One of the more mysterious aspects of the debt ceiling crisis is what happens if we actually go over the edge. There are two basic possibilities:
- Treasury simply pays bills on a first-come-first-serve basis. So if X-Day arrives on, say, June 1, and Treasury runs out of cash at 11 am, all the bills still in the queue after that would get tossed aside. This would be an entirely random set of vendors, Social Security recipients, Medicare providers, and so forth.
- Second, Treasury prioritizes payments. Maybe Social Security and bond repayments go to the top of the queue while everyone else gets (temporarily) stiffed. The problem with this approach is that Treasury secretaries have consistently warned us that our computer systems can't do it. They're set up to spit out checks when they're due, and that's that. Janet Yellen is the latest to confirm this:
Ms. Yellen declined to elaborate on how exactly she would proceed if the debt limit was not lifted, but she dismissed the idea that “prioritizing” certain payments that the government is required to make would be an easy solution. She noted that government payment systems were devised to pay bills on time, not to decide which ones to pay.
“Prioritization is not really something that is operationally feasible,” Ms. Yellen said.
This would be hellishly chaotic. Can you imagine? A bunch of Social Security recipients get their checks, but then the machine suddenly stops and the rest of the day's recipients get nothing. What happens then? Do they lose their place for a month, or are they first in line for the next day's check run? And what about bondholders? Do folks from Botswana get paid because they happen to be first in alphabetical order, while investors in the UK get defaulted?
We've never gotten to this point, so we don't know for sure what would happen. But it sure sounds like we'd all be at the mercy of a gargantuan piece of programming designed to do precisely one thing—print checks—with no discretion and no ability to stop or start except on the basis of whether there's a few dollars in the till. This works fine in ordinary times, but God only knows what it will do if Republicans shut things down. Helluva way to run a railroad.
this is the first time i've actually expected us to really start defaulting on payments and the more i think about it, the more insane it seems. as this post illustrates, just logistically, any plan to deal with it in some coherent manner seems virtually impossible to implement.
When one party would rather rule in hell then serve in heaven--expect hell on Earth.
The dog finally caught the car...
👍👍👍👍👍
I assume sometime in the next week, Biden will address the nation in prime-time saying he will either ignore the limit or use one of the proposed workarounds. It will still lead to turmoil but not as much as a default and in response, the GOP will make sure there's a gov't shutdown in October when the budget expires.
My guess is different. I think that Biden’s going to fold and give the extreme right a lot of what it wants. I think that the meaning of Ezra Klien’s NYT piece and other similar trashing of ways out of this nightmare. Unfortunately, he just hired a new radical centrist chief of staff so basically he’s decided he doesn’t want to be re-elected. It’s going to be a disaster and the democrats are going to be blamed.
If Biden capitulates, it would be a terrible outcome. But I don't know if he can capitulate far enough to make a deal. Would the GOP House agree to it? Matt Gaetz just yesterday was saying his side doesn't think they should be negotiating at all. What if McCarthy tries to pass a bill with Dem votes instead? Gaetz & co. can vacate the chair. Then no deal. What would Dems in the Senate do if a p.o.s. bill comes out of the House? Biden needs almost every D vote, and many senators have already told him he has better options. So good chance, still no deal.
From the outside, no one knows exactly what the WH is planning to do. Lawrence O'Donnell last night gave the most optimistic view that Biden has McCarthy where he wants him, implying they could wrap up debt ceiling and budget issues all at once. I dunno.
But if Biden cuts a really bad deal, and forces Dems to get behind it, it could be the end. Politically, it could fracture the D coalition. Economically, it could turn the economy south at a bad time. Historically, it could turn Biden into our Hindenberg. (I'm not referring to the Zeppelin, but that analogy would work too.)
I don't see Biden doing a really bad deal, or trying to force one onto the party. His whole career track has been Mr. Median D, even with the way he was working on BBB (so many ages ago now).
I could easily be wrong, but I think his positioning is far more important than anything he's been saying. So he's setting up as so reasonable he'll talk with the R "leadership" even about something that's non-negotiable, no hard-lining on his side. And every time they draw breath the Crazy Caucus wants more. McCarthy even said yesterday yeah, the R give is that we don't default, and in return the administration has to give up everything it's ever done or campaigned on and push through a bill so stingy even trump won't support it. Was it Gaetz who openly talked about full faith and credit being the hostage, his word?
Point is that the longer this goes on the more they run their mouths, and every word reveals more starkly what nihilists and destroyers they are. Clarity from Biden would give them an identifiable foil to react to and cut off the flow of crowing and self-revelation from them, so he doesn't gain anything by being definite about what he'll do. So I think at least some of that confusion is deliberate.
I can't see him committing hara-kiri to prevent default, which a bad deal would be. I can see him agreeing to a crumb or two, as he apparently has already, but in the end reluctantly and regretfully instructing his cabinet and agencies to proceed normally and lamenting that the crazies made him do it. Righteous contempt, no matter how appropriate it is, gains him nothing, and the regretful tack would be a lot more his style, to me. However I don't know anything about this new chief of staff and I suppose his influence could take Biden in bad directions.
Basically, though, I think we should pay more attention to Biden's positioning and much less to his words, not just because he's never been a great orator but also because he has nothing to gain against McCarthy by being clear and forthright. Not yet, anyway.
Seventh dimension chess. Sure. Where have I heard that before?
When Biden did his first press conference I was on the road and could only catch it on the radio. I thought he was focused and cogent and had clearly thought carefully about all sides of the problem, in that case above all Xi and our stance toward China. The press uniformly treated it as a disaster for some small and probably optics-related reason I don't remember now. But it was like we were reacting to two completely different events in alternate universes.
My takeaway was not to pay much attention to the political press's evaluations of Biden, and more generally to be very watchful about underestimating him.
My takeaway was not to pay much attention to the political press's evaluations of Bidem...
I'm not paying excessive attention to the press's evaluations. I'm paying attention to the fact that: A) POTUS has decided for some unfathomable reason to negotiate with people pointing a gun to the temple of the US economy; B) his people—including his own Treasury secretary and including Biden himself—have, on multiple occasions, downplayed the possibility of using a work-arounds; and C) if polls are to be believed, about 60% of the public supports "budget cuts" in order to get the debt ceiling increased (so the GOP has deftly used the public's ignorance as part of their economic vandalism).
I think Biden definitely "gets" the stakes here. His presidency is on the line. Which is why his flailing strategy makes no sense. But I hope—boy oh boy do I fervently hope—I'm proven wrong.
I meant to stress underestimation more than paying attention to the press.
Wapo has a piece today explaining why the one particular poll is garbage-- it set up the response of pairing debt increase with budget cuts as the optimal answer and didn't offer anything that separated the two actions. Two other polls did, and in those, the preference was to raise the ceiling right away and talk about the budget separately.
I agree with you that the White House comms shop hasn't been up to this, and they've been especially bad with their own side and well-disposed. I think that's a big risk of permanent harm but it's baked into their strategy (I think they really do have one). But we obviously continue to disagree about how they're approaching this and we'll have to see how it goes as the crisis comes closer.
The decision to negotiate with Republicans on the debt ceiling was a huge, probably fatal mistake. The choice to denigrate the potential ways to defuse the crisis without a default or a surrender was, equally, an entirely self inflicted wound. I don’t see any choice but to either go the 14 amendment route, mint the coin, or basically end Biden’s presidency by surrendering.
Obama has a tremendous amount of residual popularity and was a great orator. And that, plus Mittens unpopularity, was enough to get Obama re-elected. Biden’s lacking all of those things and the DC press continues to be hardwired for the Republican Party. Even minor concessions on the budget will probably split the Democratic Party and make the remainder of Biden’s presidency an irrelevancy.
I guess we'll be finding out over the next week or so
The decision to negotiate with Republicans on the debt ceiling was a huge, probably fatal mistake.
Parallel Universe President Biden's speech several months ago:
Something like this should've been Joe's stance from day one.
The decision to pretend to negotiate with the Republicans is eminently sensible. It reinforces the existing perception of Biden and the Democrats as "the adults in the room" and when the negotiations inevitably fail because neither side ever intended to make any concessions at all, it will be seen as the Republicans' fault.
October? I would assume the shutdown would come a lot sooner than that, like maybe May 31. Although earlier could be better, to let Americans know just how bad things have gotten. (Congressional Republicans don't appear to be "teachable" by any means, at this point.)
Shutting down the government would be illegal. Once a budget becomes law, no one has authority to stop spending money that's been appropriated.
I'm just hoping in this game Biden uses a workaround of some sort, which then forces the Republicans to say "no, default!"
The debt ceiling is a silly law. It provides nothing separate from the actual budget. You get to shut down the government then. No reason to get to shut it down twice in the same year.
No one has the authority to shut down the government after a budget becomes law. The Constitution does not allow it.
If you're beginning to see there's no legal way out of this mess, that's good.
Democrats need to keep repeating this is happening now because the Republicans gave billionaires and corporations a $2 trillion free gift and now they want everyone else to pay for it.
This is entirely the basis of the problem and needs to be said every time this comes up.
That it's happening NOW, and not in a few months is due to the cuts but it would still probably happen this year without the cuts. The annual deficit is close to $1T.
Unfortunately, neither side is really serious about fixing the problem. I'm not saying R's and D's are equally guilty, just that I don't see either side being serious about actually doing something about it.
Yes, it would inevitably happen at some point because the debt ceiling exists at all --because Republicans insisted on installing it because it let's them take the world hostage.
Focusing on the tax cuts as the proximate argument forces the hostage takers to explain themselves, and they have no explanation beyond their glee in causing any harm they think they can get away with, and their need to give money to billionaires while stealing it from everyone else.
It's a direct point they can't refute and anyone can understand, not just an argument between accountants.
What, exactly, is the problem?
Interesting. Biden and other officials seemed to be suggesting they'd prioritize payments recently. Even Yellen seemed to suggest as such a few weeks back. I think they can do it, nothing concentrates the mind like danger etc. but with this statement I wonder if maybe they thought they could, tried a test and it was a total disaster.
Some prioritizing might be possible, but not for everything, primarily because federal payments are made, basically, by older software in a system that would undoubtedly require significant modification to distinguish which payments do or do not get made.
Biden cannot prioritize payments. He doesn't have the authority, as the Supreme Court has already ruled.
Since all options he has would be illegal, he ought to continue to issue new debt to pay bills. It's the least disruptive option available.
That is correct. Even if the idea of Treasury picking and choosing which bills to pay were *operationally* possible, it is not possible without violating the law (the Impoundment Control Act) and the Separation of Powers.
See e.g., https://www.brookings.edu/2023/04/24/how-worried-should-we-be-if-the-debt-ceiling-isnt-lifted/#:~:text=If%20the%20debt%20ceiling%20binds,risk%20triggering%20a%20deep%20recession
In particular: "Timely payments of interest and principal of Treasury securities alongside delays in other federal obligations would likely result in swift legal challenges. ...lawsuits would probably argue that Treasury has no authority to unilaterally decide which obligations put in place by Congress to honor. ...Moreover, it is not clear how such litigation would turn out, as the law imposes contradictory requirements on the government. Treasury is required to make payments, honor the debt, and not go above the debt limit: three things that cannot all happen at once."
See also the linked Congressional Research Service report (https://sgp.fas.org/crs/misc/R41633.pdf) particularly the section "Possible Options for Treasury: Could Prioritization Be Used?"
+ 1 Good piece.
"Treasury is required to make payments, honor the debt, and not go above the debt limit: three things that cannot all happen at once."
When it becomes impossible to do all three, then I suggest two out of three ain't bad. Exceeding the debt limit may not be legal, but it's the least disruptive of the options.
You two have it correct. The Executive is not empowered to withhold moneys appropriated by Congress; that is the basis of the Supreme Court’s declaring the line-item veto unconstitutional (Clinton v. City of New York. If the debt ceiling is not raised, no action or inaction by the President can be legal and Constitutional.
Exceeding the debt limit may not be legal, but it's the least disruptive of the options.
That claim is not so obvious. If the legality of new debt issues is questionable, it's pretty unlikely markets are going be rushing to buy treasuries. At minimum interest rates will certainly spike—maybe massively so.
I think a smoother work-around is just engaging in seigniorage: order Treasury to pay the bills without borrowing. The Fed can use the tools at its disposal to prevent an inflation spike. And there's no easily justiciable issue, as there would be in the case of the platinum coin.
As someone above put it viz. claiming the 14th- the executive would not "do" anything.
not so. The executive would have to issue debt.
FYI y'all:
Social Security direct deposit is all done so that funds are available to recipients on the second, third, or fourth Wednesdays of each month (June 14, 21, and 28). There are still some older recipients who get actual checks in the mail on the first Wednesday (June 7).
In other words, no Social Security recipients would get screwed on June 1. Later, however ...
Prioritization is not only "not...operationally feasible," as Yellen says. It's not legal.
The Supreme Court has ruled the Exec branch does not have authority to pay some bills but not other bills. Any action by the president to do so would exceed his constitutional powers.
That's true for continuing to make debt payments while neglecting other bills.
By the way, what happens when you stop paying bills that you owe. You run up more debt. In other words, if you hit the debt ceiling and can't borrow (issue treasuries) to pay bills, you continue to run up IOUs that you owe. You cannot stop running up debt when you hit the debt ceiling. You exceed the debt ceiling every day past the day you hit the debt ceiling. It's absurd. But that's the way it works.
But, you say, what if you shut down government? That's illegal. This is NOT like other situations where government shuts down because a budget is not passed. In this case, the budget is in place, funds have been appropriated, per the Constitution, and no one, inc. Joe Biden, has the authority to shut down the government or to stop paying bills as mandated.
We already know: default is unconstitutional.
Every option for Biden requires him to take action that is unconstitutional. (Not counting the gimmicks like the coin, which is debatable.) Since EVERY OPTION is illegal, I think the case is overwhelming that it's Congress that would be violating the Constitution for exceeding balance of powers provisions.
Maybe that'll get worked out in the courts. Meanwhile, if the debt ceiling is not raised, Biden will have no legal option to take. Therefore, he should act in the least disruptive way possible. That is, continue with business as usual. Borrow by issuing treasuries, keep government open, and pay all bills.
No, the only action that might be unconstitutional would be questioning the validity of the debt, whatever that means - possibly not paying interest on bonds or not returning principal. Short of repudiating the actual debt - which is bonds already issued and not Congressional appropriations - Biden is faced with a choice of disobeying the conflicting Acts of Congress.
There is more to the Constitution than the 14th. None of the options use powers that reside with the president. He'll be breaking the law whatever he does.
Business as usual, arguably, isn't an action.
The constitution also requires the president to execute the laws passed by Congress. So not paying bills would be unconstitutional. There is no legal framework by which the president can decide not to make payments mandated by Congress. Just imaging if there were! President Trump could stop all Social Security payments to Muslims and trans people. Thank God that is not how our system works.
The 14th Amendment says the validity of the debt should not be questioned so this might be taken to mean that servicing the debt, that is paying interest on bonds and returning principal on expiration - must be prioritized over other expenditures once a debt limit is reached. Thus default on the debt should not happen unless servicing takes up all revenue. If Congress does not act it would be up to the Executive to prioritize other payments - in fact it has been doing this to postpone going over the limit.
Contrary to what many people seem to think, debt is not incurred when Congress authorizes spending money over the next fiscal year. The debt is counted on a daily basis when spending exceeds revenue and bonds are sold. The 14th Amendment does not itself obligate the Executive to incur new debt (sell bonds) in order to follow Congress's spending direction - although there is a law about the Executive following that direction. The conflicts between Congress's spending directions, the requirement of the Executive to carry out those directions and the debt limit are not resolved by the 14th Amendment, and it does not give the Executive the authority to resolve the conflict either.
You may not agree with this analysis, but it will be ultimately up to the Supreme Court, and in the short term maybe up to some selected court in Texas. The Republicans on the Supreme Court are capable of reaching this conclusion about the 14th Amendment, and if they aren't they can find some other reason to rule in favor of the Republicans in Congress - that is against Biden being allowed to continue to increase the debt.
Assuming Congress does not raise the debt ceiling, we will soon be way outside the bounds of what the president has legal authority to do under the Constitution.
A. Default on debt.
The US cannot default, per the 14th Amendment. We agree on that. Payments to service existing debt must continue.
B. Prioritize other payments.
The president cannot legally prioritize bills to pay. He has no authority to pay some bills and not pay others. The authority on where money is spent rests with Congress. The Supreme Court made that clear.
C. Shut down government.
No one has authority to shut down government once a budget becomes law. (Every day the government will be running up new bills it cannot pay -- i.e., accumulating new debt.)
D. Issue new debt.
The president cannot issue new debt (treasuries) that exceeds the limit established by Congress.
A, B, C, D are all actions that the president cannot do or cannot allow. With no legal authority for any of them, I suggest he goes with the least disruptive, which is D, business as usual.
Let him declare an emergency, and the three branches of government can work it out in the meantime.
My sense is that it is prima facie unconstitutional for Congress to force the Exec branch to take action that violates the law. That's not how balance of powers should work under the Constitution. Any (sane) Scotus would rule that way.
Re your point B), as much as the Roberts SCOTUS might want to prevent the Biden administration from breaking through the debt ceiling, they would want even less to give a Democratic administration a de facto line-item veto.
You are inventing a definition for the word 'debt'.
There is absolutely no reason to think that the people who drafted the 14th Amendment used the word 'debt' to mean 'only specific term dated debt instruments' instead of a more broadly used meaning of the word debt like 'money/payment that is owed'.
Debt encompasses all monies that are owed at a future time. It doesnt matter if you owe via a work contract, a purchase order, a short term loan or a specific debt instrument like a bond. These are all debts.
The 14th amendment definitely does not specify that only certain debts are covered by the language of the Amendment while all others are excluded.
The fact that it specifically mentions pensions for soldiers is an indication that they clearly meant debt to be defined broadly as these pension payments would be due for many years in the future and would not be covered by debt instruments already issued.
But, i get your point that the Supreme Court is making it up as they go and might draw any conclusion they feel serves their interests.
This is kind of worth trying to imagine in a little more detail. How many different agencies and offices issue payments, either as EFTs or on paper? How, even, can they all be brought to a stop? How many of these systems have been designed to include anything like an off switch? What happens if you do stop making transfers or printing checks and then start up again-- do these systems have any provisions for restarting in the right place? Or do you just cut the power and rely on the software's recovery routines? And how will the bookkeeping systems handle the floods of missing payments-- how does that ramify through all these different agency systems?
And what do you do with the cash that remains or that trickles into the till? It's not like there's a central control panel that orchestrates all the different paying agencies so it's not like Yellen is some kind of TV producer cutting between cameras. Can Treasury even legally authorize some agencies to continue paying and others to pull the plug?
If this happens it'll be like the 2012 shutdown, when the backlog took years to work through, or the railroad merger in the 90s that left hundreds of ghost cars stranded and supposedly still lost to this day.
There isn't a circle of hell low enough for the clowns who are pulling this stunt deliberately, and just to say they're owning the libs.
It is not about "owning the libs". It is about screwing up th eAmerican economy, assuming that they (i.e. trump) can blame it on Biden.
This is not a an emotional thing. It is a rational plan (by Trump, not the ****s in the house).
The various shutdowns have shown us clearly that the US government is not designed to fail soft, much less fail operational. A personal story: in a recent shutdown, I was working as a contract employee, in a government facility. The Federal employees were furloughed immediately — including contract administrators, who were thereby unable to issue stop-work orders to some contractors. My group worked an additional week, while arrangements were made to bring the Feds back for a day to stop us. That week violated the contract, because we were to work only when being ‘overseen’ by Federal employees, but of course we would have violated the contract if we had left before the stop-work.
I'm sure there'd be a stink if checks were not sent to red states. It'd work, though. Btw how's that Texas secession thing coming along?
I'm sure that now that the bidding for Kevin McCarthy's used chapstick has ended, the radical right will be quick to find solutions for those other pesky issues. Maybe they think that they can prioritize payments to their constituents if they can't successfully pin all the blame for a shutdown on Biden.
Too bad we can't impeach them all for their dereliction of duty.
👍👍😄😄
Prioritizing payments in a reduced budget is something that will apparently have to be done one way or another, unless Biden somehow gets away with a clean debt limit raise. Negotiations are going on now to reduce expenditures from what was budgeted, so cuts will have to be made in specific places. Prioritization will in effect be the outcome of the negotiations and if the negotiations fail and the limit is adhered to, Biden (not Congress) will have to decide which things to cut or somehow postpone payment for. Again, Treasury has been doing this on a small scale already.
If Biden becomes a law unto himself with no debt limit increase, he can also choose to continue issuing new debt, right?
I work in .gov (definitely lower-case) and a lot of times those of us who are the equivalent of NCO's will save management from themselves. I'm pretty convinced that as long as that happens nothing changes.
So, maybe, it's time to let it fall where it falls. Gonna suck for a whole lot of us but the old folks watching Fox could do with a rude awakening when they don't get their SS. It might also wake up some other folks to get serious.
Or it could go all to hell.
I feel like the bigger the stakes, the less you can let people fail. Sure, the small stuff, let people fail all the time to learn from their mistakes, but on the big stuff, there are knock on effects that are global.
Why would we default? I thought the what happens is the government shuts down so that we can afford to pay debts with revenue without incurring more debt.
You are thinking of when congress refuses to budget for and authorize payment to government workers. In that case, there is no money authorized to pay for the daily operations of the government, so the govt shuts down.
In this case, congress has authorized the payments to be made and has already fully funded daily government operations. The US treasury is legally require to make these payments for daily govt services.
Is it possible to move cat blogging up to tomorrow? Maybe tomorrow and Friday?
Very simple to prioritize this. If someone resides in the district of a representative who voted to default, they don't get paid. Very simple zip code search and it probably would be just enough to avoid default.
Also publicizing that this is the plan right away would go a long way to getting the debt ceiling raised. If you live in a republican district, your social security will not get paid because that is what your elected official voted for. Same with money for roads, healthcare, defense spending, etc.
Nice thinking. But the only way to accomplish that operationally and legally would be if the US were split into two countries.
Maybe that's where our politics are headed, but we're not there yet.
This is exactly why it would be deeply troubling to allow the President to use any criteria at all to decide who gets their legally mandated payments and who does not.
I can't imagine that there is any legal or constitutional basis for paying one party vs. another. And anyone entitled to expect payment from the US government would have grounds to sue at the very least.
It seems to me that not making legally mandated payments because of the debt ceiling is no different from attempting to collection non-legally mandated fees or payments.
The least bad option as far as I can see would be to simply pay everyone according to the law and ignore the debt ceiling farce altogether. Let the Rs in Congress try to sue to force the government to not pay its bills. Yeah, the government's bond rating would suffer but not as much as if any other action were taken.
Agree entirely.
The simplest path forward is to ignore the ceiling (since no legal alternative exists) and let the squawkers squawk.
I think Biden might win popular support for doing the sensible thing.
Purely from a political perspective, this is clearly the only good option he has. He can get up on his soap box and talk about how the government honors it's obligations and Republicans want to run the economy into a ditch. In talking head land he will be "strong". Any other option makes him look weak. Political optics are far from the most important thing here but seriously, this course is literally the only one that makes a lick of sense any way you look at it.
I agree. This is one case where the simplest plan is the best one.
It has the additional advantage that it will make MAGA heads explode.
If Republican appeals to the Supreme Court succeed (they have three guaranteed votes on the Court), well then it's on them.
I look forward to seeing the editorial boards of the mainstream both-sides press eat crow.
Glad to hear Mr. Drum is coming along.
The republicans should demand that Biden and Harris resign so that Speaker McCarthy can be President. I'm a little surprised they haven't already demanded it! There's still time. Would you trade default for this? Or would you blow up the world economy? Republicans have us all over a barrel. They might as well go all in. Stolen election and all...
Good luck.
"The problem with this approach is that Treasury secretaries have consistently warned us that our computer systems can't do it. They're set up to spit out checks when they're due, and that's that."
This sounds like total BS from someone who just doesn't want the heat of having to justify why certain payments were prioritized over others. Considering that the IRS prioritizes refunds to certain filers (electronic) over others (snail mail), and that large banks generally got PPP funds faster than smaller ones... there's a lot of anecdotes of payments being prioritized already.
Sure man. A regular process coded into the system and tested and vetted over years is the same as massively altering the system with unknown requirements at the very last minute.
Not all bills are fixed amounts every month, or calculable in advance. Many bills don't just generate themselves in the government's queue. Somebody somewhere is entering invoices into a computer. For example, claims to Medicare and Medicaid vary month to month, and the government has no idea what they'll exactly be for any given enrollee. Order those people entering invoices into The Government Check Printing Machine to stop entering invoices. That should free up enough money for the government to keep generating checks for the fixed amounts that apparently are set on auto-pay for a few more months. (Sucks for the hospitals and whomever else that has variable amounts every month owed by the Feds, but oh well. Those entities should stop giving funds to Republican election campaigns.)
The problem with that is that it doesn't avoid the debt ceiling. Those Medicaid invoices become debts and are added to the debt ledger the day that payment is due. A billion dollars in unpaid Medicaid invoices is a billion dollars of government debt.
The debt ceiling cannot be avoided just by not paying, because the obligations keep falling due and keep getting added to the debt if not paid. The only way to avoid the debt ceiling is to either reduce the government's financial obligations or to increase the government's revenue until the government's budget is balanced or in surplus. That takes legislation; there is NO executive action that can prevent the debt ceiling from being breached.
I'm sure AI could, even at this point, find a way to burn it all down for people who want to burn it all down, and that would suffice to keep spending in bounds so that people who don't want to burn it all down, are not burned.
Thus, finally, all Americans will be happy and united around a common goal: give everyone what they want. "Keep your government hands off my Medicare" for those who want it, stuff like that.
A little on the side:
Wouldn't it be typical of the PAC-12 to prolong negotiations, such that the US defaulted, and as a result the quotes it had been getting from potential media partners were slashed again?
A truly terrible piece in the Atlantic today full of intellectual pretense, claiming that the president can't ignore the debt ceiling because only Congress can issue debt. As if Congress did not authorize the debt by authorizing more expenses than revenue. And yet somehow the President can unilaterally decide which bills and creditors to pay without Congress.
Here's another facile "argument":
"If Biden were to assert that the debt limit alone is what “questions” the public debt, he would open himself to the argument that his own spending agenda did so too . . ."
I mean, seriously?
Authorizing spending does not mean it has authorized debt.
The Constitution has the Tax and Spend Clause and the Public Debt Clause. The two are not the same and it wouldn't make sense if one obviated the other, now would it?
I think they're right. I don't think ignoring the debt ceiling is constitutional. 14A:
Think about why this was included in the 14th Amendment. Why predicate the validity of the public debt on its authorization by law?
But, if you were going to test this idea, it should have already been laid out in an Executive Order, immediately ordering Treasury to issue new debt to fulfill the rest of the financial year, don't you think?
There are other Constitutional issues that are more relevant. See the comments above by Amil Eoj and Joseph Harbin. The Executive is not empowered to withhold moneys appropriated by Congress. Failure to raise the debt ceiling will leave the President with no legal option.
That is talk about what is "not authorized by law", which is not the same as what is not constitutional.
Not all that is not authorized by law is unlawful, for one, and it definitely does not mean that it is unconstitutional.
After all, the Executive is given the power on how to execute the laws. We've spent the better part of a decade arguing about the Executive's prerogative to prioritize immigrants who have overstayed their welcome, and so on -- DACA anyone?
Therein, the Take Care Clause, grants POTUS discretionary powers to execute the will of Congress. This is not new.
I happen to think that the discharge petition has a chance. Obviously it can’t be attempted until the eleventh hour; can’t even be acknowledged by Republicans. But if no deal is reached, there only need to be a handful of GOP Representatives who decide that crashing the economy might hurt their re-election chances, especially if it hits their big donors in the pocketbook/portfolio. I mean, do any Republicans believe that sticking with Kevin McCarthy is the key to winning in 2024?
Though if McCarthy sees the petition as having a chance, he would probably cave on a deal that many Democrats would back, so as not to be sidelined.
Interesting vision of half a dozen people walking onto the House floor with paper bags over their heads . . .
I agree it's still a shot. To me, the main point of Biden's approach has been to maximize the pressure on the R caucus to try to break it, and this would be one way it breaks. It took McCarthy 15 rounds of voting and handing over the keys to the Krazy Kaucus Klowncar for him to get the gavel-- they've been ripe for a crisis. And the longer this goes on the crazier the crazies get, and you have McCarthy admitting that he sees relenting on the debt ceiling as a big giveaway rather than what responsible adults do. So we shall see how long party discipline holds.
The wish-casting outcome would be half a dozen or so Rs going independent as a bloc and putting a sane R (if one can be found) or even Jeffries in the chair. Talk about dreaming. But the House is almost purely partisan so this really is an alternate-universe thing.
Still, imagine being an R in a D+2 or Biden 2020 district right now.
Why issue more debt at all?
I personally doubt it's going to come to this, but, a lot of folks are urging the president to invoke the 14th amendment (debt validity) and just pay our bills, if push comes to shove. That's clearly a violation of the debt ceiling law, although arguably the Constitution overrules the law in question. So far so good.
But if they're going to go the route of absolutely violating a law, why not violate the law against naked seigniorage (I believe such a law is on our books)? In other words, why not just order the Treasury to pay bills without borrowing (thereby creating fiat money)?
Because the problem with invoking the 14th to greenlight bond operations after the debt ceiling is pierced is: interest rates are likely to soar, as investors seek compensation to outweigh the risk the their asset might be ruled illegal by a court.
Seingorate sidesteps this problem. And sure, in isolation such a move would be highly inflationary, but it wouldn't be in isolation: the Fed is required by law to fight inflation, and would undoubtedly seek to sterilize the increase in money.
This is basically the platinum coin work-around without the banana republic optics. I also think it would be more difficult for federal courts to stop the government in this case. What are they going to do, order Treasury to completely stop paying bills? (In the case of the platinum coin, they likely could issue an injunction targeting this one, narrow item).