Imagine yourself, for a moment, as a credit examiner for a financial institution.
Before you is an application from Uncle Sam. Sam has maxed out his credit card, and he is applying for an emergency extension of his credit limit.
A quick look at Sam’s numbers reveals a troubling portrait.
Sam has been living beyond his means for years, but during the last four years, he has been particularly prolific. Indeed, in that time, Sam has borrowed between 1/3rd and half of his total spending, sending his debt soaring.
Worse, Sam wasn’t using the borrowed funds to increase the value of his home or start a business. Records show he is simply borrowing to fund a lifestyle he cannot afford. This sustained, prolific borrowing has resulted in an eye-popping debt. Sam now owes you more than he makes in a year. Just making the interest payments alone on all this debt costs 10 percent of Sam’s salary.
It is obvious that instead of a credit extension, Sam is in need of some intense credit counseling.
Yet, quite amazingly, Sam sits in front of you – petulant – refusing to even discuss his resources and spending priorities, peevishly warning you that failure to give him the extension will lead to a complete financial default on his part, setting off chain reaction with all of Sam’s creditors. Sam virtually dares you not to keep him afloat.
So, are you going to make this guy a loan?
Sound rediculous? Boiled down to a simple, relatable example, this is the current debt limit debate.
The nation has maxed out it borrowing limit. President Obama wants to increase the nation’s borrowing authority, well beyond 100 percent of the nation’s GDP, no strings attached, and if Congress won’t agree, well then it’s their fault that the nation falls into another fiscal crisis.
A sober, independent and accountable media would be asking hard questions of the Administration regarding the debt limit and why an increase would be warranted without a real plan to restructure and reduce the currently-explosive longer-term debt – a strategy that every serious economist treats as an axiom. Instead, it speaks volumes about the hollow and sycophantic Fourth Estate that the dominant media narrative in Washington surrounds House Republicans and their plans to force the nation into “default.”
Democrats have become so rashly myopic about raising the debt ceiling – no questions asked, – that in recent days, Party leaders have endorsed a series of irresponsible – bordering on absurd – solutions, that would allow the President to circumvent Congress, and ostensibly raise the debt limit unilaterally. In a letter to the White House, Democratic congressional leaders said:
“In the event that Republicans make good on their threat by failing to act, or by moving unilaterally to pass a debt limit extension only as part of an unbalanced or unreasonable legislation, we believe you must be willing to take any lawful steps to ensure that America does not break its promises and trigger a global economic crisis — without congressional approval, if necessary.”
An extraordinary ceding of fundamental congressional power in its own right (Article I, Sections 7, 8 & 9 of the Constitution), the goal of the letter becomes more alarming when you consider the solutions.
First, there was talk of minting a platinum coin – valued at $1 trillion – that would be put on deposit at the Federal Reserve, and would allow the Treasury Department to borrow off the value of the coin. Apparently both the Fed and the Treasury Department have rejected this approach – but note that we are still about a month away from the actual “drop-dead” on the debt limit. Bad ideas enjoy new life in critical times.
A second approach promoted by Democrats – including noted constitutional authority, House Minority Leader Nancy Pelosi – is to torture new meaning into a forgotten section of the 14th amendment.
The relevant passage – Section 4 – reads as follows:
“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.”
By removing a clause related only to the Civil War, Democrats see this: “The validity of the public debt of the United States, authorized by law…shall not be questioned.”
It is deeply ironic that Democrats and progressives, who spittle in rage when gun rights activists routinely forget the first 13 words of the Second Amendment, would now be conducting their own “fine tuning” of a constitutional amendment, clearly designed for another purpose during another era, to meet their immediate political objectives.
We have yet to see if this approach is being seriously considered by the Administration.
However, beneath the carnival-worthy antics of the Democrats related to the debt, there are actually serious and fundamental constitutional issues that need be understood and settled. Democratic proposals on the debt are not only frivolous, they threaten the original separation of powers enshrined in the Constitution, by all but abdicating spending authority to the Executive.
Suddenly Democrats are proposing that the US Congress looks a lot less a great Western deliberative body, and much more like the old Supreme Soviet.
This is unnerving.
Serious and thoughtful people need to put an end to this irresponsibility so that the government can get back to the serrious work of finding a solution to the debt crisis. And there is a 19th century congressional solution – updated in the decades since – that can provide the tool; the Anti-Deficiency Act (31 USC 1341). Hat-tip here to my good friend and loyal Soapbox reader from Berkley Springs, WVA.
The Anti-Deficiency Act prohibits federal employees from:
1) making or authorizing expenditure from, or creating or authorizing an obligation under, any appropriation or fund in excess of the amount available in the appropriation or fund unless authorized by law. 31 U.S.C. § 1341(a)(1)(A).
2) involving the government in any obligation to pay money before funds have been appropriated for that purpose, unless otherwise allowed by law. 31 U.S.C. § 1341(a)(1)(B).
Simply stated, the Anti-Deficiency Act codifies and penalizes Executive action in contravention of clearly articulated constitutional powers. No one in the Executive Branch – and that includes the Secretary of the Treasury, the Chairman of the Federal Reserve and, yes, the President of the United States – can spend money that isn’t first authorized by Congress.
But what makes the Anti-Deficiency Act relevant to the ongoing Democratic circus, is that the statute has teeth.
Federal employees who violate the Anti-Deficiency Act are subject to two types of sanctions: administrative and penal. Employees may be subject to appropriate administrative discipline including, when circumstances warrant, suspension from duty without pay or removal from office. In addition, employees may also be subject to fines, imprisonment, or both. In addition, an officer or employee who “knowingly and willfully” violates any of the law’s provisions can face punishments of up to $5,000 in fines and two years in prison, according to the GAO.
There is a freight train of fiscal consequence barreling down on the United States. We do not have time for posturing, let alone reckless proposals to alter the balance of power in the federal government for partisan ends. But instead of addressing our long term solvency in conjunction with our debt accumulation, the Democrats have opted for disagreeable petulance.
The Anti-Deficiency Act should be a wakeup call to anyone in the Executive that believes there is a solution to the impending crisis that does not involve Congress.
The clock is ticking….