This Is What Gets Defunded If The Treasury Has To Prioritize Payments

Business Insider ^ | 07/25/2011 | Joe Weisenthal

[SeekAndFind]

It's been assumed -- but never confirmed -- that if we hit the debt ceiling, that The Treasury could prioritize payments, continuing to make bond coupon payments and entitlements, while shutting off other spending.

The Bipartisan Policy Center has put together a presentation (.pdf) on the debt ceiling, and what prioritization would look like (via Stone Street Advisors).

These two charts show it all.

[Gaffer]

Where they really make there money is in RALs.....the beneficiaries can’t even wait for the checks....interest on that “Refund Anticipation Loan” is very hefty....

[Norseman]

We’ve been through this before, kabar. The Trust Funds hold non-public debt issued by the U.S. Government. You can call them IOU’s if you wish, but an IOU is just a promise to pay, as is any other debt issue.

My point, which seemed to elude you in the last exchange, is that the non-public debt can be converted to cash by having the Treasure issue public debt in its place. The non-public debt held by the Trust Fund is then canceled in exchange for the cash, which is then used to pay SS retirees. Because both types of debt are counted against the debt ceiling, the total debt outstanding remains the same.

The text you bolded (apparently so that I would see it and understand) actually states that what I’m advocating is indeed possible (...those resources will need to come from federal revenues or additional borrowing...) All I’m suggesting is that the “additional borrowing” be undertaken.

[Mad Dawgg]

"Military pay MUST be put on the list. It is a Constitutional issue."

Actually it's ALL a Constitutional Issue.

All the laws passed dealing with spending basically order the Treasury Dept to pay out the money according to the language of the legislation. I am fairly sure neither the Treasury Dept. or the President can arbitrarily pick and choose what to pay and what not to pay without being in violation of the law.

This is going to get real interesting real fast.

[Mad Dawgg]

"Why are Social Security, Medicare and unemployment expenses on the “ok to pay” list? Don’t these expenses each have a dedicated funding source set aside in a lock box? That’s what Al Gore and the Dems have said for years..."

[SatinDoll]

You don’t understand what I said.

The U.S.Constitution stipulates that the government is responsible for national defense. That Constitutional requirement takes precedence over everything else.

Show me where, in the Constitution, it says the government must pay out unemployment benefits? The only reason Representatives and Senators vote for that crap is to get votes.

[kabar]

Redeeming the IOUs will not increase the overall federal debt, but the real question is a legal one, i.e., can the federal government borrow money to redeem the IOUs thereby momentarily going beyond the debt ceiling. I have read/heard conflicting opinions on this. If it can be done, then there is absolutely no problem in paying SS benefits until the entire $2.6 trillion SSTF runs out despite the debt ceiling. If not, then revenue from the general fund must be prioritized to make up the shortfall. I am not equipped to answer the leagal question.

[Mad Dawgg]

"Show me where, in the Constitution, it says the government must pay out unemployment benefits?"

You are missing the fact that one branch cannot Constitutionally ignore a law. If the law states that the Treasury must give 20 bucks to Wal-Mart for ice cream The President can't decide not to pay it. Its the law. IF he did so or ordered someone to do so he is assuming Extra-constitutional authority.

[Norseman]

As long as the Treasury has cash in the bank it wouldn’t be a problem, and the Treasury will have cash in the bank since receipts roll in daily.

All they need to do is cash out the IOU’s (as you seem so wont to call the non-public U.S. Treasury Debt Issues held as an asset by the Trust Funds) first, and then issue the debt later the same day, thereby restoring their own cash balance. During the interim, the debt outstanding would actually drop below the debt ceiling by the amount cashed in.

I’m happy to see, however, that you’ve come around to agreeing that the assets of the Trust Fund are real enough that they can be converted to cash so that benefits can be paid.

Now I just wish someone would actually debate the merits of what I’m proposing...so far, absolutely no takers...

Which is too bad, because I think we’d all really enjoy watching this Administration deal with cutting federal spending $600 billion between now and election day, at a rate of $40 bn a month or just over $1 bn a day. I think that’s easily doable, and would love to see the process begin in early August.

To implement it, all the House has to do is sit on its hands, while explaining the procedure to the rest of the country.

[Norseman]

>>You are missing the fact that one branch cannot Constitutionally ignore a law. If the law states that the Treasury must give 20 bucks to Wal-Mart for ice cream The President can’t decide not to pay it.<<

And you are missing the point while by law we will owe the money, in practice, you can’t pay out what you don’t have. Hence, the creditors will still have the money coming to them, perhaps even with penalties for late payment, but some will have to wait for it until we have it.

And if you’re trying to set up the case that this authorizes Obama to unilaterally issue federal debt, forget it. He’s already learned that Congress is a separate, coequal, branch of government. When he finally gets around to reading the constitution that he supposedly taught classes on as an instructor of constitutional law, he’ll discover that only the Congress can authorize new borrowing. No wiggle room in that one.

[digger48]

And just where is he supposed to work digger

There's jobs around here.

There's a lot of folks out there who always seemed to be "out of a job" even back when Unemployment was under 6% for a decade.

Now they've learned how to get on the Disability bandwagon and never have to worry about looking for work again.

A monthly SS check and some part time work for cash and some are living nicely with no more disability that 90% of the people who drag themselves to their jobs.

[Mad Dawgg]

"And you are missing the point while by law we will owe the money, in practice, you can’t pay out what you don’t have."

No see neither the President nor the Treasury Branch has the power to prioritize who gets paid. No without a ruling from SCOTUS. And when the ruling comes down the POTUS will be granted extra-Constitutional authority on who to pay.

And we fall further down the slippery slope. (They'll use the Protect the full faith and credit of the USA argument...)

[TheOldLady]

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[Sarajevo]

* Aid to Israel and any other foreign aid

It took 35 posts in this thread to get to that one point. It's now up to 132 posts and no Israeli Firsters are here to castigate you.

BTW- I wholeheartedly agree.

[SatinDoll]

But I’ll wager the Congress can suspend laws, can’t they?

[Norseman]

>>...neither the President nor the Treasury Branch has the power to prioritize who gets paid.<<

Says who? The Congress passes the laws and it’s the Executive Branch’s responsibility to execute those laws. No where in those laws does it stipulate any sort of priority that I’m aware of, so it would seem that the Executive has complete discretion on who to pay when, i.e., to set whatever priority they deem necessary to run the country as efficiently as possible when faced with a cash shortfall due to a lack of Congressional authority to raise money via the debt market.

If you disagree, cite some sort of source that I can read. I doubt that you’ll find one though.

[Mad Dawgg]

"But I’ll wager the Congress can suspend laws, can’t they?"

To repeal a law you must pass a law so no "CONGRESS" can't suspend a law unless they override a veto. Bottom Line the President has his say on the matter before it becomes law to repeal the law.

[SatinDoll]

Great. We’re so screwed.

[Mad Dawgg]

"No where in those laws does it stipulate any sort of priority that I’m aware of, so it would seem that the Executive has complete discretion on who to pay when, i.e., to set whatever priority they deem necessary to run the country as efficiently as possible when faced with a cash shortfall due to a lack of Congressional authority to raise money via the debt market."

I see. OK then here is the power vested in the Executive Branch. Cite me a section that Grants the Executive the power to pick and choose which laws he wants to follow. (A.K.A. Prioritize payments by picking which law NOT to follow that instructs the government to spend money in a certain fashion.)

Article. II.

Section. 1.

The executive Power shall be vested in a President of the United States of America. He shall hold his Office during the Term of four Years, and, together with the Vice President, chosen for the same Term, be elected, as follows:

Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress: but no Senator or Representative, or Person holding an Office of Trust or Profit under the United States, shall be appointed an Elector.

The Electors shall meet in their respective States, and vote by Ballot for two Persons, of whom one at least shall not be an Inhabitant of the same State with themselves. And they shall make a List of all the Persons voted for, and of the Number of Votes for each; which List they shall sign and certify, and transmit sealed to the Seat of the Government of the United States, directed to the President of the Senate. The President of the Senate shall, in the Presence of the Senate and House of Representatives, open all the Certificates, and the Votes shall then be counted. The Person having the greatest Number of Votes shall be the President, if such Number be a Majority of the whole Number of Electors appointed; and if there be more than one who have such Majority, and have an equal Number of Votes, then the House of Representatives shall immediately chuse by Ballot one of them for President; and if no Person have a Majority, then from the five highest on the List the said House shall in like Manner chuse the President. But in chusing the President, the Votes shall be taken by States, the Representation from each State having one Vote; A quorum for this purpose shall consist of a Member or Members from two thirds of the States, and a Majority of all the States shall be necessary to a Choice. In every Case, after the Choice of the President, the Person having the greatest Number of Votes of the Electors shall be the Vice President. But if there should remain two or more who have equal Votes, the Senate shall chuse from them by Ballot the Vice President.

The Congress may determine the Time of chusing the Electors, and the Day on which they shall give their Votes; which Day shall be the same throughout the United States.

No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been fourteen Years a Resident within the United States.

In Case of the Removal of the President from Office, or of his Death, Resignation, or Inability to discharge the Powers and Duties of the said Office, the Same shall devolve on the Vice President, and the Congress may by Law provide for the Case of Removal, Death, Resignation or Inability, both of the President and Vice President, declaring what Officer shall then act as President, and such Officer shall act accordingly, until the Disability be removed, or a President shall be elected.

The President shall, at stated Times, receive for his Services, a Compensation, which shall neither be increased nor diminished during the Period for which he shall have been elected, and he shall not receive within that Period any other Emolument from the United States, or any of them.

Before he enter on the Execution of his Office, he shall take the following Oath or Affirmation:--"I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States."

Section. 2.

The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States; he may require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any Subject relating to the Duties of their respective Offices, and he shall have Power to grant Reprieves and Pardons for Offences against the United States, except in Cases of Impeachment.

He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.

The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.

Section. 3.

He shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient; he may, on extraordinary Occasions, convene both Houses, or either of them, and in Case of Disagreement between them, with Respect to the Time of Adjournment, he may adjourn them to such Time as he shall think proper; he shall receive Ambassadors and other public Ministers; he shall take Care that the Laws be faithfully executed, and shall Commission all the Officers of the United States.

Section. 4.

The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.