dems want to keep it going a little bit longer by increasing taxes and reducing defense spending, but eventually it is a losing game. The programs are unsustainable. We need to go after both the entitlement programs and means tested welfare programs like Medicaid and food stamps if we want to change the fiscal trajectory we are currently on.

[kabar]

The Trust Fund contains no real assets, just IOUs. We need to come up with the money to redeem the IOUs from the General Fund.

The trust fund does not contain assets, just unfunded liabilities, which is why the trust funds are included in the $14.3 trillion national debt. Here is what the Congressional Budget Office said about trust funds:

"When a trust fund receives payroll taxes or other income that is not needed to pay benefits immediately, the Treasury credits the fund and uses the excess cash to reduce the amount of new federal borrowing that is needed to finance the governmentwide deficit. That is, if other tax and spending policies are unchanged, the government borrows less from the public than it would in the absence of those excess funds. The reverse is the case when revenues for a trust fund program fall short of expenses. Thus, the balances of trust funds are not a measure of resources available to pay future obligations for the respective programs; those resources will need to come from federal revenues or additional borrowing in the years those obligations are due."

[kabar]

The SS receipts are included in the total $172.9 billion receipts. It is part of the unified budget accounting.

[mrsmith]

It’s there but it’s not specified as the expenditures are.

They say that expenditures must be paid, they don’t say the receipts are coming in.

SS is mentioned ONLY as a cost in the article.

[Mr Rogers]

Just eyeballing it, looks like you could put everyone getting an income check from the government on 75% pay and cover everyone.

You could also halt Medicaid benefits to those with an income above the poverty line.

[vette6387]

“Other” is 40% of the budget!!! If a company (or a family for that matter) had a budget that had “other” as 40% their budget, the accounting department would all be fired. This is a big part of the problem. Seems to me that if we actually are currently “forced” to borrow 40% of the money the Feds spend, then it’s a really simple task to cut an equal amount.

[kabar]

I see my confusion- I’m thinking of OSDI. It runs a surplus.

No, it is running a deficit.

Social Security expenditures exceeded the program’s non-interest income in 2010 for the first time since 1983. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years.

[kabar]

What article are you referring to. Regardless, the SS is part of the total receipts of $172.7 billion monthly receipts.

[SaraJohnson]

We need to go after both the entitlement programs and means tested welfare programs like Medicaid and food stamps if we want to change the fiscal trajectory we are currently on.

---

Cutting food stamps and medicaid is not going to change the socialist status of our government at all. We need to cut every activity that is outside the Federal govenrment’s constitutional boundries.

Whole departments and causes need to be cut. Trimming off a little from medicaid or food stamps won’t stop the crash.