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

284The 2011 Debt Limit Impasse: Treasury’s Actions & The Counterfactual – What Might Have Happened if the National Debt Hit the Statutory Limiteach obligation, while the line item veto only allows the Presidentto cancel an entire spending item. 186 Professor Buchanan furthercontends that the Impoundment Control Act “establishes thatCongress has aggressively disapproved of presidential encroachmenton its spending authority -- encroachment of precisely the type thatprioritization represents.” 187C. 2011 Impasse: Treasury Appears to Favor FIFO ApproachThroughout the 2011 impasse, Treasury officials implied in theirstatements that the Department would most likely employ theFIFO method of making payments if the outstanding debt reachedthe statutory limit. In his May 2 letter, Secretary Geithner statedthat, upon default, “a broad range of payments would have to belimited or delayed, including military salaries, Social Security andMedicare payments, interest on debt, unemployment benefitsand tax refunds,” 188 suggesting a pari passu approach. 189 Further,Treasury repeatedly expressed a bias against prioritizing payments,implicating the use of the FIFO method instead. For example,in responding to Senator Jim DeMint’s suggestion that interestpayments be prioritized, Secretary Geithner called such a proposal“a radical and deeply irresponsible departure from the commitmentby Presidents of both parties, throughout American history, tohonor all of the commitments our Nation has made.” 190 In a separatestatement, Deputy Secretary of the Treasury Neal Wolin contendedthat prioritizing bond payments would be “unworkable” and“unacceptable to American servicemen and women, retirees, and allAmericans who would rightly reject the notion that their paymenthas been deemed a lower priority by their government.” 191 Even186Id.187Id.188Letter from Timothy Geithner, Secretary of the Treasury, to John Boehner, Speaker of theHouse, US House of Representatives (May 2, 2011) (available at http://www.treasury.gov/initiatives/Pages/debtlimit.aspx).189Meaning that payments would be put on an “equal footing,” as in bankruptcy proceedings.190Letter from Timothy Geithner, Secretary of the Treasury, to Jim DeMint, Senator, USSenate (June 28, 2011) (available at http://www.treasury.gov/initiatives/Pages/debtlimit.aspx).191Neal Wolin, Deputy Secretary of the Treasury, Proposals to “Prioritize” Payments on U.S.Debt Not Workable; Would Not Prevent Default, Dep’t of Treasury, Jan. 21, 2011 (available athttp://www.treasury.gov/connect/blog/Pages/Proposals-to-Prioritize-Payments-on-US-Debt-Not-Workable-Would-Not-Prevent-Default.aspx).