5 ms·

14th amendment makes it pretty clear as far as I can tell that America may not default. It’s a plainly ridiculous exercise that threatens the world and empower

14th amendment makes it pretty clear as far as I can tell that America may not default. It’s a plainly ridiculous exercise that threatens the world and empowers right wing psychopaths.

tiahura 3y ago
The validity of the public debt of the United States … shall not be questioned. It says nothing about default, it’s talking about disputing the debt. Disputing debt is different than not having the money to pay it.
Kon-Peki 3y ago
I’m not sure that’s it’s clear. If the Congress passes a budget, does it create debt? Or is the debt created only when the Treasury issues a bond to pay for it? Let’s say that Biden directs the Treasury to ignore the debt ceiling law, citing the 14th amendment. Who has standing to file a lawsuit to challenge him? Who is directly harmed? You and I aren’t allowed to sue the EPA to force them to do anything about climate change, because our harms are generalized. We need to prove we’re directly harmed. Ok, but let’s say that someone is allowed to sue. It works its way through the court system and Biden loses. Does that mean we have to claw back all the payments the federal government made?
- doktorhladnjak 3y ago
  Someone trading derivatives that would be affected by the US govt defaulting would likely have standing
  - Kon-Peki 3y ago
    Interesting thought. It raises a bunch of other questions though. In what other circumstance would a derivatives trader say “I would have profited but for your (possibly illegal) actions”? And are we seeing such lawsuits?
    - vivegi 3y ago
      Not sure if the following cases offer precedents. Obviously, the Federal Govt enjoys additional legal powers, but these cases offer the circumstances where a party sued their derivatives trader (the opposite of the questions you raise). Procter & Gamble v. Bankers Trust [1] P&G sued BT for losses incurred in derivatives contracts that should not have been sold by BT. This article [2] provides some more detail: > In another high-profile case, Procter & Gamble Co. is suing Bankers Trust, its derivatives dealer, blaming it for a loss of dollars 195 million on two interest-rate contracts the company claims it should not have been sold. > Procter & Gamble recently upped the stakes dramatically, claiming triple damages under U.S. civil racketeering legislation. In a related development, a shareholder has sued Procter & Gamble for financial irresponsibility. The outcome of the case is that Bankers Trust settled with P&G as per this article [3]. The same article [2] also mentions the Orange County bankruptcy where OC sued its derivatives broker. At the time, this was one of the largest financial failures. > Orange County is suing both its main derivatives broker, Merrill Lynch, and the accounting firm Peat Marwick Merrill Lynch paid OC $437 M to settle as per this article [4]. [1]: https://casetext.com/case/procter-gamble-v-bankers-trust/case-details https://casetext.com/case/procter-gamble-v-bankers-trust/cas... [2]: https://www.nytimes.com/1996/01/13/your-money/IHT-moneylosers-demand-a-day-in-court.html https://www.nytimes.com/1996/01/13/your-money/IHT-moneyloser... [3]: https://www.nytimes.com/1996/05/10/business/bankers-trust-settles-suit-with-p-g.html https://www.nytimes.com/1996/05/10/business/bankers-trust-se... [4]: https://www.nytimes.com/1998/06/03/business/ending-suit-merrill-lynch-to-pay-california-county-400-million.html https://www.nytimes.com/1998/06/03/business/ending-suit-merr...
dragonwriter 3y ago
> 14th amendment makes it pretty clear as far as I can tell that America may not default. Right, but even if that means the executive can take some action that otherwise would be prohibited if the Congress passes taxing and spending bills but also passes a debt limit inconsistent with the net result, that doesn’t mean that the executive can take any action in his discretion. While, say, the Biden Administration might agree that the 14th Amendment would, ultimately, allow the government to pay its debts, they probably don’t want to take the risk that the courts would determine that that means that the executive must unilaterally cut appropriated spending to minimize any overage in the debt limit, and return within it as soon as practical while paying debt service. (Both because they wouldn’t prefer spending cuts to ignoring the debt limit, and because politically they don’t want to be on the hook for the impacts of spending cuts they don’t want to make.) Conversely, while Republicans might like that outcome, they wouldn’t like court finding that, indeed, the executive can choose to just ignore the debt limit in the case of that kind of conflict. So no one actually wants to get the position of having the courts resolve this, especially since US courts don’t give advisory rulings, so the only way to get it before the courts is to get into a situation where the court ruling is going to be atomic bomb for one side or the other on the issue.
- mint2 3y ago
  Following the debt limit rule is clearly more illegal than following the budget. With following the debt limit, the president would essentially get sole discretion as to what programs to fund or cut. That would essentially take all power away from congress. Congress passed the budgets that got the debt, the president can’t pick and choose what to fund as some run around of all the laws and separation of power we have.
  - dragonwriter 3y ago
    > Following the debt limit rule is clearly more illegal than following the budget. Not sure where you get that. While there is case law suggesting that budget spending is generally mandatory with certain exceptions, the Constitution itself does not expressly dictate that – it prohibits spending non-appropriated funds, but does not explicitly prohibit refusing to spend appropriated funds. You could make a textual argument that spending funds in violation of laws passed by Congress is “more illegal” than not spending funds directed in those laws. > With following the debt limit, the president would essentially get sole discretion as to what programs to fund or cut. I can see why that might be undesirable from a particular set of values, but I don’t see that that makes it “clearly illegal” in the only sense that matters, which is, “indisputably what the Supreme Court would rule should a dispute come to it.” > That would essentially take all power away from congress. No, because Congress could always pass a debt limit increase (even over a Presidential veto) that eliminated the conflict and took that power away from the President. > Congress passed the budgets that got the debt, the president can’t pick and choose what to fund as some run around of all the laws and separation of power we have. By the same token, Congress passed the debt limit, and the President can’t pick and choose what limits to ignore as some end run around all the laws and separation of power we have.

14th amendment makes it pretty clear as far as I can tell that America may not default. It’s a plainly ridiculous exercise that threatens the world and empowers right wing psychopaths.

tiahura 3y ago

The validity of the public debt of the United States … shall not be questioned. It says nothing about default, it’s talking about disputing the debt. Disputing debt is different than not having the money to pay it.

Kon-Peki 3y ago

I’m not sure that’s it’s clear. If the Congress passes a budget, does it create debt? Or is the debt created only when the Treasury issues a bond to pay for it? Let’s say that Biden directs the Treasury to ignore the debt ceiling law, citing the 14th amendment. Who has standing to file a lawsuit to challenge him? Who is directly harmed? You and I aren’t allowed to sue the EPA to force them to do anything about climate change, because our harms are generalized. We need to prove we’re directly harmed. Ok, but let’s say that someone is allowed to sue. It works its way through the court system and Biden loses. Does that mean we have to claw back all the payments the federal government made?

doktorhladnjak 3y ago
Someone trading derivatives that would be affected by the US govt defaulting would likely have standing
- Kon-Peki 3y ago
  Interesting thought. It raises a bunch of other questions though. In what other circumstance would a derivatives trader say “I would have profited but for your (possibly illegal) actions”? And are we seeing such lawsuits?
  - vivegi 3y ago
    Not sure if the following cases offer precedents. Obviously, the Federal Govt enjoys additional legal powers, but these cases offer the circumstances where a party sued their derivatives trader (the opposite of the questions you raise). Procter & Gamble v. Bankers Trust [1] P&G sued BT for losses incurred in derivatives contracts that should not have been sold by BT. This article [2] provides some more detail: > In another high-profile case, Procter & Gamble Co. is suing Bankers Trust, its derivatives dealer, blaming it for a loss of dollars 195 million on two interest-rate contracts the company claims it should not have been sold. > Procter & Gamble recently upped the stakes dramatically, claiming triple damages under U.S. civil racketeering legislation. In a related development, a shareholder has sued Procter & Gamble for financial irresponsibility. The outcome of the case is that Bankers Trust settled with P&G as per this article [3]. The same article [2] also mentions the Orange County bankruptcy where OC sued its derivatives broker. At the time, this was one of the largest financial failures. > Orange County is suing both its main derivatives broker, Merrill Lynch, and the accounting firm Peat Marwick Merrill Lynch paid OC $437 M to settle as per this article [4]. [1]: https://casetext.com/case/procter-gamble-v-bankers-trust/case-details https://casetext.com/case/procter-gamble-v-bankers-trust/cas... [2]: https://www.nytimes.com/1996/01/13/your-money/IHT-moneylosers-demand-a-day-in-court.html https://www.nytimes.com/1996/01/13/your-money/IHT-moneyloser... [3]: https://www.nytimes.com/1996/05/10/business/bankers-trust-settles-suit-with-p-g.html https://www.nytimes.com/1996/05/10/business/bankers-trust-se... [4]: https://www.nytimes.com/1998/06/03/business/ending-suit-merrill-lynch-to-pay-california-county-400-million.html https://www.nytimes.com/1998/06/03/business/ending-suit-merr...

dragonwriter 3y ago

> 14th amendment makes it pretty clear as far as I can tell that America may not default. Right, but even if that means the executive can take some action that otherwise would be prohibited if the Congress passes taxing and spending bills but also passes a debt limit inconsistent with the net result, that doesn’t mean that the executive can take any action in his discretion. While, say, the Biden Administration might agree that the 14th Amendment would, ultimately, allow the government to pay its debts, they probably don’t want to take the risk that the courts would determine that that means that the executive must unilaterally cut appropriated spending to minimize any overage in the debt limit, and return within it as soon as practical while paying debt service. (Both because they wouldn’t prefer spending cuts to ignoring the debt limit, and because politically they don’t want to be on the hook for the impacts of spending cuts they don’t want to make.) Conversely, while Republicans might like that outcome, they wouldn’t like court finding that, indeed, the executive can choose to just ignore the debt limit in the case of that kind of conflict. So no one actually wants to get the position of having the courts resolve this, especially since US courts don’t give advisory rulings, so the only way to get it before the courts is to get into a situation where the court ruling is going to be atomic bomb for one side or the other on the issue.

mint2 3y ago
Following the debt limit rule is clearly more illegal than following the budget. With following the debt limit, the president would essentially get sole discretion as to what programs to fund or cut. That would essentially take all power away from congress. Congress passed the budgets that got the debt, the president can’t pick and choose what to fund as some run around of all the laws and separation of power we have.
- dragonwriter 3y ago
  > Following the debt limit rule is clearly more illegal than following the budget. Not sure where you get that. While there is case law suggesting that budget spending is generally mandatory with certain exceptions, the Constitution itself does not expressly dictate that – it prohibits spending non-appropriated funds, but does not explicitly prohibit refusing to spend appropriated funds. You could make a textual argument that spending funds in violation of laws passed by Congress is “more illegal” than not spending funds directed in those laws. > With following the debt limit, the president would essentially get sole discretion as to what programs to fund or cut. I can see why that might be undesirable from a particular set of values, but I don’t see that that makes it “clearly illegal” in the only sense that matters, which is, “indisputably what the Supreme Court would rule should a dispute come to it.” > That would essentially take all power away from congress. No, because Congress could always pass a debt limit increase (even over a Presidential veto) that eliminated the conflict and took that power away from the President. > Congress passed the budgets that got the debt, the president can’t pick and choose what to fund as some run around of all the laws and separation of power we have. By the same token, Congress passed the debt limit, and the President can’t pick and choose what limits to ignore as some end run around all the laws and separation of power we have.