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255AppendixThe 2011 Debt Limit Impasse:Treasury’s Actions & TheCounterfactual – What MightHave Happened if the NationalDebt Hit the Statutory LimitJeremy Kreisberg & Kelley O’Mara(Under the Supervision of Professor Howell Jackson)Introduction 258I: 2011 Debt Limit Impasse 258A. Political Backdrop to the 2011 Debt Limit Impasse 258B. Treasury Undertook Extraordinary Measures to Reduce theDebt Subject to the Limit 2601. Issuance of State and Local Government Series TreasurySecurities Suspended 2612. Debt Issuance Suspension Period Declared 261a. G-Fund: Reinvestments Suspended 262b. Civil Fund: Reinvestments Suspended and ExistingSecurities Redeemed 2633. Reinvestment in the Exchange Stabilization FundSuspended 2654. Federal Financing Bank Swaps Not Utilized 2665. Selling Assets to Raise Revenue Not Seriously Considered 267C. Resolution: The Budget Control Act of 2011 268
256The 2011 Debt Limit Impasse: Treasury’s Actions & The Counterfactual – What Might Have Happened if the National Debt Hit the Statutory LimitII. The Counterfactual: What Would Have Happened if the United StatesHit the Debt Limit in August 2011? 272A. Legal Background 2721. The Fourteenth Amendment 2722. The Duty to Fulfill Statutory Spending Obligations 274B. Legal Theories for Executive Action if the National DebtHits the Statutory Limit 276Theory 1: The President Is Bound by the Debt Limit, and TreasuryMust Follow “First In, First Out” Procedures 277A. The President Is Bound by the Debt Limit 277B. The President Cannot Prioritize Spending Obligations;Therefore, Treasury Must Follow “First In, First Out”Procedures 281C. 2011 Impasse: Treasury Appears to Favor FIFO Approach 284Theory 2: The President Is Bound by the Debt Limit, but TreasuryCan Prioritize Spending Obligations 287A. The President Can Prioritize at His Discretion 287B. The President Must Prioritize Bondholder Payments 291C. The President Must Prioritize Bond Payments and Other“Obligations” 295D. Social Security and Medicare Trust Fund Redemptions CouldEnable Payments After Reaching the Statutory Debt Limit 297Theory 3: The President Can Ignore the Debt Limit 300A. The Debt Limit Is Unconstitutional 300B. The President’s Emergency Powers Justify Further Borrowing 302C. The President Must Obey Statutory Spending CommitmentsRather Than the Debt Limit 303D. 2011 Impasse: Debt Limit Would Not Likely Have BeenRepudiated 304Theory 4: The President Is Bound by the Debt Limit and StatutorySpending Obligations 306A. Congressional Silence Implies a Pro Rata Approach 306B. Treasury Should Look to Statutes for Guidance 3081. Legislative Prioritization 3082. Government Shutdown 309
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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
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Howell E. Jacksonloss in liquidity.
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Howell E. Jacksonand provides resou
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Howell E. JacksonWhile assertions o
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Howell E. Jacksonof those payments.
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Howell E. Jacksonwhich payments to
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Concluding ThoughtsHowell E. Jackso
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Richard Squire 697A Market for End-
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Richard SquireSo far, there is litt
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Richard Squirethat the reference en
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Richard SquireIn fact, the gross no
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Richard Squireto only 22.6%. Thus i
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Richard Squirewill default. An econ
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Richard Squireannounced that in liq
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Richard SquireCDS on USA and Correl
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Richard Squiremean, however, that t
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Peter R. Fisher 878Thoughts on Debt
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Peter R. Fishernot really an insura
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Peter R. FisherU.K. prospered great
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Peter R. FisherSources of income be
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Peter R. Fisherlead to greater comp
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Peter R. FisherCentral bank mytholo
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Peter R. Fisherboth sides of their
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Deborah Lucas 1019The Federal Debt:
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Deborah LucasProjected Size of Defi
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Deborah Lucasrevenues. In fact, man
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Deborah Lucasly from the global des
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Deborah Lucas109Figure 2: Primary S
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Deborah Lucas111Figure 4: Medicare
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James R. Hines Jr 11310The Tax Reve
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James R. Hines Jrrevenue rely on ex
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James R. Hines JrStates is the lone
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James R. Hines Jr119Table 3: Social
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James R. Hines Jrtapped federal tax
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James R. Hines Jrer economic costs
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James R. Hines Jrtries, and consequ
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James R. Hines Jrtries from 1999 to
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James Kwak 12911Can the United Stat
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James Kwakone hundred years. 6 At t
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James Kwakthe Royal Navy had over o
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James Kwak135Figure 1: National Deb
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James Kwaka real growth rate of 2.2
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James Kwakkeep the national debt at
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James KwakRepublicans have seized o
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James Kwakreduction package. 45 Fur
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James KwakThe bottom line is that f
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James Kwakprovisions, including hea
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James KwakDespite these political c
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Jim Millstein 15112Burning the Furn
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Jim Millsteinits spending and tax c
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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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Page 264 and 265: Donald S. Bernstein 23714A Comment
Page 266 and 267: Donald S. Bernsteinis what most ban
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Page 272 and 273: Steven L. Schwarcz 24515Direct and
Page 274 and 275: Steven L. Schwarczin Perry held tha
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Page 278 and 279: Steven L. Schwarczunder Section 13(
Page 280 and 281: Steven L. SchwarczD. Assessing the
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Jeremy Kreisberg & Kelley O’Mara
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