Saturday, May 7, 2011

Interview with James K Galbraith

The Prospect talks with James Galbraith about why the doomsday predictions on the debt ceiling are wrong.

Prof. Galbraith explains why the debt-ceiling debate is much ado about nothing and the President should not let the deficit hawks hold him hostage. Short and sweet.


beowulf said...

Jamie mentions of Sect. 4 of the 14th Amendment (the validity of the debt... shall not be questioned). If the President went to Court to challenge the constitutionality of the debt ceiling, there's no question he'd win. There's a Supreme Court case on point that couldn't be any clearer, Perry v. United States, 294 U. S. 330 (1935). I love Chief Justice Hughes's use of "plighted faith", good name for a race horse.

"By virtue of the power to borrow money "on the credit of the United States," the Congress is authorized to pledge that credit as an assurance of payment as stipulated, as the highest assurance the government can give -- its plighted faith. To say that the Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise, a pledge having no other sanction than the pleasure and convenience of the pledgor. This Court has given no sanction to such a conception of the obligations of our government...

"The Constitution gives to the Congress the power to borrow money on the credit of the United States, an unqualified power, a power vital to the government, upon which in an extremity its very life may depend. The binding quality of the promise of the United States is of the essence of the credit which is so pledged. Having this power to authorize the issue of definite obligations for the payment of money borrowed, the Congress has not been vested with authority to alter or destroy those obligations."

Tom Hickey said...

Excellent reference. Did you send that to Jamie?