When the limit is reached, it forces Congress to reaffirm its willingness to spend what it is already legally obligated to spend.
In my view (I am not a constitutional lawyer), the president should just ignore the debt ceiling as contradictory. Now, the president is assuming that one horn of the dilemma prevails when there is no logical reason for doing so. A constitutional argument can be made that the debt ceiling is in violation of the Constitution, specifically the Fourteenth Amendment, Section Four, and therefore, it doesn't stand.
The Debt Ceiling Limit is Destructive, Duplicative, and Dumb
Stephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders
8 comments:
We just need to default…
Then when nothing real happens as a result it will be instructive…
You have to break a few eggs to make an omelette…
Failure happens all the time in STEM it’s revealing…
Only Art degree morons fear failure..,
We should just default… get it over with then we’ll make the proper adjustments..,
“ That’s what’s so frustrating about the debt ceiling limit. When the limit is reached, it forces Congress to reaffirm its willingness to spend what it is already legally obligated to spend.”
No it doesn’t….
There is a requirement to resolve that congress approves of an increase in the amount of UST securities issued independent of any appropriations…
MAGA ideally wants balanced trade… “on shoring”..,
If there were MAGA balanced trade there would hardly be any deficit… ie not enough for anyone to complain about…
So if MAGA gets control of Congress they could not vote to increase the debt ceiling in order to force the transition back to domestic production…
There is nothing wrong with any of this… it’s political hardball…
If Dems want to increase the debt ceiling then they should have won the congressional elections..,
If congress has passed laws requiring spending, limiting the amount of tax the IRS can recover and limiting the amount of bonds, notes and bills the Treasury can issue, then the balance has to end up as a carried forward item at the Federal Reserve.
In other words any power the Fed thinks it has to say 'no' to a Treasury order to pay either never existed in the first place, or has been repealed under the doctrine of implied repeal.
That avoids both the issue argument, the discount argument and the 'lets issue bonds at a reverse discount' approach.
If you're not following Josh Barro's argument for 'premium bonds', here it is: https://www.joshbarro.com/p/a-boring-plan-for-managing-the-debt
Law interpretation guide on the matter at Forbes here. https://www.forbes.com/sites/rhockett/2023/01/19/stop-the-charade-the-federal-budget-is-its-own-debt-ceiling/?sh=45602b4b7bc9
MMT people should be pushing to have it declared that the ability of the Fed to say 'no' to a Treasury order has been repealed. Under the principle of least change that keeps the debt ceiling in place. It then becomes like the Fiduciary Note limit - a restriction on the ability of Treasury to issue items that are *alternatives* to holding Banking deposits in the Federal reserve system.
Common gentlemen, this is theater. The law is always pushed aside by political and ideological imperatives.
Current MMT brain trust:
https://twitter.com/jstein_wapo/status/1616415245605502977?s=46&t=1iWTuNtor3xhqrdHkfSmTg
Ignore SCOTUS and have armed goons storm the Fed… 🤔
How does Nathan Tankus make a living?
Substack. A lot of people do these days.
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