Counter-argument to the legality of "the coin." Preston Byrne is a lawyer. He explains why he thinks it unlikely the courts would support such a gambit.
The fourth section of the Fourteenth Amendment might fare better in the courts, but it has certain qualifiers that the court could use to deny applicability. However, it seems to be stronger than the "the coin," which can only be described as a gambit that Congress never intended in passing the legislation.
However, a further issue is that this is a constitutional question that affects the power of the executive branch, potentially setting up a constitutional crisis between the executive and judicial branches.
In the end, there will be a "just in time" political solution though. The US is not going to default on the public debt, interrupted social welfare payments such as social security, etc. The political and economic fallout is so uncertain that neither party can safely assume that it will be isolated from it. Not gonna happen. In the meanwhile, the congressional leadership will continue to make asses our of themselves, further undermining American soft power and government credibility.
Preston ByrneMinting the “Trillion Dollar Coin” is illegal
Preston Byrne's analysis is the one that seems strained and amateurish to me. Twitter quotes, weird graphs illustrated with cartoon figures. Not the kind of thing one sees in law journals or court judgments.
ReplyDeleteThe key ridiculousness is at the end "restoring constitutional order would force a default."
There is no way to square that with the 14th amendment and many Supreme Court Cases stretching back to John Marshall declaring that the government does not have the power to default on "government obligations". The UK for instance does have that power, but Congress is not as sovereign as the Parliament.
Many cases show defaulting would violate the constitutional order - so that could not possibly force a default.
I have read that President Nixon announced in 1971 that the U.S. would no longer promise to exchange gold for U.S. Dollars. Which you know could kind a been a big deal. And probably totally illegal using Preston Byrne's analysis as a guide. But it happened anyways. So how did he manage to do that and how does that that substantially differ from ordering Treasury to mint a platinum coin when Congress has already made a law allowing it to do so?
ReplyDeleteBiden should just order it up. Let the courts work on it after the fact. I'm not even sure who would have standing to file a lawsuit aside from Congress itself.
But obviously I am not a lawyer.
While there probably will be a just in time fix, you're severely underestimating the craziness of the republican party.
ReplyDelete@Jerry Brown
ReplyDeleteBingo!
https://twitter.com/markets/status/1445861757793230848
ReplyDelete“ Secretary of State Antony Blinken says the U.S. wants China to act “responsibly” when it comes to addressing the potential impacts of China Evergrande's financial crisis”
lol Blinken says China should “act responsibly! “ on their debt meanwhile whole US Congress threatening to default on bazillions of USTs..
Can’t make it up…
Hey maybe the whole evergrande thing is China is holding back some USDs as security against this threatened sovereign default…
Ha Ha. ZH says China will likely fire back that the US should act responsibly regarding its sovereign debt (of which China holds a large stock).
ReplyDeleteAnyway, the takeaway is that the global economy is an interconnected system and everyone involved needs act so that it functions optimally, without inducing distortions for the benefit of a part. This is a distant goal at this stage.
https://twitter.com/foxbusiness/status/1445871490679939073?s=21
ReplyDeleteSounds like Mitch pitching a GOP Dec extension for eventual solo Dem reconciliation…
A short thread on where Byrne goes wrong - answers both his blog piece and argument with Rohan Gray
ReplyDelete@prestonjbyrne
tries to argue on definitions. On "proof" & on "circulating." Yet he is wrong on both
1/x
I also mention Chevron Deference
Tom, yes, this court anyway.
DeleteOh, and Grey, not Gray.
I believe the possible sticking point with SCOTUS — if it would get that far and it could if brought into play and they were willing to accept the case, that is — is that the originalists would decide based on the intent.
ReplyDeleteHasn't Rohan Grey already addresses all these objections?
ReplyDeleteThe legal argument is which is the least bad law to break to maintain the constitutional direction. Something has to break - either spending that has been directed must not happen, the debt has to be defaulted on to maintain the spending, or the government uses its power of seigniorage clearly laid down in the constitution using a law that congress has passed.
It's always interesting that the default assumption is that spending that has been directed should not happen - as though maintaining a pretence is far more important than paying people their wages and their dues.
Proof coins and bullions coins have a face value and are legal tender.
ReplyDeleteIf they can't be 'circulated' then how can that face value ever be employed?
"The UK for instance does have that power, but Congress is not as sovereign as the Parliament. "
ReplyDeleteOnly if Parliament deliberately changed the law of the land. As it stands UK law is very clear on repayment of National debt. It is without qualification and HM government is required to do it without question.
National Loans Act 1968, s12(4)
"The principal of and interest on any money borrowed under this section, and of any money due under securities issued under this section ... shall be charged on and paid out of the National Loans Fund with recourse to the Consolidated Fund"
National Loans Act 1968, s12(7)
"The Bank of England may lend any sums which the Treasury have power to borrow under this section"
National Loans Act 1968, s15(1)
"The Treasury shall from time to time pay out of the Consolidated Fund into the National Loans Fund sums equal to the excess of the amounts required to meet payments out of the National Loans Fund".
and s15(2)
"Notwithstanding the provisions of section 13 of the Exchequer and Audit Departments Act 1866, payments under this section shall be effected without the granting of credits by the Comptroller and Auditor General."
That last bit is technical, but it essentially means that Treasury doesn't even have to ask the officer of parliament who normal countersigns spending orders as being "approved by parliament" when it is paying obligations under the national debt. It can do it regardless.
Rohan Grey is just a lawyer like any other… lawyers go to court to argue against other lawyers every day…
ReplyDeleteLegal conflicts are adjudicated in courts…
Can't be done. The parliamentarian forbids it ;)
ReplyDeleteRohan Grey is just a lawyer like any other… lawyers go to court to argue against other lawyers every day…
ReplyDeleteLegal conflicts are adjudicated in courts…
Exactly right.
Moreover, the one that has the better argument doesn't automatically prevails, since the judges have different frameworks based on different assumptions in approaching legal interpretation. In economic issues, this includes their understanding of economics and political (value-laden) views. This is why control of the judiciary is so important politically.
Hasn't Rohan Grey already addresses all these objections? The legal argument is which is the least bad law to break to maintain the constitutional direction. Something has to break - either spending that has been directed must not happen, the debt has to be defaulted on to maintain the spending, or the government uses its power of seigniorage clearly laid down in the constitution using a law that congress has passed. It's always interesting that the default assumption is that spending that has been directed should not happen - as though maintaining a pretence is far more important than paying people their wages and their dues.
ReplyDeleteSome argue that the administration should just continue paying the bills. This assumes the Fed would write the checks, although IIRC there is either a law or reg that gives the Treasury secretary the power to direct the Fed to do under such circumstances.
Then let whoever has standing challenge it court or let the Congress try to impeach and the president, which is impossible as long as the Dems are in control. Even if the GOP were to win big in the midterm, they would still need two-thirds of the Senate to remove.
Only if Parliament deliberately changed the law of the land.
ReplyDeleteMy point was that the Congress cannot do this, even if it changes the law. Congress is the strongest of the three branches, but it is a truism that the Parliament is more sovereign than the US Congress. There would have to be something of a conspiracy of all three branches to default. Possible, but not likely.
It's a common enough thing in the USA, buck-passing, for Congress to pass crazy laws, sometimes even the President to sign them, for purely political show purposes or to throw red meat to ravening dogs, relying on the courts to nullify them. Probably as before this is just political theater, brinksmanship. Biden just signaled support for preventing Senate filibustering for this purpose, so some good may come out of it. If this succeeds and helps the big bills pass, he gets some points for Machiavellian maneuvering from me.
John Marshall noted that not even the greatest imaginable sovereignty could default on, erase the moral obligation, once incurred. Again, the case law is for the spending, wholly against default. Not only courts, but I am not sure if a single Supreme Court Justice or even a single federal judge in US history has ever ruled in a pro-default direction. The 2004 Cherokee Nation case said that the government must pay an obligation, even if Congress does not make a specific appropriation. Vaguely similar to the case at hand.