Economy
3:00 pm
Fri July 29, 2011

No Debt Hike? A Hard Choice For Who Gets Paid

If you've ever looked at a stack of bills and realized you owe more money than you have in the bank, you can understand the position the U.S. government will soon be in, if lawmakers don't agree to raise the debt ceiling.

The Obama administration would then face the same decision as any cash-strapped consumer: Who gets paid? And who doesn't?

"Choices then have to be made," said White House Spokesman Jay Carney. "And it's a `Sophie's Choice,' right? Who do you save? Who do you pay? That's an impossible situation that this country has never faced and should never face if Congress does what it was elected to do and does its job."

For reporters too young to understand his reference to a "Sophie's Choice," Carney offered a capsule summary of the 1982 movie of the same name, in which a tearful Meryl Streep is forced to choose which of her two children to save from the Nazis.

Sophie's choice was between Jan and Eva. The U.S. government's choice — if it comes to that — is between Peggy, George and Jim.

Peggy Munson, 73, is a retired nurse, who lives in Boise, Idaho.

"I spend every dime of my Social Security every month, just to pay all my bills," Munson says.

Munson's Social Security payment is directly deposited in her checking account each month. And some of the $1605 goes right back out again for supplemental health coverage, car insurance and homeowner's dues. Munson knows exactly when her government payment is supposed to show up in her bank account, and she'll definitely know if the money is held up.

"I'm a pretty good budgeter," she said. "I try to not get down low. But it depends what happens to you. The stove blew up last spring, and I had to buy a new stove. You may have to go the emergency room for your blood pressure. You have to always plan for the unknown."

Munson's son, who's a firefighter for the U.S. Forest Service, doesn't know if he'll get a paycheck this coming month. Some two million federal employees are in that same position.

"There's rumors about furloughs," says George McCubbin, president of the National Border Patrol Council. Since border patrol agents are considered essential, McCubbin won't be furloughed. "But there's always the possibility we won't get paid," he says.

McCubbin says that would be a financial challenge, especially for entry-level workers.

"I think for a lot of the younger folks that are already cash-strapped because of what's been happening, it's just going to magnify the problem," he said.

Government bondholders will likely be first in line for their payments: $29 billion worth of interest this coming month. But defense contractors, veterans and even the active duty military may have to scramble.

The biggest bill on the government's desk — $50 billion in August — comes from Medicare and Medicaid providers like the Henry Ford Health System in Michigan. CFO Jim Connelly says nearly half the patients in the hospital network rely on Medicare or Medicaid. So the system relies on timely payments from the government.

"It's imperative that all of our physicians and our clinical staff be doing what they do every day for patients," Connelly says. "We cannot afford to have an economic disruption somehow interrupt that important patient care."

Connelly, McCubbin and Munson all say they're counting on Congress to reach an agreement. Otherwise, the government will soon find itself with just 60 cents in cash for every dollar it owes. And like it or not, somebody will not get paid.

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.