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

Michael W. McConnell(Social Security does not count as a “pension” under Section Four,but Congress has authorized the Treasury to sell notes in the SocialSecurity Trust Fund to pay Social Security claims as they becomedue. So Social Security payments are not jeopardized by hitting theceiling.) The practical effect of hitting the ceiling, in my opinion, isthat the executive would be forced to prioritize expenditures in orderto keep below the limit, by delaying expenditures that are the leasturgent. To a certain extent, these delays are authorized under theImpoundment Control Act. But in any event, if Section Four meansthat a default would be unconstitutional, the only way the Presidentcould meet all his constitutional obligations would be to prioritizeexpenditures. If Section Four has any relevance to the current debate,it means that the President is under a constitutional, as well as a pragmatic,obligation to keep current on interest and principal, ratherthan continuing other spending with a mere statutory basis. This iswhat a prudent President would do in any event.51Some have urged that Section Four authorizes the President to borrowabove the debt ceiling, in order to prevent default. I do notbelieve this is correct. The President has no constitutional power toborrow unilaterally, any more than to raise taxes unilaterally. Theonly latitude he has is to spend less, or more slowly.BudgetsIt is worth noting that the Budget Act of 1974 – passed in conjunctionwith the Impoundment Control Act – contains provisions that,if followed, would largely eliminate our periodic debt ceiling standoffs.The Act requires first the President, then both Houses of Congress,to pass budget resolutions estimating revenues, expenditures,and expected borrowing needs (including any need to raise the debtceiling), all many months before the beginning of the fiscal year.These resolutions cannot be filibustered. If adopted, a budget resolutiondoes not have the force of law, but it empowers the majority inCongress to make changes in taxes and spending through a budgetreconciliation act, which cannot be filibustered. Unfortunately, inthe last several years, the Senate leadership has declined to bring abudget resolution to the floor. This, in no small part, is the underly-