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

Jeremy Kreisberg & Kelley O’Mara (Under the Supervision of Professor Howell Jackson)Theory 1: The President is Bound by the Debt Limit, andTreasury Must Follow “First In, First Out” Procedures277A. The President is Bound by the Debt LimitThe debt limit may prevent the President from borrowing moremoney. Proponents of this view argue that the Public Debt Clausedoes not invalidate the debt limit based on their interpretations of“questioned” and “public debt,” and several arguments exist to rebutthe applicability of Perry to the debt limit.First, the word “questioned” may have a narrow interpretation,which protects repudiation but does not protect default. 137 ProfessorMichael Stern argues that the legislative history is either unsettled 138or demonstrates that the Public Debt Clause was intended toprevent repudiation based on floor speeches by the framers of theamendment. 139 Professor Laurence Tribe contends that the lack of aclear threshold for triggering the Public Debt Clause illustrates theabsurdity of applying the Clause to the debt limit because, if any actthat increases the risk of default is unconstitutional, then a “budgetdeficit, tax cut, or spending increase” may be unconstitutional. 140Second, the Public Debt Clause may not apply to the debt limit ifnon-borrowing revenues are sufficient to fulfill all payments includedwithin the scope of “public debt.” 141 In response to an interpretationof “public debt” that includes all statutory spending commitments,137See Michael Stern, “Threatening Default”: A Response to Professor Balkin, Point of Order,July 1, 2011, http://www.pointoforder.com/2011/07/01/threatening-default-a-response-toprofessor-balkin/.138See infra Appendix C.139See id. Senator Ben Wade said of his proposal, “[i]t puts the debt incurred in the civil war onour part under the guardianship of the Constitution of the United States, so that a Congresscannot repudiate it.” (emphasis added).140Tribe, supra note 110. Professor Tribe points out that, if acts that increase the risk of defaultare unconstitutional, “the absence of a debt ceiling could likewise be attacked as unconstitutional— after all, the greater the nation’s debt, the greater the difficulty of repaying it, and thehigher the probability of default.”141See Calvin Massey, The Debt Limit and the Fourteenth Amendment, The Faculty Lounge,June 30, 2011, http://www.thefacultylounge.org/2011/06/the-debt-limit-and-the-fourteenthamendment.html.Professor Massey argues that “public debt” protects principal and interestpayments to bondholders, as well as “old-age pensions under Social Security, military pensions,and other federal pensions.”