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

Jeremy Kreisberg & Kelley O’Mara (Under the Supervision of Professor Howell Jackson)of the public debt.” 292 Proponents of this interpretation point to thepolitical context after the Civil War 293 to show that the northernRepublicans framed the Public Debt Clause to prevent the southernDemocrats from excusing their war debts, and the distinction betweenrepudiation and default was irrelevant to their goal. 294 They also arguethat an interpretation which limits “questioned” to “repudiation” isredundant because the Court in Perry reasoned that debt repudiationis unconstitutional without the Public Debt Clause. 295 Finally, theylook to linguistic hints within the Public Debt Clause, including itspassive construction, 296 and to the change from the initial proposedlanguage, 297 which used “inviolable” instead of “questioned,” 298 tosuggest a broad reading of “questioned.”301In response to the argument that a broad interpretation of “questioned”presents a slippery slope in which any act that increases the risk ofdefault might be unconstitutional, 299 Professor Neil Buchananresponds that “[a]n increase in the nation’s level of debt does nothingto increase the probability of default because the definition of defaultis the inability to repay obligations on the terms to which the partieshave agreed. No matter how large the debt, the possibility of defaultremains zero, so long as there is no debt limit.” 300292If the national debt hit the statutory limit and the United States was no longer able to satisfyits interest payments to bondholders, the likely consequence would be that the governmentwould “default” on its debt until the government raised the debt limit rather than openly“repudiate” its obligations. “Roughly speaking, to repudiate a debt means that you state thatyou are not going to pay it and that you don’t owe the money. Defaulting on a debt meansthat you aren’t able to perform, but you still acknowledge that you owe the money.” Balkin,supra note 146.293See infra Appendix C.294See Balkin, supra note 290.295See infra Appendix D. See also Abramowicz, supra note 103, at 15.296Professor Abramowicz argues, “[q]uestioning a proposition is not equivalent to insistingthat the proposition is false but merely entails suggesting that it might be.” Id. at 24. The passiveconstruction of the Public Debt Clause may also “allow[] for a reading . . . containing areassuring promise from the Framers to bondholders” and “make[] the Clause more evocativethan descriptive, more like an announcement of a general principle of debt validity than like atechnical rule barring failure to make debt payments.” Id. at 25.297This was the proposal by Senator Ben Wade. See infra Appendix C.298The replacement of “inviolable” with “questioned” may “sugges[t] a preference for phraseologythat protects the public debt so strongly as to put the government’s commitment to it beyondquestion” by “precluding government action that makes default possible.” Abramowicz,supra note 103, at 27.299See Tribe, supra note 110.300Buchanan, supra note 109. Professor Buchanan’s argument is dependent on the combinationof statutes through which appropriations bills and mandatory spending programs outpace