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Deborah Lucasly from the global desirability of Treasury debt as a safe store of valueand very low borrowing costs. As economic and financial marketconditions improve, and if investors become nervous about futureinflationary pressures, those borrowing costs could increase sharply.Table 1 shows the sensitivity of interest payments as a share of GDPto the average interest rate.107Contingent Financial Liabilities. Treasury debt currently stands atover $10 trillion dollars. However, that represents only about halfof the explicit financial obligations of the U.S. government that arefirmly committed today. 4 Those other obligations include over $5trillion in debt and mortgage guarantees of Fannie Mae and FreddieMac, government sponsored enterprises that are now in federal conservatorship;about $2.7 trillion of direct government loans and loanguarantees; over $6 trillion of insured deposits, and over $2 trillionin pension insurance. In the event of a further downturn in housingprices or another large wave of financial institution failures, the costof meeting those liabilities could make it significantly more difficultto meet all of the government’s financial obligations.As well as explicit financial liabilities, implicit guarantees expose theTreasury to additional large losses. In evaluating the capacity of theU.S. economy to pay the debt, some argue that it is the total level ofindebtedness, not only federal obligations, that should be taken intoaccount. For example, state and local pension systems are, as a group,severely underfunded, and if those costs fall to the federal government,they will be a further source of fiscal strain.4 Deborah Lucas, “Credit Policy as Fiscal Policy,” MIT working paper, 2012.
108 The Federal Debt: Assessing the Capacity to PayFigure 1: Sources of Growth in Federal Spending on Major Mandatory HealthCare Programs and Social Security, 2011 to 2035(Percentage of gross domestic product)Source: Congressional Budget Offi ce
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ivPublished by FIC Press2405 Ste
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viContents8 Thoughts on Debt Sustai
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viiiContents
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The Contributors Anna GelpernAme
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The Contributors Howell E. Jacks
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The Contributors School, as well
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The Contributors Zoltan PozsarIn
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The Contributors Richard SyllaNe
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xxiAcknowledgmentsWe would like
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xxiiiPREFACEThe Law School and t
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PREFACE academic circles. A sove
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Richard Sylla 11U.S. Government Deb
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Richard Syllasigned from office in
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Richard Syllalike the United States
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Richard SyllaAfter 1815, a generall
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Richard Syllapurchase to back their
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Richard Syllational debt and reduce
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William W. Bratton 132A World Witho
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William W. Brattonwould go from a c
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William W. Brattonthe system, than
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ConclusionWilliam W. Bratton19At th
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Richard J. Herring 213Default and t
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Richard J. Herringpay is seldom in
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Richard J. HerringFigure 2: Archety
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Richard J. Herring27Figure 4: The R
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Richard J. Herring29Figure 6: Deman
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Richard J. HerringGovernment bonds
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Richard J. HerringDuring August 201
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Zoltan Pozsar 354A Macro View of Sh
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Zoltan Pozsartions, forming an inte
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Zoltan Pozsarfunding for safe, shor
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Zoltan Pozsarfor the reduction in t
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Zoltan PozsarWhile increased rollov
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Michael W. McConnell 455Origins of
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Michael W. McConnellAlthough the Co
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Michael W. McConnellvene? Who would
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Michael W. McConnell(Social Securit
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ConclusionMichael W. McConnell53Whe
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Howell E. Jackson 556The 2011 Debt
Page 84 and 85: Howell E. Jacksonloss in liquidity.
Page 86 and 87: Howell E. Jacksonand provides resou
Page 88 and 89: Howell E. JacksonWhile assertions o
Page 90 and 91: Howell E. Jacksonof those payments.
Page 92 and 93: Howell E. Jacksonwhich payments to
Page 94 and 95: Concluding ThoughtsHowell E. Jackso
Page 96 and 97: Richard Squire 697A Market for End-
Page 98 and 99: Richard SquireSo far, there is litt
Page 100 and 101: Richard Squirethat the reference en
Page 102 and 103: Richard SquireIn fact, the gross no
Page 104 and 105: Richard Squireto only 22.6%. Thus i
Page 106 and 107: Richard Squirewill default. An econ
Page 108 and 109: Richard Squireannounced that in liq
Page 110 and 111: Richard SquireCDS on USA and Correl
Page 112 and 113: Richard Squiremean, however, that t
Page 114 and 115: Peter R. Fisher 878Thoughts on Debt
Page 116 and 117: Peter R. Fishernot really an insura
Page 118 and 119: Peter R. FisherU.K. prospered great
Page 120 and 121: Peter R. FisherSources of income be
Page 122 and 123: Peter R. Fisherlead to greater comp
Page 124 and 125: Peter R. FisherCentral bank mytholo
Page 126 and 127: Peter R. Fisherboth sides of their
Page 128 and 129: Deborah Lucas 1019The Federal Debt:
Page 130 and 131: Deborah LucasProjected Size of Defi
Page 132 and 133: Deborah Lucasrevenues. In fact, man
Page 136 and 137: Deborah Lucas109Figure 2: Primary S
Page 138 and 139: Deborah Lucas111Figure 4: Medicare
Page 140 and 141: James R. Hines Jr 11310The Tax Reve
Page 142 and 143: James R. Hines Jrrevenue rely on ex
Page 144 and 145: James R. Hines JrStates is the lone
Page 146 and 147: James R. Hines Jr119Table 3: Social
Page 148 and 149: James R. Hines Jrtapped federal tax
Page 150 and 151: James R. Hines Jrer economic costs
Page 152 and 153: James R. Hines Jrtries, and consequ
Page 154 and 155: James R. Hines Jrtries from 1999 to
Page 156 and 157: James Kwak 12911Can the United Stat
Page 158 and 159: James Kwakone hundred years. 6 At t
Page 160 and 161: James Kwakthe Royal Navy had over o
Page 162 and 163: James Kwak135Figure 1: National Deb
Page 164 and 165: James Kwaka real growth rate of 2.2
Page 166 and 167: James Kwakkeep the national debt at
Page 168 and 169: James KwakRepublicans have seized o
Page 170 and 171: James Kwakreduction package. 45 Fur
Page 172 and 173: James KwakThe bottom line is that f
Page 174 and 175: James Kwakprovisions, including hea
Page 176 and 177: James KwakDespite these political c
Page 178 and 179: Jim Millstein 15112Burning the Furn
Page 180 and 181: Jim Millsteinits spending and tax c
Page 182 and 183: Jim MillsteinWhile safe-haven flows
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Jim Millsteinon reserve balances wi
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Jim Millsteinfull list of options i
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Jim Millsteinfundamental disagreeme
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Jim MillsteinHowever, other things
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Jim Millsteinwould likely command a
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Jim MillsteinThere will inevitably
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Charles W. Mooney, Jr 16913United S
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Charles W. Mooney, JrSecond, would
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Charles W. Mooney, Jrticipants, did
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Charles W. Mooney, JrThe extent and
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Charles W. Mooney, Jr“Treasury Di
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Charles W. Mooney, Jrin subpart B i
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Charles W. Mooney, Jrcount holders
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Charles W. Mooney, Jrdefault. If an
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Charles W. Mooney, Jrcould be achie
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Charles W. Mooney, Jrconsider adopt
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Charles W. Mooney, Jror gold coin.
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Charles W. Mooney, Jrpre-1933 legis
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Charles W. Mooney, Jrbegin by notin
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Charles W. Mooney, Jrformity requir
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Charles W. Mooney, Jrnation based o
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Charles W. Mooney, Jrthe Treasury d
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Charles W. Mooney, JrUnder any cohe
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Charles W. Mooney, Jrcontext of ban
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Charles W. Mooney, Jrcans in Congre
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Charles W. Mooney, JrThe government
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Charles W. Mooney, JrIf Wade’s sp
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Charles W. Mooney, Jring in Perry,
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Charles W. Mooney, JrThere would be
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Charles W. Mooney, JrBut that concl
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Charles W. Mooney, JrCourt of Feder
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Charles W. Mooney, Jrtem. 135 This
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Charles W. Mooney, Jr. b. The Race
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Charles W. Mooney, JrBut, of course
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Charles W. Mooney, Jrhave adopted r
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Charles W. Mooney, Jrtions Conventi
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Charles W. Mooney, Jrthe other hand
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Charles W. Mooney, JrIf the U.S. co
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Charles W. Mooney, Jrpursue massive
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Charles W. Mooney, Jrof multination
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Donald S. Bernstein 23714A Comment
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Donald S. Bernsteinis what most ban
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Donald S. BernsteinAmendment, simpl
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Donald S. Bernsteinfallout of alloc
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Steven L. Schwarcz 24515Direct and
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Steven L. Schwarczin Perry held tha
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Steven L. Schwarczwould apply to fe
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Steven L. Schwarczunder Section 13(
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Steven L. SchwarczD. Assessing the
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255AppendixThe 2011 Debt Limit Impa
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Jeremy Kreisberg & Kelley O’Mara
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