• Dump the debt ceiling

    Andrew Pavelyev makes the perfectly sensible suggestion of simply doing away with the debt ceiling.

    The federal debt ceiling is utterly redundant, since Congress already has the sole constitutional power to authorize any federal spending. Even if Congress were concerned about the remote possibility of the Treasury borrowing a lot of cash just for the fun of it and piling it in the White House basement (since there’s no way it can be spent on anything without explicit permission from Congress), there would be ways to prevent that without any debt ceiling — by authorizing the Treasury to issue new debt only as long as the amount of cash on hand does not exceed the current federal budget. The mere fact that the debt ceiling serves no useful function should be more than sufficient reason to repeal it.

    Annie Lowery agrees. Bruce Bartlett has said the President should simply act independently and continue selling Treasury securities. It seems that doing away with the debt limit is the most straightforward approach, with the least uncertainty.

    A balanced budget means the ins match the outs. Congress can already achieve this or at least move toward it via the budgetary process. We don’t need superfluous steps in an already (seemingly) impossible situation of political gridlock that keeps us from addressing our fiscal problems.

    • Doing away with the debt ceiling would do away with a lot of political theater. It would also deprive the Republicans of two bites at the apple of cutting spending they don’t like.

      What makes you think that the fact that the proposal is sensible has anything to do with the matter?

    • I read one article which pointed out that the Constitution gives the Treasury the authority to borrow whatever the country needs so there is not need to get the permission of Congress to borrow.
      The Treasury should just keep borrowing whatever it needs and let the Republicans sue them if they don’t like it.

    • @Mark – please link to the article or the Constitutional provision.

      So far as I know, the relevant provision is the 14th Amendment, which provides that public debt must not be questioned, that is, the govt must pay on its bonds and cannot default. That provision does not authorize borrowing beyond the amounts provided by law.

    • @Mark Spohr
      The argument you make is what Bruce Bartlett said more or less. The Constitutional authority (full faith and credit…) trumps statutory law. And in any event, since most of the debt is 3 month notes, there is almost no risk to investors of not being paid because court case will take a while and then we will be to the next election in any event

    • @Don & Mark – the relevant provision is Section 4 of 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.”

      Bruce’s argument (to which I’ll confess to having contributed) is a major stretch. It’s hard to argue that all moneys appropriated, let alone whatever the govt wants to spend, is “public debt of the US authorized by law.” As a random example, Social Security is not a binding obligation of the US govt. See Fleming v. Nestor, 363 U.S.
      603 (1960). If it’s not a binding obligation, it’s surely not public debt.

      Bruce’s article is at http://www.capitalgainsandgames.com/blog/bruce-bartlett/2233/constitution-and-national-security-trump-debt-limit for those interested.

      The constitution does not “give[] the Treasury the authority to borrow whatever the country needs so there is not need to get the permission of Congress to borrow.”

      The notion that it would take courts a long time to rule, therefore the president can do whatever he wants and investors would buy anyway is, in a word, silly.

    • I should have taken the time to Google it when I first posted but was busy this morning.
      Here is the article by David Rivkin:

      “…Section Four of the 14th Amendment. This provision, which forbids any default on outstanding federal debt, appears to limit the leverage Congress can exercise in this increasingly frequent showdown with the president.”

      He goes into the history of this clause after the Civil War as a protection to prevent the US from defaulting on the considerable sum it had borrowed to finance the war. It was intended to tie the hands of Congress by ensuring that the government would continue to borrow to pay the debt.
      However, he then goes on to make the argument that the Congress could reclaim control over borrowing by specifically providing for borrowing with every spending bill. I’m not sure I follow his logic here but it is an interesting argument.
      Probably best to test this by issuing some new bonds above the debt limit and have the Supreme Court rule on it… that would be very interesting.

    • I am not a constitutional law expert. My main point is that passing a budget and then Congress saying no we won’t allow the govt to borrow the money necessary to carry out the budget we just passed makes no sense. The budget resolution the House just passed requires the debt limit to be raised.

    • Don, I agree. If the Congress passes a budget/ spending/ etc. then I would assume that the rest of government (Executive Branch) can assume that they have authority to do whatever it takes to execute the Congressional action. This should include borrowing money if necessary.