A small quibbling point, the US can go on business as usual. The admin can just keep going. Meaning the GOP in the house has not passed a law stopping the government from spending. Even if the PDA is violated it would take the GOP going to court to stop the spending. If we want to do this. Meaning if the GOP wins in court the party has destroyed our nation. Or the GOP loses in court and the PDA is unconstitutional. Even if for pragmatic purposes.
The GOP would then need to sue the administration to stop the spending.
Isn’t that they way everything else is done in DC? Just do it until the courts say you can’t.
I am not convinced the 14th argument has standing either, but I also don’t think we can draw a lot of parallels to past government shutdowns as those occurred because we didn’t have budgets, not because we failed to raise the debt ceiling.
I think our options to operate without a budget are far more robust compared to our options to operate without a concise method to pay current bills.
I mean - maybe. The scope of the problem is different, because a non-trivial amount of the government’s spending (like Medicare) have permanent appropriations that aren’t affected by a failure to pass an appropriations bill - whereas everything the government spends money on requires…well, you know, money to spend.
That said, unlike an appropriations shutdown the government does continue to receive money all the time - several hundreds of billions of dollars every month, as tax payments and other revenue streams roll in throughout the year.
The government has the theoretical ability to trim their operations to the point where “current bills” are reduced to the point where they can be covered by those revenues. It would be catastrophic in terms of impact, but it perhaps could be done.
I agree that the 14th Amendment can’t be used to justify more spending. But Congress, similar to Dr. Jekyll and Mr. Hyde, is capable of dramatic personality changes every 2 years. Congress can easily pass laws that are incompatible, and the President then has to decide which laws to enforce. The President can’t make up new laws, but has to select which programs to fund.
“Are all the laws, but one, to go unexecuted, and the government itself go to pieces, lest that one be violated?”
If the President decided to enforce the debt ceiling law, the government would have to shutdown, and the defense department cut in half. (Prioritizing Mandatory spending and Net Interest payments would only leave $0.3T. Probably even less than that because of rising interest rates. Nondefense Discretionary spending would have to be cut to zero. Defense spending would have to be cut at least in half.)
Or the President could choose to keep the government and defense department working, and ignore the debt ceiling law. Some middle ground might be found, with some discretionary programs funded and some debt issued above the limit.
Nondefense Discretionary $B
$132 Education, Training, Employment, and Social Services
$113 Certain Veterans’ Benefits #112 Transportation
$93 Income Security
$71 International Affairs
$68 Administration of Justice
$46 Community and Regional Development
$44 Natural Resources and Environment
$37 General Science, Space, and Technology
Other includes outlays for Department of Energy (DOE) atomic energy activities, Department of Defense (DoD) military construction and family housing projects, and some defense-related activities by agencies other than DoD and DOE. Other includes outlays for general government; agriculture; administrative costs of Medicare and Social Security; energy; and commerce and housing credit programs.
I think the problem comes down to the fact that fed revenues are “lumpy” while debt payments and other mandatory spending are not. How do you adjudicate a month (or even a week) were revenues come in short of what is needed to pay all the mandatory stuff? Heck, from day to day, I am not sure anyone can even determine what is due each day. We can’t even get an accurate count of new job hires monthly (it is always adjusted one way or another) so I doubt we can ever accurately predict just what the government is required to spend on a particular day (and much less what are the daily receipts).
Imagine trying to pay your bills where you were paid a variable daily income that may or may not cover the bills for that day. It would be madness.
Well, that would depend on how close you decided to cut it, relative to the variation in bills and income.
If you’ve got a large enough amount in the bank, a variable income wouldn’t affect you much. For example, it’s very likely that the federal government will get between $300-$500 billion in receipts each month. If spending is $400 billion per month and you have no reserves, that could indeed lead to madness. But if spending were only $300 billion per month and the government had a trillion in reserves, it would be fairly trivial to manage that. In reality, spending is closer to $500 billion per month and there are relatively meager reserves, which is why they’re pointing out that this will lead to madness.
It’s not madness for government because government has mechanisms (Treasury instruments) to smooth all of it out as necessary.
For example, this morning I received a press release from the US Treasury in my email stating that there will be a few “Cash Management” bills issued over the next two weeks somewhere between $100B and $150B in total. This is in addition to the usual 4-week, 8-week, 13-week, 17-week, and 26-week bill issuance that happens weekly.
Government doesn’t need anything at all “in the bank” … because they simply create the money as necessary. See above.
Under normal circumstances, sure. The issue is that they’re about to bump up against the statutory limit on their ability to create the money as necessary. That constrained circumstance is what we’ve been talking about.
OK. But if all of these solutions are prohibited by statute, how does a President decide which statute to violate?
Or perhaps a better question - how does a President decide between shutting down parts of government to keep from violating any statute, thereby inflicting significant harm to the economy, as opposed to violating some statute and protecting the economy?
And yet another question. You mention appropriations vs. budgeting. I can see that appropriating funds is authorizing the spending while budgeting is just planning on what is expected to be appropriated during the coming year. But if Congress has appropriated spending that will result in the debt limit being exceeded, how is a President supposed to respond? “No, I’m sorry, I can’t spend that money because doing so will cause the debt limit to be exceeded.” “I will spend that money, but it will cause the debt limit to be exceeded.” Either way, he has to refuse to do something that Congress has instructed him to do.
At any rate, I see this as Congress putting the President in a no win situation. Anything he does is going to violate some law or another. So why not violate the debt ceiling law rather than some other law? At least with that one he can point to a constitutional source rather than picking and choosing between various laws adopted by Congress. Congress is basically forcing the President to choose where he will argue with Congress - potentially in court. Certainly a constitutional argument is better than trying to say one Congressional law is better or worse than another.
Poorly. They are all poor choices. Cutting spending is the only one that’s entirely within the Administration’s control - selling property, borrowing money, and raising taxes require the participation of people outside of government. That’s why it’s talked about as the most likely consequence of a deb ceiling calamity.
That’s the wrong way of phrasing it. Congress has appropriates spending that exceeds the amount of money the government has (or will have). There are various different ways the government could get more money - and all of them require separate Congressional approval that isn’t forthcoming. He’s not “refusing” to do something that Congress has instructed him to do (spend X dollars) - it is impossible for him to do something Congress has instructed him to do (because the government has fewer than X dollars).
The Constitutional argument works equally for all of the options, not just issuing more debt. The argument is, essentially, “I have to increase government funds in the Treasury in order to avoid defaulting on existing debt, therefore I have free reign to act outside of statutory authority.” That argument works just as well for raising taxes or selling federal lands as it does for issuing more t-bills.
There are two arguments for cutting spending, rather than any of the other three options. The first is practical - you need a cooperative counter-party to sell property, sell debt, or collect more tax revenue in a manner timely enough to matter. You don’t need one to furlough your employees. The second is that when confronted with an impossible directive, inaction is easier to argue to a court than action. You can’t do something that’s impossible to do without breaking the law - it’s harder to argue that the mandate to do the impossible carries an implicit obligation to then go break a law, rather than just not do the impossible thing.
As a general matter, the only reason you need to raise the debt limit is to allow future additions to the debt. If you were to reduce current spending to the level of current receipts, you don’t need to sell more debt - and thus don’t have any issues with the debt limit.
Yes. That’s the way we’ve done it in the past. But if the debt limit isn’t raised, then you can’t do that any more (setting aside for the moment creative arguments of dubious legality). You can only refinance the debt that comes due. You can’t refinance the interest plus the new spending gap. The total amount of debt issued by the feds can no longer increase. You can refinance the existing debt as it comes due, but you can’t add to it.
One “solution” to that is to reduce your spending by enough that there isn’t a spending gap, and in fact is a small surplus. So now you refinance the debt, don’t have a spending gap, and use the surplus between receipts and outlays to pay the owed interest. It is a catastrophically dumb and damaging solution, but it is a solution nonetheless.
The debt limit is the debt limit. Congress has said the federal government cannot borrow more money through the issuance of debt instruments than a certain amount.
That has implications for spending. The government can’t spend money it doesn’t have. Spending has to be funded - either through borrowing, through disposition of assets, or through collection of revenues (taxes, user fees, tariffs, and the like). If borrowing is not available, then spending has to match receipts generated through taxation or sales of assets.
The debt limit doesn’t authorize borrowing “to pay our debts.” It authorizes borrowing up to a specific amount. The government is not permitted to borrow more than that amount.