ABC-7 Fact Check: The Debt Ceiling

Phones in the ABC-7 newsroom started ringing Tuesday night when the station reported on the debt ceiling negotiations.

Some viewers said ABC-7 got it all wrong when it reported that Treasury Secretary Timothy Geithner said Social Security checks might not come if there’s no debt ceiling deal by Aug. 2.

Many thought the station was reporting that Social Security checks would be interrupted. That’s not quite what it said. What ABC-7 reported was Geithner’s comment that Social Security checks might be interrupted.

But is that true? ABC-7’s story paraphrased Geithner. This ABC-7 Fact Check will use an exact quote from Geithner’s boss, President Barack Obama, from the same day.

On Tuesday, the president told CBS News, “I cannot guarantee that those checks go out on Aug. 3 if we haven’t resolved this issue, because there may simply not be the money in the coffers to do it.”

In this case, the president should have quit while he was ahead. His statement is half true, half false.

It is literally true that the president can’t personally guarantee checks will go out on time. Other people in government trying to make a political point could conceivably interfere with that.

But it’s not true that “the coffers” from which Social Security benefits are paid from will be out of money next month. The Social Security Trust Fund is a separate account that is gradually approaching insolvency, but that won’t happen until the year 2036, according to a report issued this year by the Social Security Administration.

Any failure to fund Social Security benefits would be the result of a conscious decision to divert those funds for other purposes.

ABC-7 also takes a swing at another unsubstantiated talking point making the rounds. It is false that reaching the debt ceiling necessarily means the nation will default on its debts.

In 1985, 1995 and 2002, it took several months after reaching the limit for legislators to agree to a long-term deal to raise the limit.

If the government couldn’t borrow any more money, it would have to make painful cuts somewhere. Those cuts could come in the form of furloughed workers, deferred purchases and closed programs and facilities.

Politicians could elect to default on debts rather than employ those other painful cash-conserving options. But interest payments are only about 7 percent of federal spending, according to the Congressional Budget Office.

The government would still have operating funds because taxes would continue to be withheld from paychecks. The borrowed portion of federal spending is what could not continue until a deal is reached.

Default would be a decision, not destiny.

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