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Concluding ThoughtsHowell E. Jackson67One of the paradoxes of debt ceiling crises is that the part of thegovernment best equipped to engage in advance planning for theconduct of government business in a Phase Two Debt Crisis hasstrong political incentives to avoid any public discussion of sensibleplanning procedures. In the months and weeks leading up to a debtceiling crisis, the Executive’s primary goal is to force congressionalcompromises by suggesting that the consequences of failing to raisethe public debt ceiling will be unpredictable and unpalatable to awide range of important constituencies. However, should the debtceiling ever actually be reached and should a Phase Two Debt Crisisensue, the incentives of the Executive will transform overnight.Rather than raising the specter of dire consequences, the focus ofgovernment policy would then be to convey to the general publicand the capital markets that a prudent, legally-defensible, andeconomically-efficient plan for addressing government payments isin place and capable of preserving fiscal stability while the politicalbranches work out a longer-term compromise.In my view, payment rules derived solely from obscure ReconstructionEra constitutional provisions or controversial theories of inherentauthority are unlikely to have the desired effect. Rather a sensiblesystem of prioritization – likely built off of a FIFO paymentplan adjusted to honor debt service payments under the Public DebtClause as well as Social Security and perhaps other trust fund paymentsunder 42 U.S.C. § 1320B–15 – is the most attractive path.To the extent that the prioritization decisions are supported throughinvocation of the Impoundment Act’s rules of deferral and other potentiallyapplicable federal budget laws, so much the better. Whileone might wish that we lived in a country where Phase Two DebtCrises were impossible to imagine, we no longer inhabit that world.Thus, we have no choice but to plan for crisis in a manner that is asconsistent as possible with the rule of law, and to map out a course ofgovernmental action that will minimize disruption and uncertainty.The dynamics of political brinksmanship may make it difficult forthe Executive to plan for a Phase Two Debt Crisis in the public view,but the academic community and independent analysts are under
68 The 2011 Debt Ceiling Impasse Revisitedno such constraints and should not hesitate to debate publicly howbest to allocate limited government resources in the face of a bindingdebt ceiling.
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ivPublished by FIC Press2405 Ste
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viContents8 Thoughts on Debt Sustai
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viiiContents
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The Contributors Anna GelpernAme
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The Contributors Howell E. Jacks
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The Contributors School, as well
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The Contributors Zoltan PozsarIn
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The Contributors Richard SyllaNe
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xxiAcknowledgmentsWe would like
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xxiiiPREFACEThe Law School and t
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PREFACE academic circles. A sove
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Richard Sylla 11U.S. Government Deb
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Richard Syllasigned from office in
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Richard Syllalike the United States
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Richard SyllaAfter 1815, a generall
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Richard Syllapurchase to back their
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Richard Syllational debt and reduce
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William W. Bratton 132A World Witho
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William W. Brattonwould go from a c
Page 44 and 45: William W. Brattonthe system, than
Page 46 and 47: ConclusionWilliam W. Bratton19At th
Page 48 and 49: Richard J. Herring 213Default and t
Page 50 and 51: Richard J. Herringpay is seldom in
Page 52 and 53: Richard J. HerringFigure 2: Archety
Page 54 and 55: Richard J. Herring27Figure 4: The R
Page 56 and 57: Richard J. Herring29Figure 6: Deman
Page 58 and 59: Richard J. HerringGovernment bonds
Page 60 and 61: Richard J. HerringDuring August 201
Page 62 and 63: Zoltan Pozsar 354A Macro View of Sh
Page 64 and 65: Zoltan Pozsartions, forming an inte
Page 66 and 67: Zoltan Pozsarfunding for safe, shor
Page 68 and 69: Zoltan Pozsarfor the reduction in t
Page 70 and 71: Zoltan PozsarWhile increased rollov
Page 72 and 73: Michael W. McConnell 455Origins of
Page 74 and 75: Michael W. McConnellAlthough the Co
Page 76 and 77: Michael W. McConnellvene? Who would
Page 78 and 79: Michael W. McConnell(Social Securit
Page 80 and 81: ConclusionMichael W. McConnell53Whe
Page 82 and 83: Howell E. Jackson 556The 2011 Debt
Page 84 and 85: Howell E. Jacksonloss in liquidity.
Page 86 and 87: Howell E. Jacksonand provides resou
Page 88 and 89: Howell E. JacksonWhile assertions o
Page 90 and 91: Howell E. Jacksonof those payments.
Page 92 and 93: Howell E. Jacksonwhich payments to
Page 96 and 97: Richard Squire 697A Market for End-
Page 98 and 99: Richard SquireSo far, there is litt
Page 100 and 101: Richard Squirethat the reference en
Page 102 and 103: Richard SquireIn fact, the gross no
Page 104 and 105: Richard Squireto only 22.6%. Thus i
Page 106 and 107: Richard Squirewill default. An econ
Page 108 and 109: Richard Squireannounced that in liq
Page 110 and 111: Richard SquireCDS on USA and Correl
Page 112 and 113: Richard Squiremean, however, that t
Page 114 and 115: Peter R. Fisher 878Thoughts on Debt
Page 116 and 117: Peter R. Fishernot really an insura
Page 118 and 119: Peter R. FisherU.K. prospered great
Page 120 and 121: Peter R. FisherSources of income be
Page 122 and 123: Peter R. Fisherlead to greater comp
Page 124 and 125: Peter R. FisherCentral bank mytholo
Page 126 and 127: Peter R. Fisherboth sides of their
Page 128 and 129: Deborah Lucas 1019The Federal Debt:
Page 130 and 131: Deborah LucasProjected Size of Defi
Page 132 and 133: Deborah Lucasrevenues. In fact, man
Page 134 and 135: Deborah Lucasly from the global des
Page 136 and 137: Deborah Lucas109Figure 2: Primary S
Page 138 and 139: Deborah Lucas111Figure 4: Medicare
Page 140 and 141: James R. Hines Jr 11310The Tax Reve
Page 142 and 143: James R. Hines Jrrevenue rely on ex
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James R. Hines JrStates is the lone
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James R. Hines Jr119Table 3: Social
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James R. Hines Jrtapped federal tax
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James R. Hines Jrer economic costs
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James R. Hines Jrtries, and consequ
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James R. Hines Jrtries from 1999 to
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James Kwak 12911Can the United Stat
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James Kwakone hundred years. 6 At t
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James Kwakthe Royal Navy had over o
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James Kwak135Figure 1: National Deb
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James Kwaka real growth rate of 2.2
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James Kwakkeep the national debt at
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James KwakRepublicans have seized o
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James Kwakreduction package. 45 Fur
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James KwakThe bottom line is that f
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James Kwakprovisions, including hea
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James KwakDespite these political c
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Jim Millstein 15112Burning the Furn
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Jim Millsteinits spending and tax c
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Jim MillsteinWhile safe-haven flows
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Jim Millsteinon reserve balances wi
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Jim Millsteinfull list of options i
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Jim Millsteinfundamental disagreeme
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Jim MillsteinHowever, other things
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Jim Millsteinwould likely command a
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Jim MillsteinThere will inevitably
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Charles W. Mooney, Jr 16913United S
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Charles W. Mooney, JrSecond, would
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Charles W. Mooney, Jrticipants, did
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Charles W. Mooney, JrThe extent and
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Charles W. Mooney, Jr“Treasury Di
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Charles W. Mooney, Jrin subpart B i
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Charles W. Mooney, Jrcount holders
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Charles W. Mooney, Jrdefault. If an
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Charles W. Mooney, Jrcould be achie
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Charles W. Mooney, Jrconsider adopt
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Charles W. Mooney, Jror gold coin.
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Charles W. Mooney, Jrpre-1933 legis
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Charles W. Mooney, Jrbegin by notin
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Charles W. Mooney, Jrformity requir
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Charles W. Mooney, Jrnation based o
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Charles W. Mooney, Jrthe Treasury d
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Charles W. Mooney, JrUnder any cohe
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Charles W. Mooney, Jrcontext of ban
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Charles W. Mooney, Jrcans in Congre
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Charles W. Mooney, JrThe government
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Charles W. Mooney, JrIf Wade’s sp
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Charles W. Mooney, Jring in Perry,
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Charles W. Mooney, JrThere would be
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Charles W. Mooney, JrBut that concl
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Charles W. Mooney, JrCourt of Feder
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Charles W. Mooney, Jrtem. 135 This
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Charles W. Mooney, Jr. b. The Race
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Charles W. Mooney, JrBut, of course
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Charles W. Mooney, Jrhave adopted r
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Charles W. Mooney, Jrtions Conventi
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Charles W. Mooney, Jrthe other hand
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Charles W. Mooney, JrIf the U.S. co
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Charles W. Mooney, Jrpursue massive
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Charles W. Mooney, Jrof multination
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Donald S. Bernstein 23714A Comment
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Donald S. Bernsteinis what most ban
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Donald S. BernsteinAmendment, simpl
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Donald S. Bernsteinfallout of alloc
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Steven L. Schwarcz 24515Direct and
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Steven L. Schwarczin Perry held tha
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Steven L. Schwarczwould apply to fe
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Steven L. Schwarczunder Section 13(
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Steven L. SchwarczD. Assessing the
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255AppendixThe 2011 Debt Limit Impa
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Jeremy Kreisberg & Kelley O’Mara
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