US Government Debt Different - Finance Department - University of ...

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