Mad SeniorToday, Fran Liotta has two harsh words for the U.S. government, "unconscionable, outrageous!"

The 77-year-old retiree says she had to read President Obama's warning twice. She couldn't believe that the federal government was saying it couldn't guarantee that Social Security checks will be mailed Aug. 3 if Congress doesn't take action on the debt ceiling.

"I won't be able to pay my rent or eat if I don't get my check. They can't work this out on the backs of senior citizens. Raise the taxes on the wealthy. I don't know what I will do if this happens," says Liotta.

The warning Tuesday that tens of millions of Social Security recipients may find their mailboxes empty when they go looking for their checks sent shockwaves through the senior community. They wasted no time having their say. "Now is not the time for elected leaders on either side of the aisle to play politics with Americans' hard-earned Social Security benefits," said AARP Executive Vice President Nancy LeaMond in a prepared statement. On Wednesday, White House Press Secretary Jay Carney responded to the criticism from seniors and their advocates, telling reporters "that the president's position has always been that we will not get to that point [of not paying Social Security benefits] because Congress will do the right thing."

"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 LeaMond. "Tens of millions of Americans rely on Social Security to help pay for basic necessities, including rent, food and health costs, and AARP is fighting to protect the hard earned benefits that are critically important to all Social Security beneficiaries. AARP is adamant that Social Security and Medicare benefits must not be cut in any way as part of any deal to pay the nation's bills and will continue our efforts to raise the voices of older Americans who rely on these programs for their health and financial security." she added.


Phil Kent, CEO of the American Seniors Association, is asking how the leaders of a nation that is supposed to be the world's greatest economic engine could even be considering such a solution? "It's a shame that it has gotten to this. We are already getting calls and email from our members -- they are concerned," says Kent.

Some take issue with the statement that without a debt deal, there wouldn't be enough money to pay Social Security. "There is enough revenue coming in to cover all entitlement payments -- just nothing left to cover other discretionary and non-discretionary spending," says Lance Roberts, CEO of Streettalk Advisors. "The administration is using Social Security payments as a fear tactic."

Default Would Be a Catastrophe for the Economy


Cutting off those payments would have a huge impact. "77% of seniors depend on Social Security for all or most of their monthly income," says Jim Firman, president and CEO of the National Council on Aging. "One in three seniors are living on the edge financially and it would be absolutely devastating to them if their checks were to be delayed. Congress and the president need to agree on a balanced debt ceiling proposal soon to keep it from happening. Otherwise there will be political hell to pay."

The economy can ill-afford the chaos. Consumer spending is already weak and a $20 billion hit to the economy would push it very close to zero growth very quickly, says Roberts.

A better course of action, says Roberts, is to raise the debt ceiling. "The Treasury is already dipping into federal pension funds to meet spending needs," he says. "There is $500 billion in government debt that has to be rolled over in August or we will be in default. Default will be a catastrophic problem. Save the political pandering and fear mongering for working on the 2011-2012 budgets going forward. Work on ways to cut spending that doesn't affect the growth of the economy."

The government cannot selectively pick which obligations to pay, and which should be deferred, says Jerry Kremer, chairman and CEO of grassroots lobbying and government relations firm Empire Government Strategies and a former New York state assemblyman. "Monthly government costs are not an option, but a mandated requirement for government to keep its obligations to the nation. Most members of Congress, especially the newer ones, don't understand the debt limit issue and that its ramifications will go far beyond a Social Security payment. Individual taxpayers try to keep up with their mortgages or rent to avoid personal default. Government doesn't have that option either."

Says Hazel Pachtman, 88: "I may not suffer, but I will change how I spend money. But I'm thinking of people who are depending on those checks. The rest of the world will look at us with contempt. This should be illegal. Social Security is the law of the land and nobody should be trying to destroy it."

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