Friday, July 08, 2011

Changing the Payment Process at Treasury

Tyler Cowen at Marginal Revolution links to a Felix Salmon post discussing, in part, the problems Treasury faces on August 2/3, including this sentence:
"At that point — and no earlier — there would be enormous pressure on the White House to pull out the 14th Amendment and declare the debt ceiling unconstitutional, if only for practical reasons: doing so would be a lot easier than trying to reprogram the computers which are set to send out $49 billion of Social Security checks on August 3."
I know (almost) nothing about this, but when has lack of knowledge ever kept a self-respecting blogger from writing? I've two thoughts:

On the one hand, since the government hasn't done this (prioritizing payments) before, yes, the process is likely to be difficult and full of glitches. On the other hand, at least in the old manualish days, people had to certify the payment document before transmitting to Treasury for payment.  Then, moving ahead to the tape days (i.e., 1960-80's), SSA would have provided reels of 7 or 9 track mag tape containing the payment data to Treasury.  Back then, they could have just  stuck the reels in storage and waited to mount them and run the program until the debt limit was lifted.

I'd expect there's the automated equivalent of that still in place.  In others words, at some point SSA stops updating their payment file with the deaths, new retirees, corrections, and transmits the whole file to Treasury for payment of Aug 2 pensions.  I wouldn't think on the Treasury side their systems would know much about the data, except to record the payee, amount and date of payment--etc. But their system doesn't know or care whether they're printing Aug 2 checks on Aug 2, or on Sept. 2.

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