Over at BPI, one of the commenters posted an e-mail from her Republican Congressman, who is apparently attempting to preemptively shift the blame if the debt ceiling isn’t raised:
I have heard from quite a few concerned seniors and veterans in the last few days. The concern stems from the President’s suggestion that Social Security and other benefits won’t get paid in the absence of a deal to raise the debt ceiling. This is a scare tactic, pure and simple.
Spending on Social Security, Medicare, veterans’ benefits and our troops has already been authorized by Congress, and the President has the authority to continue funding these priorities. If he chooses not to, it will be his decision and his alone.
As Sheriff, I always had a contingency plan – hope for the best, but plan for the worst. My hope is that the President won’t play games with your Social Security check, but his current posturing doesn’t inspire much confidence.
The bolding is mine, and it demonstrates a seriously poor understanding between “authorized spending” and “having the money to spend.” Because it’s not a scare tactic, it’s a potential reality. Anyone who has ever worked in the private sector (let alone government) for an employer of any real size should have grasped it immediately.
Let me explain this. Way back when I used to work for a large business, I had to submit a budget request every year. That request covered salaries, benefits, utilities, supplies, equipment, and any other things that were needed to keep us running. There was usually some haggling involved, justifications for something having to submitted, and so on, but at the end of the process, I would have an “approved budget.” That was my authorization to spend money for a given purpose.
All well and good, right? Not quite. You see, there’s a little issue called “cash flow” that entered into it. I might be authorized to purchase a 5000 dollar reagent kit (yes, that’s a real price), but if the cash wasn’t in the company’s account for it, it didn’t matter. It would be “delayed.” So my purchase order would sit in limbo until the money was available. It didn’t matter that I had a “budget authorization,” it didn’t matter that it was a priority for me, if the company didn’t have the cash on hand, it didn’t get ordered. Of course, sometimes you’d run into the situation where a supplier wouldn’t take the purchase order, because the company hadn’t paid them in a while.
This particular company worked on a direct cash flow model. That is, the money they took in went into a bank account, from which the bills were paid. If the cash flow turned out to be variable, and not enough was coming in, things started getting shifted around. Purchases were delayed, bills went unpaid, and work scheduling was disrupted because you weren’t getting what you needed in a timely fashion. In good years, it didn’t happen, but in years when things were tight – or tight for someone else – it often resulted in a headache-inducing scramble.
Anyone who has ever run a business (and I have) knows the “joy” of waiting for payments to come in, while looking at the bills to be paid. It doesn’t matter that next month you will have more than enough money in the account to pay off everything, you need the money now. Other companies get around this by using “short-term debt obligations.” That is, you have a line of credit which enables you to pay your bills and make your purchases, even if you don’t have the money immediately in the bank. It does a great job of smoothing out the ups and downs of revenue for you.
So what does this have to do with the debt ceiling? That’s how the government works. Congress authorized the particular budget, and the spending. In order to meet those authorizations, the Federal government must borrow money. Failing to raise the debt ceiling puts the government into a direct cash-flow accounting position. Why is this a problem? Because the bills coming in aren’t going to match the revenue – and its timing. Which means that some bills will be paid, and others won’t. In other words, just like a business without a credit line, it doesn’t matter if spending has been “authorized.” If the money isn’t in the bank, it means it can’t be spent.
Which is why this Republican – and apparently it’s the “party line” – is an idiot. He may tout his “experience” in contingency plans, but he’s never either worked in business or had to actually use contingency plans. The Administration does have a contingency plan, but it’s based on cold hard math:
There’s only going to be $12 billion coming in, and $32 billion in spending due. That means a lot of things aren’t going to get paid, and there’s no getting around it. That’s the cold fact. Apparently, despite their claims of being “for business,” Republicans in Congress seem to have no clue about business budgeting, let alone government budgets. Because if they did have a clue, they wouldn’t be spouting the inane crap they are. They’re idiots. They really don’t grasp the difference between being “authorized” to spend money versus having the money to spend. They think it’s the same thing. Of course, there’s a reason for why they’re doing it. Because there were a lot of people who were stupid enough to vote them in in the first place, and they’re hoping that those same people are still stupid enough to believe them. But the first time that check those voters expected doesn’t appear in the mailbox, the reality will sink in, and no, the Republicans aren’t going to dodge the blame. It couldn’t happen to a better group.