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U.S. Could Run Out of Cash by June 1, Yellen Warns

nytimes.com

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Re: U.S. Could Run Out of Cash by June 1, Yellen Warns

#21

Post by ProjectArcturis »

Georgelemental wrote: post #15
GalenErso wrote: post #2

It's unlikely the House will pass a clean debt ceiling hike. The GOP has not budged since the beginning of the new Congress. The MAGA caucus is determined to extract spending cuts at any costs. The way I see it, one of three things will happen: 1) The executive branch will invoke Section 4 of the 14th Amendment[1] and direct, by Executive Order, the Treasury Department to continue paying interest to bondholders, effe…

What is the desired end game supposed to be, of successive "clean" debt ceiling hikes? How much longer should we be spending money we don't have—enough to make inflation even worse? Enough that nobody will lend to us anymore and default is forced? What's the plan here?

Our debt will continue to grow exponentially, along with our overall economy and population size. That's the plan.

Re: U.S. Could Run Out of Cash by June 1, Yellen Warns

#22

Post by GalenErso »

AnimalMuppet wrote: post #14
GalenErso wrote: post #2

It's unlikely the House will pass a clean debt ceiling hike. The GOP has not budged since the beginning of the new Congress. The MAGA caucus is determined to extract spending cuts at any costs. The way I see it, one of three things will happen: 1) The executive branch will invoke Section 4 of the 14th Amendment[1] and direct, by Executive Order, the Treasury Department to continue paying interest to bondholders, effe…

The problem with 1 is that, if the Supreme Court rules that the debt ceiling limit is constitutional, then the US is right then, as of the moment of the ruling, in default. That's an insanely risky gamble.

Sure, and what if the court said the First Amendment of the Constitution was unconstitutional? The courts can interpret the Constitution. They cannot disregard it wholesale. The power of the judicial branch is not absolute. It can be checked by the other two: the legislative branch and the executive branch. And one way for the executive branch to check the judicial branch is to disregard judicial rulings that are blatantly unconstitutional, just like the judicial branch regularly invalidates entire laws and government programs. This is not a dictatorship or a coup. It's just the balance of power. The courts check the executive. The executive checks the courts. Of course, there's a fine line between disregarding a ruling that would cause the US to default, and disregarding a ruling that would, say, invalidate a conservative or liberal policy bill. But if the courts stop playing nice with the executive, the executive should stop playing nice with the judicial, as much as necessary.

"I have directed the Treasury Department to continue honoring our financial commitments to bondholders. My administration will ignore any rulings, by any court, or judge, that would seek to impair all or part of this order, as such rulings would be unconstitutional. I will not allow legal technicalities or political games to threaten the full faith and credit of the United States of America. It it so decided."

I would say these words.

Re: U.S. Could Run Out of Cash by June 1, Yellen Warns

#23

Post by [deleted] »

Georgelemental wrote: post #15
GalenErso wrote: post #2

It's unlikely the House will pass a clean debt ceiling hike. The GOP has not budged since the beginning of the new Congress. The MAGA caucus is determined to extract spending cuts at any costs. The way I see it, one of three things will happen: 1) The executive branch will invoke Section 4 of the 14th Amendment[1] and direct, by Executive Order, the Treasury Department to continue paying interest to bondholders, effe…

What is the desired end game supposed to be, of successive "clean" debt ceiling hikes? How much longer should we be spending money we don't have—enough to make inflation even worse? Enough that nobody will lend to us anymore and default is forced? What's the plan here?

[deleted]

Re: U.S. Could Run Out of Cash by June 1, Yellen Warns

#24

Post by astrange »

Georgelemental wrote: post #15
GalenErso wrote: post #2

It's unlikely the House will pass a clean debt ceiling hike. The GOP has not budged since the beginning of the new Congress. The MAGA caucus is determined to extract spending cuts at any costs. The way I see it, one of three things will happen: 1) The executive branch will invoke Section 4 of the 14th Amendment[1] and direct, by Executive Order, the Treasury Department to continue paying interest to bondholders, effe…

What is the desired end game supposed to be, of successive "clean" debt ceiling hikes? How much longer should we be spending money we don't have—enough to make inflation even worse? Enough that nobody will lend to us anymore and default is forced? What's the plan here?

The debt ceiling isn't what prevents us from spending money we don't have.

Congress causes deficit spending to happen by passing budgets. The debt ceiling is more like refusing to pay your credit card bill after you've already used it to buy stuff.

Re: U.S. Could Run Out of Cash by June 1, Yellen Warns

#25

Post by astrange »

akomtu wrote: post #18
nabla9 wrote: post #7

there are many ways to avoid default. (1) discharge petition - bill from committee to a vote. (2) Fourteenth Amendment Constitution prevents willful default until SCOTUS says otherwise. Just keep issuing debt. (3) High coupon and low principal. 10-year bond with $1 in principal and annual $100 coupon will increase debt ceiling almost 1000X. (4) high denominations coin minting

These are bandaids. Very soon it will become apparent that the US needs to take extraordinary measures to solve its debt problem, and such measures need an extraordinary excuse, more extraordinary than the recent pandemic.

The market doesn't believe this. If it did, the 10 year Treasury bond rate would be a lot higher, instead the yield curve is negative.

https://ycharts.com/indicators/10_year_3_month_treasury_spre...

Re: U.S. Could Run Out of Cash by June 1, Yellen Warns

#26

Post by ProjectArcturis »

GalenErso wrote: post #22
AnimalMuppet wrote: post #14

Earlier quoted context omitted.

The problem with 1 is that, if the Supreme Court rules that the debt ceiling limit is constitutional, then the US is right then, as of the moment of the ruling, in default. That's an insanely risky gamble.

Sure, and what if the court said the First Amendment of the Constitution was unconstitutional? The courts can interpret the Constitution. They cannot disregard it wholesale. The power of the judicial branch is not absolute. It can be checked by the other two: the legislative branch and the executive branch. And one way for the executive branch to check the judicial branch is to disregard judicial rulings that are bla…

>And one way for the executive branch to check the judicial branch is to disregard judicial rulings that are blatantly unconstitutional.

That is not at all how the Constitution is set up. There is no explicit power for the executive to ignore the judicial. It has happened once in US history, when Andrew Jackson continued his genocide against the Cherokee after the Supreme Court had ordered it stopped. "John Marshall has made his decision; now let him enforce it!", Jackson supposedly said.

It would be a VERY BAD precedent to do that again. It would be a huge step towards enshrining the President as a dictator.

Re: U.S. Could Run Out of Cash by June 1, Yellen Warns

#27

Post by HDThoreaun »

albatross13 wrote: post #9
hackbinary wrote: post #8

Earlier quoted context omitted.

Nice, an appeal to a false equivalence. The conservative obstructionist and scorched earth tactics are obscene.

[flagged]

Society can not allow people to be uninsured while also forcing medical care providers to treat emergencies as we currently do. It's a horrible moral hazard and increases health care costs for everyone else. There is no political will to end the "hospitals must admit people even if they don't have insurance" rule, so we had to do something about getting everyone insured.

Re: U.S. Could Run Out of Cash by June 1, Yellen Warns

#28

Post by HDThoreaun »

Georgelemental wrote: post #15
GalenErso wrote: post #2

It's unlikely the House will pass a clean debt ceiling hike. The GOP has not budged since the beginning of the new Congress. The MAGA caucus is determined to extract spending cuts at any costs. The way I see it, one of three things will happen: 1) The executive branch will invoke Section 4 of the 14th Amendment[1] and direct, by Executive Order, the Treasury Department to continue paying interest to bondholders, effe…

What is the desired end game supposed to be, of successive "clean" debt ceiling hikes? How much longer should we be spending money we don't have—enough to make inflation even worse? Enough that nobody will lend to us anymore and default is forced? What's the plan here?

Biden has already agreed to negotiate on the budget once the debt ceiling is raised.

Re: U.S. Could Run Out of Cash by June 1, Yellen Warns

#30

Post by GalenErso »

ProjectArcturis wrote: post #26
GalenErso wrote: post #22

Earlier quoted context omitted.

Sure, and what if the court said the First Amendment of the Constitution was unconstitutional? The courts can interpret the Constitution. They cannot disregard it wholesale. The power of the judicial branch is not absolute. It can be checked by the other two: the legislative branch and the executive branch. And one way for the executive branch to check the judicial branch is to disregard judicial rulings that are bla…

>And one way for the executive branch to check the judicial branch is to disregard judicial rulings that are blatantly unconstitutional. That is not at all how the Constitution is set up. There is no explicit power for the executive to ignore the judicial. It has happened once in US history, when Andrew Jackson continued his genocide against the Cherokee after the Supreme Court had ordered it stopped. "John Marshall…

> There is no explicit power for the executive to ignore the judicial.

But there is: it's called the Constitution. Not any particular clause or article, but the whole document. The executive is allowed to check the judicial if the judicial ignores the Constitution. How else is the executive supposed to check the judicial?

> It would be a VERY BAD precedent to do that again.

It would be a bad precedent, but it would be an even worse precedent for the Supreme Court to force the government to default on its debt. The least bad of the two evils would be for the government to continue paying its debt by waving the debt ceiling away.

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