U.S. Could Run Out of Cash by June 1, Yellen Warns(nytimes.com)
nytimes.com
U.S. Could Run Out of Cash by June 1, Yellen Warns
https://www.nytimes.com/2023/05/01/us/politics/debt-limit-date-janet-yellen.html
64 comments
https://archive.is/lsdJS
It's unlikely the House will pass a clean debt ceiling hike. The GOP has not budged since the beginning of the new Congress. The MAGA caucus is determined to extract spending cuts at any costs. The way I see it, one of three things will happen:
1) The executive branch will invoke Section 4 of the 14th Amendment[1] and direct, by Executive Order, the Treasury Department to continue paying interest to bondholders, effectively abolishing the debt ceiling with the stroke of a pen, and without Congress' approval. This is my preferred option. There already exists a strong legal argument that the existence of the debt ceiling is unconstitutional. This maneuver would allow the White House and Congress to fight the issue in the courts without defaulting. The administration could also mint the oft-discussed trillion dollar coin, or a couple of them, if that loophole still exists.
2) A few sane House Republicans will cross party lines and vote for a clean debt ceiling hike with the Democrats. The Speaker would not be able to prevent it, and what happens to Kevin McCarthy doesn't matter here. Democrats can introduce a bill and force a floor vote without the Speaker's approval (?) Someone correct me on this.
3) Default. Either the US government stops paying bondholders, or the Fed buys bonds in default (this is called a technical default), or the Treasury keeps paying interest but slashes spending in other areas, like Medicare, to pay for it. However, there are serious doubts as to whether this "debt prioritization" maneuver would be legal and/or constitutional.
Or the administration could cave and give the Republicans what they want, but I don't see that happening, because it would greatly harm Biden's reelection chances and hand a huge political victory to the GOP.
[1] 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.
1) The executive branch will invoke Section 4 of the 14th Amendment[1] and direct, by Executive Order, the Treasury Department to continue paying interest to bondholders, effectively abolishing the debt ceiling with the stroke of a pen, and without Congress' approval. This is my preferred option. There already exists a strong legal argument that the existence of the debt ceiling is unconstitutional. This maneuver would allow the White House and Congress to fight the issue in the courts without defaulting. The administration could also mint the oft-discussed trillion dollar coin, or a couple of them, if that loophole still exists.
2) A few sane House Republicans will cross party lines and vote for a clean debt ceiling hike with the Democrats. The Speaker would not be able to prevent it, and what happens to Kevin McCarthy doesn't matter here. Democrats can introduce a bill and force a floor vote without the Speaker's approval (?) Someone correct me on this.
3) Default. Either the US government stops paying bondholders, or the Fed buys bonds in default (this is called a technical default), or the Treasury keeps paying interest but slashes spending in other areas, like Medicare, to pay for it. However, there are serious doubts as to whether this "debt prioritization" maneuver would be legal and/or constitutional.
Or the administration could cave and give the Republicans what they want, but I don't see that happening, because it would greatly harm Biden's reelection chances and hand a huge political victory to the GOP.
[1] 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.
There's a much simpler legal rationale for simply ignoring the debt ceiling than the 14th amendment. The constitution allocates both spending and borrowing power to Congress. The executive has some discretion, but largely _has_ to spend the money the budget says should be spent. So once the debt ceiling hits there are two conflicting laws. The executive must violate either the budget or the debt ceiling. There is common law precedent about how conflicting laws should be handled, and the precedent is that the more recent law takes precedence. The budget was passed after the last debt ceiling, so that's what the executive should follow.
The problem with 1 is that, if the Supreme Court rules that the debt ceiling limit is constitutional, then the US is right then, as of the moment of the ruling, in default. That's an insanely risky gamble.
Sure, and what if the court said the First Amendment of the Constitution was unconstitutional? The courts can interpret the Constitution. They cannot disregard it wholesale. The power of the judicial branch is not absolute. It can be checked by the other two: the legislative branch and the executive branch. And one way for the executive branch to check the judicial branch is to disregard judicial rulings that are blatantly unconstitutional, just like the judicial branch regularly invalidates entire laws and government programs. This is not a dictatorship or a coup. It's just the balance of power. The courts check the executive. The executive checks the courts. Of course, there's a fine line between disregarding a ruling that would cause the US to default, and disregarding a ruling that would, say, invalidate a conservative or liberal policy bill. But if the courts stop playing nice with the executive, the executive should stop playing nice with the judicial, as much as necessary.
"I have directed the Treasury Department to continue honoring our financial commitments to bondholders. My administration will ignore any rulings, by any court, or judge, that would seek to impair all or part of this order, as such rulings would be unconstitutional. I will not allow legal technicalities or political games to threaten the full faith and credit of the United States of America. It it so decided."
I would say these words.
"I have directed the Treasury Department to continue honoring our financial commitments to bondholders. My administration will ignore any rulings, by any court, or judge, that would seek to impair all or part of this order, as such rulings would be unconstitutional. I will not allow legal technicalities or political games to threaten the full faith and credit of the United States of America. It it so decided."
I would say these words.
> And one way for the executive branch to check the judicial branch is to disregard judicial rulings that are blatantly unconstitutional, just like the judicial branch regularly invalidates entire laws and government programs.
That is totally not how this works. But if it did... what decisions would you have the executive ignore? Dred Scott? That would be fine. The one in 1942 that allows the Interstate Commerce clause to apply to what is clearly in-state commerce? Yeah, that one, too.
How about Roe v. Wade? That was pretty clearly going beyond the bounds of the Constitution. ("Penumbra"? Why not just admit that you're stretching it past the breaking point?) Do you really want Richard Nixon deciding whether he can throw out Roe v. Wade?
The one time that I know of where the president blatantly threw out a Supreme Court decision was when Andrew Jackson ignored the court's decision that whites could not encroach on Cherokee land.
Do you really want the president deciding which Supreme Court decisions are "clearly unconstitutional"? Not only is the president less of a constitutional scholar than the justices are, he is also more blatantly political than they are. He's going to judge the judges' decisions? That's a terrible idea, and it's absolutely not how checks and balances work.
And the fact that you think that is both good and constitutional makes me really unimpressed with your view that the debt ceiling is clearly unconstitutional...
That is totally not how this works. But if it did... what decisions would you have the executive ignore? Dred Scott? That would be fine. The one in 1942 that allows the Interstate Commerce clause to apply to what is clearly in-state commerce? Yeah, that one, too.
How about Roe v. Wade? That was pretty clearly going beyond the bounds of the Constitution. ("Penumbra"? Why not just admit that you're stretching it past the breaking point?) Do you really want Richard Nixon deciding whether he can throw out Roe v. Wade?
The one time that I know of where the president blatantly threw out a Supreme Court decision was when Andrew Jackson ignored the court's decision that whites could not encroach on Cherokee land.
Do you really want the president deciding which Supreme Court decisions are "clearly unconstitutional"? Not only is the president less of a constitutional scholar than the justices are, he is also more blatantly political than they are. He's going to judge the judges' decisions? That's a terrible idea, and it's absolutely not how checks and balances work.
And the fact that you think that is both good and constitutional makes me really unimpressed with your view that the debt ceiling is clearly unconstitutional...
"And one way for the executive branch to check the judicial branch is to disregard judicial rulings that are blatantly unconstitutional, just like the judicial branch regularly invalidates entire laws and government programs."
That is not even remotely true. That is not a power of the executive branch, which is supposed to uphold the law.
That is not even remotely true. That is not a power of the executive branch, which is supposed to uphold the law.
Andrew disagrees
>And one way for the executive branch to check the judicial branch is to disregard judicial rulings that are blatantly unconstitutional.
That is not at all how the Constitution is set up. There is no explicit power for the executive to ignore the judicial. It has happened once in US history, when Andrew Jackson continued his genocide against the Cherokee after the Supreme Court had ordered it stopped. "John Marshall has made his decision; now let him enforce it!", Jackson supposedly said.
It would be a VERY BAD precedent to do that again. It would be a huge step towards enshrining the President as a dictator.
That is not at all how the Constitution is set up. There is no explicit power for the executive to ignore the judicial. It has happened once in US history, when Andrew Jackson continued his genocide against the Cherokee after the Supreme Court had ordered it stopped. "John Marshall has made his decision; now let him enforce it!", Jackson supposedly said.
It would be a VERY BAD precedent to do that again. It would be a huge step towards enshrining the President as a dictator.
> There is no explicit power for the executive to ignore the judicial.
But there is: it's called the Constitution. Not any particular clause or article, but the whole document. The executive is allowed to check the judicial if the judicial ignores the Constitution. How else is the executive supposed to check the judicial?
> It would be a VERY BAD precedent to do that again.
It would be a bad precedent, but it would be an even worse precedent for the Supreme Court to force the government to default on its debt. The least bad of the two evils would be for the government to continue paying its debt by waving the debt ceiling away.
But there is: it's called the Constitution. Not any particular clause or article, but the whole document. The executive is allowed to check the judicial if the judicial ignores the Constitution. How else is the executive supposed to check the judicial?
> It would be a VERY BAD precedent to do that again.
It would be a bad precedent, but it would be an even worse precedent for the Supreme Court to force the government to default on its debt. The least bad of the two evils would be for the government to continue paying its debt by waving the debt ceiling away.
> How else is the executive supposed to check the judicial?
Pardons and nominating judges. Disregarding the Court is a constitutional crisis.
> would be an even worse precedent for the Supreme Court to force the government to default on its debt
On one hand, we have the Court allowing the President to overrule the Congress. Two branches agree. On the other hand, we have the President unilaterally overruling the Congress and the Court. One is a check. The other a coup.
Pardons and nominating judges. Disregarding the Court is a constitutional crisis.
> would be an even worse precedent for the Supreme Court to force the government to default on its debt
On one hand, we have the Court allowing the President to overrule the Congress. Two branches agree. On the other hand, we have the President unilaterally overruling the Congress and the Court. One is a check. The other a coup.
> Disregarding the Court is a constitutional crisis.
Then a constitutional crisis there shall be. Words don't scare me. If a "constitutional crisis" means the government _doesn't_ default on its debt and some politicians and pundits cry foul, and nothing else changes under the heavens, then let's have a "constitutional crisis".
> On the other hand, we have the President unilaterally overruling the Congress and the Court. One is a check. The other a coup.
Congress can impeach and convict if it's such a big deal. Until they do...
Then a constitutional crisis there shall be. Words don't scare me. If a "constitutional crisis" means the government _doesn't_ default on its debt and some politicians and pundits cry foul, and nothing else changes under the heavens, then let's have a "constitutional crisis".
> On the other hand, we have the President unilaterally overruling the Congress and the Court. One is a check. The other a coup.
Congress can impeach and convict if it's such a big deal. Until they do...
> Then a constitutional crisis there shall be. Words don't scare me
In what universe is constitutional crisis, the suspension of the rule of law, not cause a default? You’re trading a minor infraction for a major one. This is a false economy.
> Congress can impeach and convict if it's such a big deal. Until they do
Police can arrest me if murder is such a big deal.
In what universe is constitutional crisis, the suspension of the rule of law, not cause a default? You’re trading a minor infraction for a major one. This is a false economy.
> Congress can impeach and convict if it's such a big deal. Until they do
Police can arrest me if murder is such a big deal.
I can think of a few situations where taking the life of another human being would be justified, as a last resort.
> can think of a few situations where taking the life of another human being would be justified, as a last resort
Straw man. We aren’t saying there couldn’t be a situation where causing social and economic meltdown is valid. If America is threatening global nuclear war, yes, causing it to burn into a deep depression and possibly dictatorship is worth risking. You’re doing that to avoid technical default, which would occur anyway in case of a constitutional crisis.
Earlier, you conditioned: “if a "constitutional crisis" means the government _doesn't_ default on its debt…” That isn’t a valid condition. If the Congress and Court say debt limit, and the President tries to override, you get a constitutional crisis and legal default, on America’s debt, but also everything else.
Straw man. We aren’t saying there couldn’t be a situation where causing social and economic meltdown is valid. If America is threatening global nuclear war, yes, causing it to burn into a deep depression and possibly dictatorship is worth risking. You’re doing that to avoid technical default, which would occur anyway in case of a constitutional crisis.
Earlier, you conditioned: “if a "constitutional crisis" means the government _doesn't_ default on its debt…” That isn’t a valid condition. If the Congress and Court say debt limit, and the President tries to override, you get a constitutional crisis and legal default, on America’s debt, but also everything else.
Take two seconds to think about what happens when a president you don't like starts using this power. Trump: "The Supreme Court made the wrong decision in denying my vote fraud lawsuit. It's unconstitutional to allow voter fraud to determine an election. Therefore I'm declaring myself President for a second term."
> > There is no explicit power for the executive to ignore the judicial.
> But there is: it's called the Constitution. Not any particular clause or article, but the whole document
Then it's not in the constitution.
> The executive is allowed to check the judicial if the judicial ignores the Constitution.
He is? Where, specifically, does it say that?
> How else is the executive supposed to check the judicial?
He's not. The senate is, by impeachment.
Stop making stuff up, and actually read what's there.
> But there is: it's called the Constitution. Not any particular clause or article, but the whole document
Then it's not in the constitution.
> The executive is allowed to check the judicial if the judicial ignores the Constitution.
He is? Where, specifically, does it say that?
> How else is the executive supposed to check the judicial?
He's not. The senate is, by impeachment.
Stop making stuff up, and actually read what's there.
What is the desired end game supposed to be, of successive "clean" debt ceiling hikes? How much longer should we be spending money we don't have—enough to make inflation even worse? Enough that nobody will lend to us anymore and default is forced? What's the plan here?
Whatever needs to be done must be done during the budgeting process. Not when the check comes due. Congress wrote the check years ago. Now it's time to pay. If Republicans truly want a more balanced budget they should pursue it then. Of course, the last time the Republicans passed a budget it was far from balanced. Make of that what you will.
> Whatever needs to be done must be done during the budgeting process.
If the "normal" process could fix our serious problem, it would have done so long ago. Instead, deficits have exploded. If the only way to force a discussion on reigning in spending before disaster strikes is via debt-ceiling negotiation, so be it.
> Of course, the last time the Republicans passed a budget it was far from balanced.
And shame on the Republicans who passed that budget!
If the "normal" process could fix our serious problem, it would have done so long ago. Instead, deficits have exploded. If the only way to force a discussion on reigning in spending before disaster strikes is via debt-ceiling negotiation, so be it.
> Of course, the last time the Republicans passed a budget it was far from balanced.
And shame on the Republicans who passed that budget!
The debt ceiling isn't what prevents us from spending money we don't have.
Congress causes deficit spending to happen by passing budgets. The debt ceiling is more like refusing to pay your credit card bill after you've already used it to buy stuff.
Congress causes deficit spending to happen by passing budgets. The debt ceiling is more like refusing to pay your credit card bill after you've already used it to buy stuff.
I am not against Congress passing a debt ceiling hike, I am against Congress passing a "clean" hike that is not paired with the needed cuts in spending. The normal budgeting process clearly hasn't been working, if debt ceiling negotiations are the only way to force a fix then so be it.
But it won't work. The administration won't trade spending cuts for a clean hike. It's like a hostage taker whose demands aren't met. You're left with two options: surrender, or shoot the hostage. Neither gets you what you want, but one is more reasonable than the other.
The adminstration doesn't write budgets, Congress does, even if the president hosts the meetings where they talk about it.
(Although presidents do run on doing a lot of things they don't have the power to do.)
(Although presidents do run on doing a lot of things they don't have the power to do.)
The President writes the budget. You can find the budgets here: https://www.govinfo.gov/app/collection/budget/2023
Congress passes nonbinding budget resolutions on themselves and binding appropriations bills on the Treasury.
Congress passes nonbinding budget resolutions on themselves and binding appropriations bills on the Treasury.
No, the executive writes and releases a budget for PR reasons which Congress then receives, tears up into little pieces, and writes their own.
If the presidency and Senate are controlled by opposing parties the Senate wins.
Remember when Trump's proposed budget just defunded Meals on Wheels? That didn't actually happen because it's not real.
If the presidency and Senate are controlled by opposing parties the Senate wins.
Remember when Trump's proposed budget just defunded Meals on Wheels? That didn't actually happen because it's not real.
> President writes the budget
The President proposed budgets. The House and the Congress have the power of the purse.
The President proposed budgets. The House and the Congress have the power of the purse.
The president is part of the legislative branch because they have veto power. It's really not as simple as "the president writes the budget" or "congress writes the budget". The entire legislative branch writes it together.
> president is part of the legislative branch because they have veto power
Veto is a check on the legislature by the President. It does not make the President part of the legislature anymore than it makes every district court judge. (The Vice President has a hybrid role.)
Congress can pass a budget with zero executive input by overriding the veto. One can correctly say the President is part of the legislative process. But not the branch.
Veto is a check on the legislature by the President. It does not make the President part of the legislature anymore than it makes every district court judge. (The Vice President has a hybrid role.)
Congress can pass a budget with zero executive input by overriding the veto. One can correctly say the President is part of the legislative process. But not the branch.
You're getting into semantics and I disagree with your definition of legislative branch. I guess we'll just have to agree to disagree. If you are a part of the lawmaking process you're in the legislative branch as far as I'm concerned.
Well, you know, your definition of the legislative branch is the non-standard one. It's like you looked at rain, and said "that's mud", and someone said, "that's not mud, it's rain, because mud has dirt in it", and you said, "there's some dirt in rain, too; I guess we'll just have to agree to disagree". No, it's not "agree to disagree"; they're right in their definition, and you're wrong.
That's because he's a "check and balance" on the legislative branch, not part of it. Congress "checks" the other branches by approving nominees and controlling their budgets.
And then effectively nobody checks SCOTUS, which is kind of a problem.
And then effectively nobody checks SCOTUS, which is kind of a problem.
We already spent the money. Raising the debt ceiling is just a way for us to formally say "not declaring bankruptcy see ya in a bit"
Our debt will continue to grow exponentially, along with our overall economy and population size. That's the plan.
Your population size is not growing anywhere near exponentially: https://www.google.com/search?client=firefox-b-d&q=us+popula...
[deleted]
Biden has already agreed to negotiate on the budget once the debt ceiling is raised.
Strangely, the 14th Amendment's original intent was to prevent forgiving debt, not prevent default.
albatross13(4)
there are many ways to avoid default.
(1) discharge petition - bill from committee to a vote.
(2) Fourteenth Amendment Constitution prevents willful default until SCOTUS says otherwise. Just keep issuing debt.
(3) High coupon and low principal. 10-year bond with $1 in principal and annual $100 coupon will increase debt ceiling almost 1000X.
(4) high denominations coin minting
(1) discharge petition - bill from committee to a vote.
(2) Fourteenth Amendment Constitution prevents willful default until SCOTUS says otherwise. Just keep issuing debt.
(3) High coupon and low principal. 10-year bond with $1 in principal and annual $100 coupon will increase debt ceiling almost 1000X.
(4) high denominations coin minting
> (4) high denominations coin minting
Far and away the most entertaining path. Who gets to carry the trillion dollar coin from the mint to the treasury? How many heist plots will be foiled? How many movies about said heist plots will be made? Will there be a elaborate motorcade that's ultimately a ruse while the coin is sent by USPS in a plain envelope?
Far and away the most entertaining path. Who gets to carry the trillion dollar coin from the mint to the treasury? How many heist plots will be foiled? How many movies about said heist plots will be made? Will there be a elaborate motorcade that's ultimately a ruse while the coin is sent by USPS in a plain envelope?
> Who gets to carry the trillion dollar coin from the mint to the treasury?
We should pick America's wealthiest and therefore most trustworthy citizen to do the job.
Bizarrely enough, Simpsons did it.[0]
[0]https://www.youtube.com/watch?v=_KgHy3Pi5Yw
We should pick America's wealthiest and therefore most trustworthy citizen to do the job.
Bizarrely enough, Simpsons did it.[0]
[0]https://www.youtube.com/watch?v=_KgHy3Pi5Yw
What would be the point of stealing a trillion dollar coin? Who could fence it?
Sounds like something Cobra from GI Joe would do. But in reality, it would have little value to anyone other than the intended bearer.
[deleted]
These are bandaids. Very soon it will become apparent that the US needs to take extraordinary measures to solve its debt problem, and such measures need an extraordinary excuse, more extraordinary than the recent pandemic.
The market doesn't believe this. If it did, the 10 year Treasury bond rate would be a lot higher, instead the yield curve is negative.
https://ycharts.com/indicators/10_year_3_month_treasury_spre...
https://ycharts.com/indicators/10_year_3_month_treasury_spre...
Market isn't always rational.
It's more rational than Congress at least, is only just.
I mean why ruin the infinite money hose the U.S. has?
The cost to service debt has been going down.