Nobody From Nowhere (@i8dc)

Occasional Common Sense

Obama Would Just Disregard Debt Ceiling

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UPDATE: My ideas on the debt ceiling and the trillion dollar coin are similar to those in earlier articles by Neil H. Buchanan and Michael C. Dorf and Eric Posner. Read them too.

Okay, following up on what I wrote here about the Trillion Dollar Coin, some thoughts about how I see the debt ceiling fight going.

First, recall that I have faith that the Obama administration wouldn’t have given up on not just the Coin, but also the 14th Amendment gambit, without having a better idea in play.  If the administration thinks a debt ceiling-induced spending freeze would significantly damage the economy (I think they do), and if it thinks there’s any likelihood that the Republicans actually would fail to raise the debt ceiling (I also think they do), not having a way out would be extremely irresponsible. Which, call me fool, I don’t think the Obama administration is.

The only way Obama specifically removes two promising options is because they already have a better path. Which I think is to disregard the debt ceiling law.

Here’s how it goes down.

When we approach zero hour, when the Accounting Shuffle the Treasury’s currently engaged can no longer prevent a breach of the debt ceiling, the administration will have two options: follow the debt ceiling law or follow appropriations laws.

If Obama follows the debt ceiling law, he disregards the appropriations laws that direct the government to spend money. Similarly, if he follows appropriations laws, he disregards the debt ceiling law.

Either way, the Republicans in Congress can impeach him. He’s either going to break the debt ceiling law or he’s going to break appropriations laws.

I’m not a legal scholar, so please tell me if I’m wrong, but I’ve found nothing that indicates which of the debt ceiling and appropriations laws have precedence. In which case, President Obama gets to choose which law he will follow.

Either way, he’s breaking the law. The question for him is easy: which option does the least harm? And, surprise surprise, Obama (and virtually every economist in the world) thinks following the debt ceiling law would be much, much more damaging.

Okay, so what’s the basis for disregarding the debt ceiling rather than appropriations, from a legal point of view?  This is where it gets fun.

If President Obama were to follow the debt ceiling law, he would become the sole decision-maker about spending, which Congress (and everybody else) should find completely intolerable.  Here’s how it works.

There’s some question about whether it’s technically possible to manage to pay some bills and not others, but let’s assume for the argument that the government can choose to pay every single check individually (there are apparently 80,000,000 per month). There’s significant reason to find that debt service takes precedence over other spending.  Let’s say revenues cover only 70% of spending, and that debt service costs 20% of the budget.  After servicing the debt, Obama would be left with 50% of normal revenue to distribute to 80% of the budget.

How would he do this?  The answer is that he can’t. Again, I’m not a lawyer or a legal scholar, but there’s nothing in the Constitution to support the notion that the president can pick and choose which of Congress’ appropriations to honor. He must spend all the money that Congress says to spend. The president’s administration administers the budget (funny that). All spending choices originate in the House.

That’s the President’s line.  He comes out in a primetime address and says: “Look, people, if I were to follow the debt ceiling law, I would necessarily have to make decisions about how to spend the money we have.  And I know a chunk of you crazies think I’m some kind of power grabbing socialist; well why the hell aren’t you screaming at your Congressman about this unprecedented shift of power they’re trying to force on me? As much as you think I’m a tyrant, I don’t want to make these decisions. And the Constitution doesn’t say I can.”

But imagine if he did so anyway. After paying the interest on the debt, the President could pick and choose anything covered in the latest continuing resolution to spend money on. He could zero out individual things. He could send aid to states and/or districts that support him, and not to those that don’t. Maybe he would pay Democratic Congressional staffers, but not Republicans.

All of this would be against the law and patently unfair, but that’s the point: following the debt ceiling law necessitates breaking other laws and being unfair; might as well make it count.

Maybe the Republicans can’t be convinced to get rid of this stupid debt ceiling once and for all, which is the sensible path.  But do they really want to give this President unprecedented power over the purse?

That we’re even considering this question says a lot about the competence of many Republicans in Congress. Seriously, it’s like a bunch of little kids running around up there.

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Written by David Clayton

January 16, 2013 at 12:27 am

Posted in Punditry

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