I am so proud of the above paragraph. I just love it when I get things off of my chest. My chest feels so much better. How’s does your chest feel?
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First let me clarify a few things for you regarding our current Statutory Debt Limit Crisis...
Ø Those Talking Heads on TV every night who smugly pontificate about the Statutory Debt Limit as if they know what they are talking about do not know what they are talking about.
Ø The Secretary of the Treasury on TV every other night who smugly pontificates about the Statutory Debt Limit as if she knows what she is talking about does not know what she is talking about.
Ø Sergeant
Shultz put it quite well when he said, “I know nothing about the American Statutory Debt Limit”...
Winston Churchill said it better than Sergeant Shultz when he said, “The American Statutory Debt Limit is a riddle, wrapped in a mystery, inside an enigma".
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Thanks to the Wall Street Journal I now have proof of all of the confusion I have pecked out above. Below are the first 2 paragraph of the proof article...
With the U.S.
Treasury predicted to run out of cash (the “X date”) as early as June 1,
Treasury Secretary Janet Yellen has started warning of an “economic
calamity” if Congress doesn’t raise the statutory debt limit. According to Ms.
Yellen, “whether it’s defaulting on interest payments that are due on the debt
or payments due for Social Security recipients or to Medicare providers, we
would simply not have enough cash to meet all of our obligations.” These claims
are dangerously misleading.
Hitting the X date
won’t cause a default on the national debt. Debt-service payments have a
feature that most other government payments lack: When the government pays off
maturing debt, the amount of debt subject to the statutory limit declines. This
means that the government can “roll over” such obligations—that is, issue new
debt to pay off old debt—without violating the debt limit.
Now do you understand? Glad I could help.
Would our rulers kid us?
Smartfella
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The entire article is below...If I were you I would not bother to read it.
The Phony Debt-Ceiling ‘Calamity’
The Treasury made a plan to pay bondholders in 2011. It could do the same with Social Security.
By Conor J. Clarke and Kristin A. Shapiro
May 22, 2023 12:08 pm ET
With the U.S. Treasury predicted to run out of cash (the “X date”) as early as June 1, Treasury Secretary Janet Yellen has started warning of an “economic calamity” if Congress doesn’t raise the statutory debt limit. According to Ms. Yellen, “whether it’s defaulting on interest payments that are due on the debt or payments due for Social Security recipients or to Medicare providers, we would simply not have enough cash to meet all of our obligations.” These claims are dangerously misleading.
Hitting the X date won’t cause a default on the national debt. Debt-service payments have a feature that most other government payments lack: When the government pays off maturing debt, the amount of debt subject to the statutory limit declines. This means that the government can “roll over” such obligations—that is, issue new debt to pay off old debt—without violating the debt limit.
A plan to roll over debt after the X date—and thereby ensure that the debt is honored—is more than theoretical. It is a matter of public record that the Treasury made such a plan during a 2011 showdown over the debt limit, when one official explained that “the principal on Treasury securities that are maturing would be funded by having auctions that would roll over those maturing securities into new issues, so the new issues would be able to fund the redemption of the maturing securities.”
For a similar reason, hitting the X date need not stop Social Security and other payments that come from federal trust funds. The payroll taxes that are used to fund such benefits are invested in special Treasury securities that count toward the debt limit. The Treasury has the authority to redeem these securities to pay benefits; when it does so, debt subject to the statutory limit declines. Thus paying Social Security benefits—like paying maturing principal on the public debt—can create headroom under the limit, making rollover strategies possible. In both 1985 and 1996, following similar debt-limit conflicts, the comptroller general concluded that such strategies would be lawful because they wouldn’t “increase the total amount of outstanding debt subject to the statutory limit,” and thus wouldn’t “usurp the congressional power under the Constitution to borrow.”
Paying Social Security benefits and servicing the national debt are not only lawful; they are legally obligatory. Because the Biden administration can continue making such payments regardless of the statutory debt limit, and because such payments wouldn’t come at the cost of any other federal payments, it must do so. Otherwise, the administration would fail its constitutional duty to execute those statutes faithfully—an argument that would apply even without the support of the 14th Amendment’s Public Debt Clause.
Most government payments don’t involve rolling over debt. That includes interest payments on the public debt, because only the “face amount” of the debt counts toward the statutory debt limit. But on a monthly basis, interest is a relatively small fraction of incoming tax revenue, and the government has broad lawful authority to prioritize payments after the X date. With advance planning, such as what the Treasury undertook in 2011, interest payments can continue.
More broadly, the government regularly faces situations in which Congress hasn’t appropriated enough money to fulfill the mandate of a spending statute, or in which external circumstances render spending infeasible. In Morton v. Ruiz (1974), the Supreme Court held that such circumstances don’t deprive the executive branch of the “power to create reasonable classifications . . . to allocate the limited funds available.” In 1985 the comptroller general confirmed that such discretion would extend to the debt limit, opining that after the X date, “Treasury is free to liquidate obligations in any order it finds will best serve the interests of the United States.”
The X date still presents uncertainty, and we don’t want to appear pollyannaish. But the executive branch has both the power and the obligation to make debt-service and Social Security payments, and it has broad authority to prioritize the most pressing of the government’s remaining obligations. For those reasons, it may well be that hitting the X date—and a short lapse in the government’s ability to raise revenue—looks like a temporary government shutdown that follows an appropriations lapse.
When the government temporarily shuts down (as it did repeatedly during the Clinton, Obama and Trump presidencies), some federal obligations go temporarily unmet. When the shutdown ends, the obligations are paid. Shutdowns happen because the government runs out of lawful authority to spend; the X date would happen because the government runs out of lawful authority to raise revenue.
In one respect, hitting the X date could be less disruptive than a government shutdown. The Antideficiency Act requires that many federal functions cease during a shutdown, and most federal employees are prohibited from working. But there is no analogous limit on federal functions after the X date—so many such functions could continue even if payments are delayed.
Congress can take several steps to correct misleading claims about the debt limit, which threaten to spook markets as the X date approaches. First, the House should subpoena Treasury officials to confirm the executive branch’s broad legal authority to satisfy the government’s most pressing obligations after the X date. The House should also confirm the Treasury’s practical ability to prioritize certain key obligations. Although officials in 2011 explained how a limited prioritization plan could be implemented using Treasury’s systems, Ms. Yellen warned recently that those “systems are built to pay all of our bills on time and not to pick and choose which bills to pay.”
Second, the Bipartisan Legal Advisory Group should issue a statement confirming the Treasury’s legal authority to roll debt over to make debt-service and Social Security payments after the X date. The group is composed of the speaker and other House leaders of both parties and “speaks for, and articulates the institutional position of, the House in all litigation matters.” With the executive branch and the House united, markets could rest assured that such payments will continue and that no credible legal challenge to them will arise.
Ms. Yellen recently stated that if Congress fails to raise the debt limit, “we will have an economic and financial catastrophe that will be of our own making.” But if a catastrophe arises, it may be because the markets take the worst debt-limit scaremongering seriously rather than appropriately discount it as another negotiation tactic.
Mr. Clarke is an incoming associate professor at the Washington University in St. Louis School of Law. Ms. Shapiro practices appellate and constitutional law in Washington and is a senior fellow at the Independent Women’s Forum. Both served as attorney-advisers at the Justice Department’s Office of Legal Counsel during the Trump and Biden administrations.
