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View Diary: More on Section 4 of the 14th Amendment and the debt ceiling (45 comments)

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  •  Why and how does the ceiling even exist? (1+ / 0-)
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    I’ve been puzzling over this for a while now. Boiled down, Article I, Section 8 of the Constitution grants Congress the power to borrow money, and Section 4 of the 14th Amendment says that “the debt of the United States shall not be questioned.” Okay. Pretty clear.

    But... Since Congress has the explicit and sole power to borrow, why is an arbitrary ceiling imposed on the executive branch? Why would the debt ceiling not be set at the moment Congress passes (and the President signs into law) any legislation that borrows money that increases the debt? In fact, how can any boundary even exist to be crossed? If Congress doesn’t authorize it - it can’t be spent, right? The treasury can’t just print money at will, can it?

    Sorry for my soft-brained logic, 'tis a puzzlement.

      •  Congress authorizes the borrowing transactions (1+ / 0-)
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        furi kuri

        just as Congress authorizes spending, the actual transactions are performed by the Executive branch.

        The debt limit is a limit on how much debt Treasury is authorized to have outstanding.

        Spending authorization is not sufficient to specify borrowing as some spending is not of a specific known amount, as is the case with revenue sources such as tax revenues.

        Essentially Congress tells the executive it can spend as authorized, as long as it does not require issuing more debt than authorized.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Mon Dec 10, 2012 at 07:49:14 AM PST

        [ Parent ]

    •  Introduced during WWI. (0+ / 0-)

      Congress wanted to put a handle on Wilson's "foreign adventure" by limiting how much he could borrow for it.  After that it proved convenient, so they kept it for political purposes.

      Mind you, in 1916 the US was on a gold standard, and borrowing meant borrowing credit against the gold reserves in JP Morgan's vaults.  The US didn't have enough god reserves to back the additional currency on its own.  In fact, nobody did, which was what was discovered in 1929 when all the long-delayed bills from WWI finally hit due all over Europe and the various can-kicking machinations that had been used to paper it over stopped working.  Thus the Great Depression.  And every nation in the world went off the gold standard within a few years, except the US, which went off the standard internally but continued to pay foreign government claims in gold.

      So actually, the treasury COULD print money at will, but we're all terrified of that because 1) the Germans did that to deliberately reduce their war debts in 1922, and it hurt international banks badly, and 2) since ultimately most of the price was paid by New York bankers, they have since done everything in their power to make "printing money" anathema.  We are therefore fed propaganda about the horrors of printing money from kindergarten through college.  Printing money would deprive our largest campaign contributors of both their security and a major profit stream.

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