Wednesday, July 13, 2011

Some Random Thoughts about the Debt Ceiling

Thought #1: The Administration is not bound by the debt ceiling. By authorizing spending, Congress de facto authorized the President to borrow whatever money was needed to make the authorized expenditures.

Thought #2: Even if thought #1 is wrong and the Administration is bound by the debt ceiling, there is still no reason for the Government to default. Money is still coming into the Treasury and the President will just have to prioritize how to spend it. However, debt service must be at the top of the list, due to the 14th Amendment (“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”) In other words, if the Government defaults, that’s Obama’s decision alone, but such a decision would be unconstitutional.

Thought #3: Some pundits have suggested that we would be better off if Congress did not raise the debt ceiling. That would require the Federal Government to balance the budget immediately. Anyone advocating this should be expected to show how it could be done. As I’ve shown previously, the plan must include cuts to Medicare, Social Security, or Defense, or increased revenues.