This is another in a series of diaries about the problems imposed by the "debt limit" law and the Republicans. In my last diary on this subject I concluded prematurely that it would be impossible for the executive branch to enforce the contradicting laws passed by the congress concerning the debt limit and the budget and the "borrowing law" (this latter law is the one that says the Treasury MUST sell treasury debt instruments to finance any and all deficits).
I have now come to the realization that it MAY be possible to LEGALLY stay under the debt limit while continuing to deficit spend; while continuing to grow and pay debt service on the current "debt owed to the public".
Simply stated, it MAY be legal to rob the Social Security trust fund just as the Federal employees trust fund is currently being robbed.. It appears that this thievery is a matter of word games. My understanding is that government/treasury is still obligated to pay the retirement benefits even though there are no actual bonds in the trust fund. It is said that the trust fund will be brought up to date when the debt ceiling is raised (that the bonds will be replenished). This "borrowing from the trust fund" implies that the intergovernmental debt owed by the income tax payers to the Federal workers is being converted from an actual debt backed by treasury notes to an "unfunded liability" backed by nothing save the actions of the legislatures now and in the future. And if it is LEGAL to do this with the federal employees trust fund then it may well be LEGAL to do it with the Social Security and Medicare trust funds too.
Is that what the Republicans are actually up to??? Are they attempting to dismantle Social Security and Medicare by cashing in the bonds in the trust funds and spending the proceeds as general revenue?
The "National Debt" of $14.x trillion is composed of "debt owed to the public" and "debt owed to the trust funds". It is clearly possible to stay under the debt limit by cashing in the bonds in the trust funds and using that money to fund all the other activities of government. This, of course, would be an outright theft perpetrated by the Republicans. But we know that the Republicans are lying thieves anyway, and that they will steal anything that is not nailed down. And should it be LEGAL to rob the trust funds in this manner (the way the federal employees fund is currently being robbed), then the Republicans will be dancing in the streets and claiming victory at last over the social insurance systems.
I am of the opinion, however, that it is NOT legal to cash in the trust funds for purposes other than supporting that which was intended by the accumulation of the funds. But an "opinion" is all this is. I don't actually KNOW if it is LEGAL (current laws) to convert the bonds in the funds to "unfunded liabilities" in order to stay under the "debt limit". If we assume that it is not, then the president can issue an executive order to ignore the debt limit. He can do this because the Congress has failed to produce enforceable, non contradicting, laws.
The bottom line is that if government can "borrow" from the trust funds by converting treasury notes in those trust funds into "unfunded liabilities" then we are screwed. We are screwed because the executive branch of government cannot create law via executive oder based on the fact that it is impossible to enforce the contradicting laws created by the congress.
This idea of "executive order" (e.g. an executive order to ignore the debt ceiling) has been my position on the current "problem" from the beginning. The Congress passed a budget that implicitly nullifies the "debt limit" law. And until there is a new "debt limit" law, we are fine.