No reason to waste words with a description of current events - the United States is back in a debt ceiling standoff, again, and the U.S. Treasury Department is estimating that the date that the U.S. will default on its obligations absent an increase in the debt ceiling is October 17. Tick tock. This time around, we have the added bonus of a partial shutdown of the federal government. I understand that The Daily Show has fired all its writers and The Onion has been shuttered, because reality is satire now. Dogs and cats, living together, mass hysteria.
We've been here before, unfortunately, and recently. And a couple rounds of debt-ceiling roulette ago, I wrote something about how the debt ceiling may, possibly, not be constitutional by virtue of Section 4 of the 14th Amendment. I'm happy to report that there seem to be a number of folks who, strangely enough and to varying degrees, agree with me. There's even a law review article about it.
I'm not going to re-hash my original post, but I would like to address a couple of things that have come up since related to the issue:
Is the whole trillion-dollar coin thing pretty dumb? Yes, it is. First, it doesn't need to be a coin: in the 1930s, the Treasury printed $100,000 bills for a similar purpose. What is with people and their platinum fetishes? Still, probably a dumb idea. People complain all the time that the Federal Reserve is printing money. It isn't. The Treasury minting a trillion dollar coin, depositing it in the Federal Reserve, and then drawing on it? That is printing money.
Should the President disregard the debt ceiling as unconstitutional? While I'm clearly not an expert, I don't think the executive branch is the branch of government tasked with saying what the law is. On the other hand, the Obama White House does have a recent SCOTUS win in its belt for guessing correctly. As the law review article above argues, disregarding the debt ceiling and carrying on as normal is probably the "least unconstitutional" option that the President has available, but the damage to the separation of powers would be terrible if that option was taken. Saying "least unconstitutional" is like saying "least gangrenous."
Is what congressional Republicans are doing today identical to what southern politicians were threatening to do during reconstruction that led to Section 4 of the 14th Amendment being passed in the first place? Not exactly, but the federal government isn't financed the same way today, either. After the Civil War, southern politicians didn't want the federal government to continue paying on the bonds issued to finance the war. In other words, they wanted to repudiate the debt incurred during the civil war, but weren't objecting to further bond issuances. Today, the U.S. Treasury Department functionally rolls the debt over like a large corporation does - if there isn't enough cash in the till to fund the current liabilities of government, the Treasury issues new bonds. Refusing to raise the debt ceiling means that the Treasury wouldn't be able to fund its current liabilities with new bond issuances. So, functionally, the government wouldn't be repudiating the debt by refusing to pay on bonds that were outstanding despite having the money to do so; it would be acknowledging that the debt was owed but defaulting for a self-imposed inability (unwillingness?) to pay. The difference is splitting hairs, really.
Are the people who say that it's not really a big deal if Congress fails to raise the debt ceiling and the U.S. defaults on the national debt wrong? Yes. Definitely.
Should we all stock up on water and canned food and head for our bug-out shelters? ...Maybe. But I for one welcome our new insect overlords.
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