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Author | Topic: United States Debt Default | |||||||||||||||||||||||||||||||||||||||||||
crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined:
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Someone is going to decide who gets laid off, who doesn't get their social security, etc. There's a bit of a rub, there - the Executive branch doesn't have the constitutional authority to not pay someone whom Congress has authorized an expenditure for. When Congress passes a law that you should be paid, it's a violation of the separation of powers for the Executive branch to not pay you. It's a bit of a constitutional oversight, but it stems fundamentally from the fact that Congress has passed mutually contradicting laws - they've authorized only X amount of debt, but have legislated K > X amount of spending. There's no constitutional guidance on what's supposed to happen when Congress does that because it never occurred to the Founding Fathers that Congress would ever be that stupid. Regardless, SS recipients have a legal right to be paid, military contractors have a legal right to be paid, everybody who the government is supposed to pay has a legal right to be paid, because a law was passed to pay them. And the Executive branch simply isn't granted the constitutional authority to contradict Congress and say "sorry, not going to pay you" - not for any reason. There's already court precedent on this; when Congress passes a law that someone should be paid for something, they have to be paid.
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
But what happens when the money just isn't there? What happens when the Social Security checks and military wage checks are returned NSF? The government prints money, Jon. By definition they can't run out of it because they're the source of it. The Secretary of the Treasury is given statutory authority to strike coinage. So, he'll just strike some. Under Federal Law he can strike all the platinum coinage he sees fit.
What law creates something from nothing? Well, in this case, it's US Code Sect 31.5112 (k).
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
Speaking of constitutional oversite, can Congress REALLY kick the responsibility and authority of raising the debt ceiling over to the President without actually voting on it themselves? Congress can't do anything except by voting on it, so by definition they'll have voted on the debt ceiling by authorizing the executive to raise the debt ceiling as he sees fit.
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
But we're not dealing with printed money; we're dealing with electronic money, money in the bank. Printed (or struck) money can be turned into electronic money in the bank. Seriously, Jon. It's something banks do! You can take them a wad of cash and they'll take it from you and turn it into "electronic money." It's an inconvenience, but if House Republicans are determined to prolong their manufactured crisis, then it'll just be one more market-distorting inefficiency forced upon us by "free market" conservatives.
He is not required to do so. As I said, he is required to do so - the executive branch has no constitutional unallotment power. Geithner has to pay everybody that Congress has decided to pay. That Congress has also declined to give him the money to do so, or to allow him to borrow the money in order to pay them, doesn't matter at all - a court would have no choice but to order the payment of legitimate classes of claimants because Congress has already legislated that they be paid. The result would be a line at the Treasury window, with each claimant possessed of a court order that they should be paid ahead of the other guys. But Geithner has both statutory and constitutional authority to ignore the debt ceiling altogether, since he's the one who prints the money. Making sure that new dollars are backed by revenue is Congress's job, not his, and House Republicans have decided to abdicate that responsibility. Edited by crashfrog, : No reason given.
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
I think you're trying to take me out of context, here; the thing I'm asserting he's required to do is pay those claimants that Congress has legislated to be paid. The thing you're saying he's not able to do is print money to do so, but that's something totally different and that's not what I've asserted he's required to do.
No, Frog, he is not required to, authorized to or even permitted to. Absolutely wrong. Treasury Secretary Geithner is absolutely required to allot payment to those claimants that Congress has legislated to be paid, contrary to your assertion.
The Treasury can only print/strike what the Fed orders. Well, no. USC 31.5112(k) gives the Treasury Secretary discretion to strike platinum coinage as he sees fit.
quote: Do you see? Both mint and issue. 31.5112(k) gives the Treasury Secretary full authority to strike whatever coins in platinum he wants, to whatever end he wants, and issue them into circulation. The Fed isn't the only way that new dollars can enter the economy; Geithner can simply strike some very large $1,000,000 coins and roll them into a bank.
Thus the debt problem. No, the debt ceiling problem is a result of Constitutional short-sightedness and a stop-gap measure enacted in WWII that results, uniquely among modern democracies, in Congress having to vote twice on the things they want to buy - once to allocate the funds to buy it, and once to actually get the funds.
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
As of Aug. 3 the executive cannot sell any more Treasury obligations until congress authorizes an increase in the ceiling. Frankly, it's not at all clear that the executive is constrained by Congress's failure to raise the debt ceiling: 1) Since Congress has already established that these debts should be paid, and the Treasury has no Constitutional unallotment authority, claimants have a legal right to be paid. All of them. The Treasury is obligated to do so, there's no Constitutional authority for the Treasury to say "sorry, the money's not there." They have to pay everybody; they can't pick and choose. They have no authority to prioritize one payment over another, so any attempt to do so would be reversed by a judicial ruling. 2) The Fourteenth Amendment reads in part:
quote: This is understood as preventing the government from defaulting on government loans and as it is an amendment, it supersedes any legislation. Therefore the Executive branch's obligation to preserve the Federal government's trustworthiness and prevent default on the debt overrides the Congressional debt ceiling. 3) As stated the Treasury Secretary has unilateral authority to both mint and issue platinum coinage in any denomination and amount, as granted by Congress in US Code 31.5112(k).
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
The government is obligated to pay ... eventually. Nothing in our law requires when. Well, no. When Congress stipulates an expenditure usually they stipulate a timeframe as well. When Congress makes contracts with private parties, those contracts specify when payments are to be made. Those are laws and they do require that claimants be paid at a certain time. I'm sorry, Paul, but you're just 100% wrong here - the Executive branch isn't given unallotment authority. Woe betide us if it did! The next Republican president could just opt out of Federal funding of the NEA, Planned Parenthood, and so on. But Constitutionally the Secretary of the Treasury is obligated to pay those parties whom Congress has legislated must be paid. The fact that Congress also hasn't yet authorized the revenue necessary to make those payments is legally irrelevant; the Constitution doesn't make any provision for Congress being stupid enough to pass two mutually contradicting laws.
It does not keep the government from defaulting on timely payment per expectations. By its plain reading it pretty clearly does. I'm not a lawyer - as neither, I suspect, are you - but the meaning is pretty clear.
Note in the section you described the provision that such platinum coins are "legal tender" is missing but is specifically stated in the other coinage sections. You're pretty clearly mistaken about that. If the Treasury mints it and issues it in a denomination of (for instance) ten dollars then it's worth ten dollars. Obviously. If you think there's some part of the law that prevents Tim Geithner from minting platinum coins in enormous denominations to pay debts, then present it. Otherwise what could "issue" possibly mean? Regardless the Constitution is pretty clear, here - Geithner can't pay some claimants and decide not to pay others. The situation outlined where bondholders get their payments but pensioners don't is a legal impossibility - Geithner doesn't have unallotment authority under the Constitution. The Executive branch can't decide not to pay those who Congress has legislated payments.
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
I did. No, you just alluded to it. I'm asking you to present the relevant statute.
The problem is not "not to pay" but deferred payment. Geithner doesn't have the authority to defer payment, is the problem.
I am right about this stance Oh, well, if you say so!
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
Great, I guess, except that's not the statutory limitations I asked you to provide, and Geithner's letter doesn't support your contention in any way.
You're in over your head, clearly. Isn't it about time you declared victory and retreated?
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
As I already stated, I did provide the statute. No, there's no statute referred to by you in message 61 or in any other. You referred to a court case (Perry) but surely I don't have to explain the difference? I see you're taking a page from Buzzsaw's book and referring to evidence "you've already presented" except that you never presented it. Maybe you even believe you presented something - maybe it's like that Jesus thread where people swore up and down that they were presenting evidence for the historical Jesus but were writing in nothing but underscores - and in that case, here's your second chance: pretend that I have no access to message 61 or any previous message or to the rest of the internet, and therefore can't accept links to other messages or allusions to statute as evidence. With that in mind, please present the evidence that supports your legal argument. By which I mean - present it, don't just refer or allude to it. Copy, paste, and put it in a post.
if the Treasury does not have the cash in the accounts the Secretary has to delay payments regardless of your errant reading of the Constitution. The Secretary can only delay payment until the Treasury does have the cash in the accounts. In a situation where the Treasury will never have the cash, which is what we're potentially talking about here, Geithner has no authority to "indefinitely delay" - that is, not ever pay - claimants who Congress has designated must be paid.
Apparently so is Geithner and his entire staff of economists, researchers and lawyers (both contract and constitutional law) since the thought of minting some $billion platinum coins and rolling them down to the bank hadn't dawned on them. Well, maybe it hasn't! Had you ever heard of USC 31.5112(k) until I showed it to you? The USC is hundreds of thousands of pages long. Obviously Geithner isn't aware of every single Federal statute - according to the OMB, keeping abreast of Federal law costs the private sector $600 billion annually. It's hardly surprising that Geithner wouldn't be aware of his every legal option when his options are buried deep in United States Code. And it's hardly unreasonable for him - even if he did know about it - to try to work with Congress to resolve the situation instead of simply going over their heads; Geithner may simply be reluctant to buck the traditional authority of Congress in this regard. Doesn't mean he couldn't or shouldn't, though.
The country would be greatful. Indeed, and they might even be grateful too.
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
Or are you just conveniently overlooking the reference? What reference? Neither this message nor message 61 have any "reference." And again, I've not asked you to provide a reference, I've asked you to quote the statute to which you're referring. You haven't given me any basis by which I can look it up myself, so I can only rely on you to quote the statutory language to which you refer. Will you please do so? This isn't a trick, Paul, it's not a gotcha. I'm completely confused about what you think you're referring to so I'm asking you to quote it.
To what section in the US Code could I be referring? Yes! What section of the US Code are you referring? Better yet - instead of referring to it, why don't you quote it?
Good god, Frog, what the hell are you arguing about. I'm arguing that Geithner can't "prioritize payments"; the Executive branch doesn't have the authority to decide who to pay and who not to pay, or to contravene Congress when they pass a law that says "X shall be paid Y on Z date." How did you lose track? I thought the axis of disagreement is pretty clear, here. Geithner doesn't have the constitutional authority to rob Peter to pay Paul.
That is what staff is for and he has thousands of them. Well, actually, he doesn't. The Senate has held dozens of Treasury appointments. A lot of his advisor and associate positions are currently unfilled.
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
What the hell are you two arguing about? I thought I laid it out pretty simply in 62:
quote: Geithner has to pay everybody whom Congress has appropriated funds to, and the fact that the Treasury cash drawer may be empty has no relevance to that obligation. There's no "Treasury is empty" escape clause in the Constitution because Congress is supposed to keep the books balanced. As it happens, though, USC 31.5112(k) gives the Secretary of the Treasury unlimited latitude to both strike and issue platinum coinage in any denomination he chooses. AZPaul disagrees but he's yet to present any relevant statute. He thinks the Federal Reserve Act somehow prevents it, but the FRA applies only to the issue of notes, not coinage. AZPaul doesn't seem to understand the difference between a coin and a bill, I guess. Really, the question is this - if the TresSec minted an enormous $1 million platinum coin, would a bank consider it backed by the full faith and credit of the United States? I see no reason to believe that they wouldn't, especially if no other payment was likely to be forthcoming.
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
You say you are an economist. Do you think a debt of 102.63% of GDP is optimum for this nation? How is that different than someone holding a mortgage larger than his yearly income? That's a pretty common situation and nobody thinks twice about it; or consider a student taking loans to finance his college, he's got a debt of thousands and an income of nothing. Nobody bats an eye. Having debt in excess of your annual income isn't unsustainable; it's when the debt service becomes too large a portion of the annual income. Right now the interest on the national debt is less than 2% of annual GDP. Of course, if the Federal government loses AAA ratings, then the interest rate explodes, and that could be a big deal. Of course, the best way out is to grow the GDP, not shrink spending. Edited by crashfrog, : No reason given.
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
What would be an optimum debt level? For what it's worth, Japan has a debt level of 220% of GDP, according to the CIA factbook. Germany, who everybody seems to think is the current financial rockstar, has a higher ratio of public debt to GDP than the United States.
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crashfrog Member (Idle past 1467 days) Posts: 19762 From: Silver Spring, MD Joined: |
Are you really this dense? Are you? The statue says mint and issue, directly contradicting your position that Geithner can't issue coinage. I mean I don't know how much clearer it has to be, or how much clearer the Federal Reserve Act says when it gives the authority to issue notes over to the Federal Reserve Bank system. But I'm not talking about notes. I'm talking about coins.
And in Giethner's Letter to Congress he does just that, doesn't he. So what? His letter to Congress hardly supersedes the Constitution. Geithner can write a letter claiming he has the authority to start a war but it doesn't make it so; it just makes it a really stupid letter. And the fact that he doesn't mention minting enormous platinum coins to pay claimants doesn't mean that he can't - it just means that he didn't see fit to threaten Republicans with it.
And before you get your panties in a wad, nothing in his priorities listing says those obligation will not be paid as funds become available. But here's the problem, as I've outlined twice for you - Geithner has no authority to determine who gets to be at the front of the line and who gets to be at the back. He doesn't have the Constitutional authority to prioritize payments. People whom Congress has determined shall be paid at a certain time have the legal right to be so paid, and Geithner can't overturn an act of Congress just because the till will run empty if he tries to pay everybody. It's a double bind. Every single claimant who cares to will win a court case saying they have to be paid ahead of everyone else, and then pretty soon everybody has a court order saying they have to be paid ahead of everybody else. How are you not getting this? Geithner doesn't have the authority to prioritize payments. You think he does? Show me the statute that gives him that authority. I've only asked you four times, now.
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