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Jeremy Kreisberg & Kelley O’Mara (Under the Supervision of Professor Howell Jackson)Conclusion 310Appendix A: Timeline of Actions During the 2011 Debt LimitImpasse 313Appendix B: Relevant August 2-31, 2011 Financials 314Appendix C: History of the Public Debt Clause 315Appendix D: Perry v. United States 316257
258The 2011 Debt Limit Impasse: Treasury’s Actions & The Counterfactual – What Might Have Happened if the National Debt Hit the Statutory LimitIntroductionDuring the summer of 2011, as the nation’s outstanding debt approachedthe statutory limit, political leaders in Washington cameto an impasse during negotiations to extend the country’s borrowingauthority. The statutory debt limit, 1 first established in 1917, actsas a ceiling to the amount of debt the U.S. Treasury can borrow inorder to finance deficit expenditures. 2 When appropriated expensesare greater than incoming revenues, failures to raise the limit couldcause the United States to default on its obligations. The debt limithas been raised by Congress 78 times since 1960, 3 typically withoutcontroversy. In the last two decades, however, it has increasinglybeen used as a bargaining chip in broader negotiations between thepolitical parties. In 2011, as tensions about the nation’s increasingdebt and annual deficits came to the fore of political discussion, thedebt limit was once again invoked as a forcing mechanism in broaderpolicy negotiations.Part I of this paper will explore the Department of Treasury’s effortsto extend the nation’s borrowing authority during the 2011 impassein order to provide political leaders more time for negotiations andto prevent the country from reaching the statutory limit. Part II willdiscuss what the Executive Branch might have done if the limit hadbeen reached, including both the legal justifications and practicalimplications of the unprecedented choices.I: 2011 Debt Limit ImpasseA. Political Backdrop to the 2011 Debt Limit ImpasseOn May 16, 2011, the national debt reached the statutory limitof $14.294 trillion, 4 amounting to more than 250% of the same131 U.S.C. § 3101(b).2See generally D. Andrew Austin & Mindy R. Levit, The Debt Limit: History and Recent Increases,Cong. Research Serv. (Feb. 2, 2012), available at http://www.hsdl.org/?view&did=707321.3Dep’t of Treasury, Debt Limit: Myth v. Fact (available at http://www.treasury.gov/initiatives/Documents/Debt%20Limit%20Myth%20v%20Fact%20FINAL.pdf).4Austin & Levit, supra note 2, at 1. Feb. 12, 2010 legislation (Pub. L. No. 111-139) increasedthe statutory debt limit to $14.29 trillion.
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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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Charles W. Mooney, Jrcans in Congre
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Page 264 and 265: Donald S. Bernstein 23714A Comment
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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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Jeremy Kreisberg & Kelley O’Mara
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