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

292The 2011 Debt Limit Impasse: Treasury’s Actions & The Counterfactual – What Might Have Happened if the National Debt Hit the Statutory LimitClause may prevent Congress from rescinding or altering a statutoryappropriation; 237 an interpretation that allowed for such a conclusionwould not be plausible. Using the same logic, Professor Tribe arguesthat “public debt” cannot include Social Security payments because,in Flemming v. Nestor, 238 “the Supreme Court held that Congresscould revise or repeal Social Security Act benefits even thoughthey had already been promised by prior legislation.” 239 Whilesome academics argue that “public debt” protects all contractualobligations, 240 Social Security beneficiaries contributed taxes, ratherthan voluntary payments pursuant to an agreement, and they havenot signed a written contract. 241In response to the argument that current “pensions” are part of the“public debt,” proponents of a narrow interpretation contend that,due to the fear that southern Democrats would refuse to pay backwar debts, the “pensions and bounties” phrase 242 was only necessaryto provide an unambiguous indication that those debts could notbe questioned. 243 On that view, the “including” phrase is limited tothose unique situations that involve the Civil War or, in a broaderview, the suppression of insurrections.This narrow construction of the Fourteenth Amendment to supportfavoring only bondholder payments was widely discussed as a validform of prioritization throughout the 2011 impasse. 244 On April 25,2011, in anticipation of reaching the debt limit, Matthew Zames,Chairman of the Treasury Borrowing Advisory Committee and aManaging Director at J.P. Morgan Chase, wrote Secretary Geithner,warning that “any delay in making an interest or principal paymentby Treasury even for a very short period of time . . . could trigger237See Abramowicz, supra note 103, at 43-44.238363 U.S. 603 (1960).239Tribe, supra note 144.240See Abramowicz, supra note 103, at 20-21.241Id. at 43-44. Although the contributions to Social Security and Medicare are tied to thebenefits received, they are a tax rather than a contractual agreement. Id.242U.S. Const. amend. XIV, § 4: “The validity of the public debt of the United States, authorizedby law, including debts incurred for payment of pensions and bounties for services in suppressinginsurrection or rebellion, shall not be questioned.” (emphasis added).243See Abramowicz, supra note 103, at 20.244Letter from Jim DeMint, et. al., U.S. Senate, to Timothy Geithner, Secretary of theTreasury (May 26, 2011) (available at http://www.demint.senate.gov/public/index.cfm?ContentRecord_id=7371d3a9-9435-4277-87ef-330fcf689087&p=PressReleases).