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

Jeremy Kreisberg & Kelley O’Mara (Under the Supervision of Professor Howell Jackson)Social Security payments could not be completed. 180 In response,Congress passed temporary exemptions 181 from the debt limit inorder to allow the President to issue new debt to the Social SecurityTrust Funds, and to pay Social Security beneficiaries. 182283Absent congressional authorization, the Supreme Court’s decision inClinton 183 may provide an implicit prohibition on executive discretionregarding the satisfaction of statutory spending obligations. 184Professor Buchanan writes that the Clinton Court “held thatthe president may not cancel appropriations that Congress hasauthorized.” 185 As compared to the line item veto at issue in Clinton,Professor Buchanan argues that prioritization is more “extreme”because it allows the President to reduce levels of spending within180General Accounting Office, Debt Ceiling: Analysis of Actions During the 1995-1996 Crisis10 (1996).181Pub. L. No. 104-103 (Feb. 8, 1996) and Pub. L. No. 104-115 (Mar. 12, 1996). These twoprovisions had the effect of temporarily exempting some newly issued Treasury securities frombeing counted against the debt limit. This allowed “Treasury to (1) raise $29 billion to payMarch 1996 Social Security benefits and (2) in March 1996, invest $58.2 billion from governmenttrust fund receipts and maturing securities.” General Accounting Office, supra note 180at 6. See 42 Cong. Rec. H1197-01, 1-2 (Feb. 1, 1996) (statement of Rep. Archer). The Act’ssponsor Rep. Bill Archer stated that this bill was enacted “in an effort to reassure our seniors.”He further stated, “[w]ith the passage of this bill, President Clinton has no excuse not to sendout Social Security checks.”Note: This provision was limited to new debt issuances and is distinct from the issue discussedinfra in Theory 2D, which would allow for Social Security Trust Fund redemptions in order topay beneficiaries. Pub. L. No. 104-103 specifically addressed the monthly process of creditingthe Trust Funds with new debt securities equal to the amount of incoming Social Security revenuesreceived by the Treasury. Rep. Smith contended that “[Treasury has] no legal authorityto withhold payments for Social Security or any other trust fund when there are surpluses cominginto those trust funds.” However, Social Security currently runs a current account deficit,which may change this evaluation. Without an Act similar to this 1996 measure, the Secretarymay be forced to violate either 42 U.S.C. § 1320b-15, which prohibits a delay of deposits intothe Trust Funds, or the Debt Limit.182See Gov’t Accountability Office, supra note 61, at 9;142 Cong. Rec. H1197-01, 4 (Feb. 1,1996) (statement of Rep. Smith). “Under normal circumstances Treasury would sell bonds afew days before benefit payments are due with a settlement date the same as the benefit paymentdate. Then the trust fund is disinvested and the debt limit has returned to what it was.Because we are at the debt limit Treasury cannot use this normal procedure. Because the SocialSecurity Trust is void of any cash, Treasury must sell securities to make benefit payments thatcome due. This bill will allow these securities to be sold outside the debt limit, then as thebenefit payments are met the trust fund securities will be redeemed. The securities which weresold will then come under the debt limit, so by March 15, when all benefit checks have beenpaid, the debt will be the same as it was before.”183524 U.S. 417. See supra Section II.A.2 – The Duty to Fulfill Statutory Spending Obligations.184See Buchanan, supra note 107.185Id.