By Bernie Becker - 07/15/11 11:53 PM EDT
The Treasury has given the OK to legislation that would effectively prioritize Social Security in case the debt ceiling is not raised by the Aug. 2 deadline, Sen Bill Nelson’s office announced Friday.
Nelson (D-Fla.) said earlier this week that he had legislation prepared that would temporarily exempt payments from the entitlement program from counting against the national debt.
“The impact of a default crisis would be felt much more broadly, affecting our men and women in uniform, people who rely on Medicare and Medicaid, veterans, civil servants, businesses that supply goods and services to the government, and many others,” the Treasury secretary wrote.
Nelson reached out to Treasury after President Obama said in an interview this week that he could not guaranteed that Social Security payments would be disbursed if the debt ceiling is not raised by the deadline.
But Republicans on the Senate Finance Committee, also on Friday, looked to cast doubt on that claim.
The panel, in a study, noted that roughly $50 billion of Social Security payments are due in August and that the Treasury was expected to bring in between $170 billion and $200 billion that same month.
The analysis also said that, if Treasury used $50 billion in cash on benefits for August, the department could also get rid of that same amount of debt in the Social Security Trust Fund and borrow that sum without breaching the debt limit.
Geithner has basically dismissed claims, generally by conservatives, that the federal government could prioritize payments if the debt ceiling is not raised.
Top officials did not meet at the White House to discuss the debt ceiling on Friday, for the first time this week.
The president instead pressed his case with a news conference, while Republicans announced they would vote next week on their “Cut, Cap and Balance” plan.