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

310The 2011 Debt Limit Impasse: Treasury’s Actions & The Counterfactual – What Might Have Happened if the National Debt Hit the Statutory Limitprocedures are distinct from a debt limit crisis because a governmentshutdown occurs due to a lack of appropriations authority, while thedebt limit involves a lack of borrowing authority. 353 However, thePresident may use the government shutdown procedures to justify apreference for spending obligations that are essential to protect “lifeand property.” 354ConclusionIt remains unclear how the President and the Treasury Departmentwould have responded if the national debt had hit the statutory limiton August 2, 2011. While legal concerns may have impacted thedecision-making of the Executive Branch, practical and politicalconsiderations were the most likely catalyst for actions taken duringthe impasse. The specter of defaulting on the debt, rising interestrates, and late Social Security payments pushed the nation’s politicalleaders to an agreement, but the mounting national debt mayprovoke political stalemates prior to future extensions of the debtlimit. Treasury’s actions before August 2, while allowing a bufferzone before the outstanding debt hit the limit, appeared to softenthe urgency in Washington, and may offer a dangerous precedent forfuture negotiations.The BiPartisan Policy Center projects that the nation will reach its$16.394 trillion debt limit 355 between late November 2012 andearly January 2013. 356 If “extraordinary measures” are again reliedupon, the nation’s borrowing authority is predicted to be exhaustedto perform activities expressly authorized by law; [t]hey are necessary to perform activities necessarilyimplied by law; [t]hey are necessary to the discharge of the President’s constitutionalduties and powers; or [t]hey are necessary to protect life and property.”353Levit, supra note 171, at 10 (“Alternatively stated, in a situation when the debt limit isreached and Treasury exhausts its financing alternatives, aside from ongoing cash flow, anagency may continue to obligate funds. However, Treasury may not be able to liquidate all obligationsthat result in federal outlays due to a shortage of cash. In contrast to this, if Congressand the President do not enact interim or full year appropriations for an agency, the agencydoes not have budget authority available for obligation. If this occurs, the agency must shutdown non-excepted activities, with immediate effects on government services.”).354See id.355Austin & Levit, supra note 2, at 1.356Steve Bell, Loren Adler & Shai Akabas, The Debt Ceiling Slouches Toward 2012, BiPartisanPolicy Center, (Feb. 24, 2012) (available at http://www.bipartisanpolicy.org/blog/2012/02/debt-ceiling-slouches-toward-2012).