Quite a few people are chiming in against the debt ceiling. Most of them are supporters of President Biden but there’s something they seem to have forgotten: President Biden opposes eliminating the debt ceiling, characterizing that as “irresponsible”. I should add that I see no difference between abolishing the debt ceiling and the House automatically approving raising the debt ceiling. Perhaps there is one that has eluded me.
I would say it is incumbent on those who want to abolish the debt ceiling to accept one or more of the following:
- They disagree with President Biden
- There is a difference between abolishing the debt ceiling and Congress’s automatically approving an increases in the debt ceiling and it is [fill in the blank]
- President Biden and/or Sen. Schumer are being irresponsible by not negotiating with the House
For the first century of the U. S.’s existence there was no debt ceiling. It was adopted a little over a century ago. The explanation I’ve read is that it provided more flexibility in financing America’s participation in World War I. That doesn’t actually make sense to me. Someday perhaps I’ll summon up enough energy to dredge up the contemporaneous arguments in favor of imposing a debt ceiling. I suspect it was adopted for precisely the reason that we’re seeing now—it provides Congress with additional power over spending.
An additional thing I wanted to add. Decisions like the one in Train v. City of New York has placed the president in something of a bind. Once the Congress has appropriated money the president must spend it as the Congress has directed. That means the only courses of action open are for Congress to raise taxes or to “borrow” which in this case mostly means to extend credit to ourselves.
One final note. My own preference would be for the Congress to be limited in its ability to appropriate. Every appropriation above the revenue anticipated should explicitly “borrow”, raising the debt ceiling.
From, Wikipedia; “From the founding of the U.S. until 1917, Congress directly authorized each debt issued”.
Until 1917, there wasn’t a debt ceiling because Congress had even tighter control of the debt.
On the second part; this has gone back and forth in a previous post, but I don’t think there is much of a bind. Laws may take away the Executive branch’s discretionary power to not spend on what Congress appropriated. There’s nothing discretionary in not spending when the treasury account is at $0. Another part is it will be very hard to challenge the Governments action in Court; for there is redressability issue which goes to standing. Suppose the City of New York sues in Federal Court that they have been owed funds that Congress appropiated but Treasury didn’t dole out because there was no money. There is an injury but is no possible redress because the Courts can’t order Treasury to give City of New York money it doesn’t have!
Actually, they can at least if they hear the case at all. Look up “powers in equity”.
1)I dont agree with everything Biden does so I dont have any problem disagreeing with him.
2) The difference is we wouldn’t have to risk defaulting when this comes up.
3) They should negotiate on how high to raise it. Not on the budget which is a separate issue. The GOP need to lay out what it wants to cut.
Steve
Stop the default nonsense. There is no default when total debt reaches the limit. Rolling over existing debt does violate the limit as long as the new contract has the same principle as the previous note.
What does happen is the budget must be balanced. Since in recent years we have run $1 trillion deficits, we would have to cut total spending by that amount. That’s the whole defense budget plus the VA.
The debt limit is a tool for the minority party to get some of what they want. Both parties use this tool, and both parties want to keep it. It’s like filibuster and cloture. They are too convenient to give. You might not need today, but tomorrow you will.
Of course, if we ever get to a true mono party, like the old CP USSR, then all those tools are unnecessary.
Dave Schuler: We Won’t Abolish the Debt Ceiling
Not in the short term.
Dave Schuler: A. They disagree with President Biden
Biden is wrong. The debt ceiling should be eliminated.
Dave Schuler: B. There is a difference between abolishing the debt ceiling and Congress’s automatically approving an increases in the debt ceiling and it is
Because leaving it to Congress to periodically raise the debt ceiling introduces uncertainty into the budget process, especially with the current partisan dysfunction. Uncertainty translates to risk, with more dysfunction meaning more uncertainty meaning more risk.
Dave Schuler: The explanation I’ve read is that it provided more flexibility in financing America’s participation in World War I. That doesn’t actually make sense to me.
Before then, debt was enacted explicitly for specific purposes. Due to the unpredictability of a vast war, the amount of money needed was unknown, so Congress gave the executive leeway within limits. Made sense at the time.
CuriousOnlooker: There’s nothing discretionary in not spending when the treasury account is at $0.
That is incorrect. There would still be money coming into the treasury and assets that can be levied by creditors.
CuriousOnlooker: There is an injury but is no possible redress because the Courts can’t order Treasury to give City of New York money it doesn’t have!
Again, that is incorrect. Not only can you sue someone who is broke, but the federal government would continue to have income from taxes and assets subject to sale.
bob sykes: There is no default when total debt reaches the limit. Rolling over existing debt does violate the limit as long as the new contract has the same principle as the previous note.
The law doesn’t allow the federal government to prefer one creditor over another. Lacking funds, the government would be forced prioritize, but you can’t stiff other creditors without it impacting your credit rating. Regardless, the U.S. would end up in court with other deadbeats.
Vendor: I have a purchase contract here for a box of paperclips. I delivered the paperclips. Now, I want to get paid.
United States: Sucker!
>There is no default when total debt reaches the limit. Rolling over existing debt does violate the limit as long as the new contract has the same principle as the previous note.
My understanding is that there are two problems here. One is that there’s a bunch of money the government owes that doesn’t count as “debt” for the purposes of the debt ceiling, particularly in the form of contractually obligated payments to vendors and contractors. The government merrily keeps on incurring these obligations as normal assuming to the money will be there, and if the debt ceiling isn’t raised, then eventually there won’t be enough money to avoid defaulting on these not-technically-debts.
The other is a technical problem with how the Treasury sends out checks and bank transfers. There’s apparently no mechanism to notice that there’s not enough money to cover all scheduled payments and prioritize interest an principal payments over current spending. Instead, the choices are to shut down the system completely, manually update the payment queue (which takes time and which administrations generally refuse to do in advance), or send out checks as usual and let some of them bounce.
This is all fixable: Congress could pass laws requiring payment prioritization and counting contractual payment obligations as part of the debt ceiling, the Treasury could fix their software, or the President could use his statutory authority under the Impoundment Control Act to temporarily stop spending that would cause a default (the ICA stopped the previous practice of the President being able to unilaterally refuse to spend appropriated funds, and is often cited by administrations as a reason they don’t prioritize debt payments over current spending, but it still specifically allowed the President to delay spending by up to 45 days pending review by Congress).
Eric Rall: President being able to unilaterally refuse to spend appropriated funds, and is often cited by administrations as a reason they don’t prioritize debt payments over current spending, but it still specifically allowed the President to delay spending by up to 45 days pending review by Congress).
Congress must approve within 45 days, or the funds must be spent. In other words, any fix requires an act of Congress. Congress not acting leads to default.
Nixon tried to sequester appropriated funds, and the Supreme Court ruled he couldn’t
Here’s a detail one needs to look at.
The US government has “reneged” on upcoming commitments in every Government shutdown by not paying wages due to “essential employees” who continue to work through the shutdown. Thus far, I don’t recall any law suits or the Courts weighing in, etc.
As for payment prioritization, I believe the system exists, through probably never gone “live” — Brookings wouldn’t have an article quoting various Goverment officials about “contingency plans” if that was not the case.
Again the obvious difference with Nixon was Nixon was trying to exercise discretionary authority of impoundment. Not paying due to no money is not a discretionary use of power. And this goes to the Courts issue, they could order the Government to print the checks which then bounce, which doesn’t redress the problem, hence the question of how the courts take the case.
The fact of the matter is that Congress has the authority to hold a gun to its own head when it comes to the debt ceiling. And they are willing to keep doing it as long as it continues to serve their narrow domestic political incentives and interests.
I agree but I would phrase it a bit differently. The position being staked out by some is a declaration that the 116th Congress has the authority to control the 117th Congress without itself being contrained by the 115th Congress which I find hard to justify.
That’s definitely true. If you look at the 1974 Budget act, for one related example, it’s a duly passed law the US government (including Congress) hasn’t met the requirements of since 1996 and only a handful of times before that.
CuriousOnlooker: The US government has “reneged†on upcoming commitments in every Government shutdown by not paying wages due to “essential employees†who continue to work through the shutdown. Thus far, I don’t recall any law suits or the Courts weighing in, etc.
That’s because it is written into statute. It used to be that the government could require essential employees to work during a shutdown with their pay delayed, but now all employees, essential or furloughed, are guaranteed to be paid under the Government Employee Fair Treatment Act, an amendment to the Anti-Deficiency Act.
If Congress doesn’t act, then the U.S. will default. The U.S. can cut spending, raise taxes, increase the debt limit, or a combination. What it can’t do is do nothing and expect nothing to happen.