The Campaign Spot

Obama: Symbolic Cuts This Year Could Endanger the Recovery

At the president’s news conference, ABC News’s Jake Tapper just asked Obama if he was willing to make cuts to this year’s budget, as a “down payment” on future budget cuts.

Obama says he wants to work with Republicans, but that he doesn’t want to make “a series of symbolic cuts this year that endanger the recovery.” He talks about the danger of “tens of thousands of layoffs in state and local government” or poor performance in the “core functions” of the government.

“Let’s use a scalpel, not a machete,” Obama says. “People should be careful about being too loose when talking about a government shutdown. This is not an abstraction. People do not get their Social Security checks, their veterans’ checks . . . Government shuts down. That, too, would be destabilizing for the recovery. The key here is to be practical, and not score political points.”

UPDATE: It’s worth noting that because of the Social Security Administration bringing back workers on an emergency basis, few if any Americans did not receive Social Security checks during the last government shutdown.

Based on the experience during the November lapse in appropriations and the loss of four full days of production time, any further interruption in service would have a devastating long-term impact on SSA’s ability to process Social Security, SSI and Black Lung claims.  The [Social Security] Agency was still attempting to recover from the effects of the November furlough.  Therefore, employees in direct service positions would remain operational, while staff support employees would be furloughed.  When the partial shutdown began December 16, 1995, about 55,000 Agency employees, most of whom processed claims and/or provided direct public service, were told to report for work.  A total of approximately 11,000 staff employees remained furloughed.

On January 5, 1996, Commissioner Chater informed OMB that SSA’s contingency plan was amended to include the processing of annual wage reports (AWR).  SSA would be receiving nearly 235 million earnings reports for calendar year 1995 from employers and self-employed individuals.  If processing was not accomplished timely, the accuracy and reliability of SSA claims processing would be seriously compromised and a permanent disruption of SSA’s ability to administer the trust funds would occur.  Timely posting of wage information was essential to enable SSA to recompute the benefit payments of three million working Social Security beneficiaries, as well as to compute the national average wage index for 1997.  If AWR processing did not begin immediately, SSA would not be able to accurately compute the 1997 wage base by the statutorily required date, resulting in a permanent loss of receipts for the trust funds, as well as untimely or inaccurate benefit adjustments for 1997.  SSA recalled approximately 950 employees, and following past practice, hired 250 seasonal employees to process this workload.  A total of 9,255 employees remained furloughed.

On February 20, 1996, Commissioner Chater provided a statement to the Committee on Appropriations on the adverse effects of the budget turmoil.  She indicated that SSA managed to operate under the funding limitations imposed by the continuing resolution, but did so at a significant cost.

As CNN summarized at the time, for Medicaid, Medicare, and Social Security, checks were issued as normal, but no new applications were accepted; a similar circumstance covered veterans’ benefits: checks were issued, but no new applications for benefits could be processed.

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