debt limit

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debt limit

Postby Kindi » Mon Jul 04, 2011 10:57 pm

Section 4 of the 14th Amendment says "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"

"…a modest approach for the President to take would be not to conclude that the debt limit is facially unconstitutional, but rather that it would be unconstitutional as applied, to the extent that it would prevent payment of interest on the debt. If the President took that position, the Administration would in effect continue to raise the debt limit as necessary to make payments on the debt. But when other bills came due, if there were insufficient funds to pay them, that would not justify the issuance of additional debt. The consequences of such nonpayment are sufficiently severe that the President and Congress could continue to play their game of chicken, but the worst case scenario would be a government shutdown, rather than a default. Perhaps the President can accomplish this even without invoking the Public Debt Clause, simply by prioritizing payments on the debt over other payments that come due, but his ability to do that depends in part on the timing of revenues and expenditures, and an announcement that the President will make payments on the debt despite the debt limit statute no matter what would calm the markets." ... from-1998/
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Re: debt limit

Postby kiryan » Tue Jul 05, 2011 3:52 pm

I couldn't get into the article. I've read some others blistering criticizing Obama for suggesting he can take some sort of unilateral action on this... and I've not heard specifics on what exactly is being considered, just a lot of rhetoric and claims the sky is falling. I think its an awful broad reading and self serving to say that Obama can unilaterally raise the debt ceiling (even if it is just to pay interest on the debt), but that seems somewhat reasonable. I have very little to no objection to that, I have an objection to raising the credit limit so they can pay for anyhing and everything else.

Also, the thing I think we need to clear up is who decides what gets paid when they can't borrow anymore... as far as I understand, the executive branch does. Given that money is constnatly flowing into the government... i'd like someone to explain why if there is money constantly coming in, why interest payments on debt can't be made in the event of hitting the debt ceiling. I read some articles on Congress suggesting that they would pass a law that said in the event we hit a debt ceiling, that the new law would order treasury to pay interest on debt first with any incoming revenue... ie prevent a 'default' even if social security checks aren't going out.

In a past thread, I posted a position that as far as I'm concerned when push comes to shove we should pay for our own citizens and let debt holder wait. I know many would disagree with that, and its probably a crazy position given what would happen with interest rates from a practical stand point. If my kids are starving to death, they get fed, the house or my credit card be damned. Its insane to do the "right" thing especially afte we just gave the worlds banks hundreds of billions. I don't want this scenario, but if we're going to go bankrupt, then go bankrupt and take care of your basic needs not your investors. The solution I want is debt limit increase for spending decrease (no new revenues). This bullshit that its not a tax if you call it a fee, or eliminate a deduction is crap. I don't agree with the corporate jet "loophole", but I don't agree with taking more money out of the economy via taxes fees or eliminating existing long running deductions.
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Re: debt limit

Postby Corth » Tue Jul 05, 2011 4:21 pm

It says the validity of the debt shall not be questioned. I think there is a distinction between claiming the debt is invalid, and acknowledging it is a valid debt, and then defaulting on it anyway. You don't have to question the validity of your debt in order to default on it.

That being said, as a practical matter defaulting on the debt - even a technical default such as this - would be a truly stupid decision on the part of the government.
Having said all that, the situation has been handled, so this thread is pretty much at an end. -Kossuth

Goddamned slippery mage.

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