4 ms·

It’s way past time this went to court to sort out. Congress has issued spending instructions, tax instructions and bond issuing instructions. They don’t add up.

It’s way past time this went to court to sort out. Congress has issued spending instructions, tax instructions and bond issuing instructions. They don’t add up. Which means the balancing figure should be left at the Federal Reserve. It needs to go to court to decide whether the Federal Reserve has the power to say “no” to a Congress mandated payment or whether it just has to suck it up and pay it anyway.

garciasn 4y ago
Unfortunately Congress and only Congress has final budgetary spending authorization abilities via the Constitution. There is little that can be done here while we are in a deadlocked political situation in this country.
- dpkirchner 4y ago
  It's ok that congress has that authority, however it should be implied that when they grant spending authority that the treasury may raise money to pay for what Congress granted.
  - neilwilson 4y ago
    Money isn't raised. It just appears as a function of the way banks account for transactions. That's the key misunderstanding here. There are no silver coins, just a bunch of promises.
- gizmo686 4y ago
  Congress passed laws authorizing the spending. If they don't want that spending, they can pass new laws repealing it. Also the same Constitution that grants Congress budgetary authority also provides that: > The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void. The debt ceiling is unconstitutional as it would cause the Government to default on lawfully authorized debts, in contradiction to the 14th amendment.
  - zinekeller 4y ago
    I heard that Biden's counsel might actually try to file a case against the legislative branch (as an institution, not specific people) about the debt ceiling (instead of negotiating with Republicans), which would be popcorn time.
voxic11 4y ago
Why do you say the balancing should be left to the Federal Reserve? If we are going to have executive branch institutions rectify Congresses instructions by disregarding one of them what is your principled reason for saying its the Federal Reserve's responsibility to fix the shortfall by issuing more debt in violation of the law instead of say the IRS's responsibility to fix the shortfall by collecting more taxes in violation of the law?
- neilwilson 4y ago
  It's not a principled reason. It is how bank accounting works. If you put the numbers authorised by Congress into the accounting then the result will be a carried forward balancing amount on the face of the Federal Reserve balance sheet. Since the Fed is mandated by law to be agent of Treasury and to follow the Treasury Fiscal manual they have no legal right to say no. And even if there was a legal right then Congress setting an unbalanced budget repeals it under the doctrine of implied repeal. The reason why you can't write checks with gay abandon is because the bank can say no, and if you sue for breach of contract the courts will back the bank. If the Fed tries that with Treasury the courts will back the Treasury. IRS can collect no more taxes by law. The Treasury can issue no more bonds by law and the Treasury cannot avoid spending what it is required to spend by law.
  - voxic11 4y ago
    The Treasury could simply mint some trillion dollar coins, that is actually something they are authorized by law to do.
    - neilwilson 4y ago
      It can mint coins with 1tn on the front. Whether the Fed has to give them $1tn of bank deposits for that coin is a different matter. Once you have an unbalanced budget of this type, then Treasury dollars become like Canadian dollars. They stop having a 1-to-1 relationship with Fed dollars. Banks have the power of discount, and maintaining a discount between the Fed and the Treasury is how monetary policy is alleged to work.

garciasn 4y ago

Unfortunately Congress and only Congress has final budgetary spending authorization abilities via the Constitution. There is little that can be done here while we are in a deadlocked political situation in this country.

dpkirchner 4y ago
It's ok that congress has that authority, however it should be implied that when they grant spending authority that the treasury may raise money to pay for what Congress granted.
- neilwilson 4y ago
  Money isn't raised. It just appears as a function of the way banks account for transactions. That's the key misunderstanding here. There are no silver coins, just a bunch of promises.
gizmo686 4y ago
Congress passed laws authorizing the spending. If they don't want that spending, they can pass new laws repealing it. Also the same Constitution that grants Congress budgetary authority also provides that: > The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void. The debt ceiling is unconstitutional as it would cause the Government to default on lawfully authorized debts, in contradiction to the 14th amendment.
- zinekeller 4y ago
  I heard that Biden's counsel might actually try to file a case against the legislative branch (as an institution, not specific people) about the debt ceiling (instead of negotiating with Republicans), which would be popcorn time.

voxic11 4y ago

Why do you say the balancing should be left to the Federal Reserve? If we are going to have executive branch institutions rectify Congresses instructions by disregarding one of them what is your principled reason for saying its the Federal Reserve's responsibility to fix the shortfall by issuing more debt in violation of the law instead of say the IRS's responsibility to fix the shortfall by collecting more taxes in violation of the law?

neilwilson 4y ago
It's not a principled reason. It is how bank accounting works. If you put the numbers authorised by Congress into the accounting then the result will be a carried forward balancing amount on the face of the Federal Reserve balance sheet. Since the Fed is mandated by law to be agent of Treasury and to follow the Treasury Fiscal manual they have no legal right to say no. And even if there was a legal right then Congress setting an unbalanced budget repeals it under the doctrine of implied repeal. The reason why you can't write checks with gay abandon is because the bank can say no, and if you sue for breach of contract the courts will back the bank. If the Fed tries that with Treasury the courts will back the Treasury. IRS can collect no more taxes by law. The Treasury can issue no more bonds by law and the Treasury cannot avoid spending what it is required to spend by law.
- voxic11 4y ago
  The Treasury could simply mint some trillion dollar coins, that is actually something they are authorized by law to do.
  - neilwilson 4y ago
    It can mint coins with 1tn on the front. Whether the Fed has to give them $1tn of bank deposits for that coin is a different matter. Once you have an unbalanced budget of this type, then Treasury dollars become like Canadian dollars. They stop having a 1-to-1 relationship with Fed dollars. Banks have the power of discount, and maintaining a discount between the Fed and the Treasury is how monetary policy is alleged to work.