surreal moment for America

[Arkady]

There is no "legally required spending." There is budget "authority" which is the authority to BUDGET, not spend. If the spending requires borrowing above the debt limit automatic across the board cuts go into effect.

I'm unaware of any law that says spending cuts would be automatic and across the board (which, by the way, would involve defaulting on all our debt that becomes payable, since that would mean paying only a portion of what we owe). So, who would get to decide where we cut and where we don't? If it's just a spending authorization rather than a spending law, is the president already entitled to stop spending in areas he disagrees with -- essentially, an unofficial line-item veto? And how does that square with the Constitution putting spending authority in the Congress's hands?

 

[Lukey]

I'm unaware of any law that says spending cuts would be automatic and across the board (which, by the way, would involve defaulting on all our debt that becomes payable, since that would mean paying only a portion of what we owe). So, who would get to decide where we cut and where we don't? If it's just a spending authorization rather than a spending law, is the president already entitled to stop spending in areas he disagrees with -- essentially, an unofficial line-item veto? And how does that square with the Constitution putting spending authority in the Congress's hands?

Moreover, the budget is subject to statutory deficit-control requirements. Legislation implementing a budget resolution that violates those requirements could trigger across-the-board budget cuts to offset the violations.

http://www.cbpp.org/research/policy-basics-introduction-to-the-federal-budget-process

 

[Drumcollie]

So we should just keep borrowing and spending because Americans don't want to pay for the government they demand? That's how Greece got to be, well, Greece!

Greece is the word

I saw my problems and I'll see the light
We got a lovin' thing, we gotta feed it right
There ain't no danger we can go too far
We start believin' now that we can be who we are - Greece is the word

They think our love is just a growin' pain
Why don't they understand? it's just a cryin' shame
Their lips are lyin', only real is real
We stop the fight right now, we got to be what we feel - Greece is the word

[Chorus:]
(Greece is the word, is the word that you heard)
It's got a groove, it's got a meaning
Greece is the time, is the place, is the motion
Greece is the way we are feeling

We take the pressure, and we throw away conventionality, belongs to yesterday
There is a chance that we can make it so far
We start believin' now that we can be who we are - Greece is the word

[Chorus]

This is a life of illusion, a life of control
Mixed with confusion - what're we doin' here?

We take the pressure, and we throw away conventionality, belongs to yesterday
There is a chance that we can make it so far
We start believin' now that we can be who we are - Greece is the word

[Chorus repeats 2x]

(Greece is the word, is the word, is the word...)

 

[Days]

There is no "legally required spending." There is budget "authority" which is the authority to BUDGET, not spend. If the spending requires borrowing above the debt limit automatic across the board cuts go into effect.

this is the great budget hoax; people think when a law is passed, it automatically spends that money. Laws can be implemented to varying degrees. A prime example being Bush's "no child left behind" program that left an awful lot of children behind. Was the law enforced? Sure, but it is characterized by and large as an unfunded program.

 

[Lukey]

this is the great budget hoax; people think when a law is passed, it automatically spends that money. Laws can be implemented to varying degrees. A prime example being Bush's "no child left behind" program that left an awful lot of children behind. Was the law enforced? Sure, but it is characterized by and large as an unfunded program.

And Obamacare's "universal coverage" that leaves 32 million uninsured...

 

[Days]

And Obamacare's "universal coverage" that leaves 32 million uninsured...

And the list is endless, ALL laws passed in Congress are implemented to varying degrees; hence, the huge difference between funding passed laws versus redeeming bonds. You don't want to add to the debt if you don't have to. Once that bond gets floated, it hangs like a dark cloud over future budget operations, looming in the distance, because it will return to be redeemed in full.

Fiscal responsibility can be measured most effectively by looking at how many bonds are being auctioned and what their terms are. I used to track that. Today I have just a general idea that we have stayed on the same insane track we were on in GWB's 2nd term... we would be in much worse sake if the FED had not bought up a trillion in 40 year bonds. Contrary to popular belief, the FED does not want to see the Treasury default, the parasite wants its host to live and live and live, so the parasite can keep drawing blood.

 

[Lukey]

And the list is endless, ALL laws passed in Congress are implemented to varying degrees; hence, the huge difference between funding passed laws versus redeeming bonds. You don't want to add to the debt if you don't have to. Once that bond gets floated, it hangs like a dark cloud over future budget operations, looming in the distance, because it will return to be redeemed in full.

Fiscal responsibility can be measured most effectively by looking at how many bonds are being auctioned and what their terms are. I used to track that. Today I have just a general idea that we have stayed on the same insane track we were on in GWB's 2nd term... we would be in much worse sake if the FED had not bought up a trillion in 40 year bonds. Contrary to popular belief, the FED does not want to see the Treasury default, the parasite wants its host to live and live and live, so the parasite can keep drawing blood.

Spending = Taxes (current + deferred). We now have an $18 trillion deferred tax liability on the books. If you add in the entitlement future implied liability the number approaches $100 trillion. And people wonder why the economy is slowing down and new business formation is at multi generation lows. This isn't rocket science...

 

[Arkady]

Moreover, the budget is subject to statutory deficit-control requirements. Legislation implementing a budget resolution that violates those requirements could trigger across-the-board budget cuts to offset the violations.

http://www.cbpp.org/research/policy-basics-introduction-to-the-federal-budget-process

That "could" is a red flag, don't you thin?. I mean, if there is clear statutory authority on the question, such a scenario either WOULD trigger across-the-board cuts or would not. The "could" suggests an ambiguity. Who resolves that ambiguity and how? I haven't read BCA, so maybe the "could" is resolved in there, in some way. I don't know.

 

[Lukey]

That "could" is a red flag, don't you thin?. I mean, if there is clear statutory authority on the question, such a scenario either WOULD trigger across-the-board cuts or would not. The "could" suggests an ambiguity. Who resolves that ambiguity and how? I haven't read BCA, so maybe the "could" is resolved in there, in some way. I don't know.

I think the "could" refers to the uncertainty of Congress passing an increase in the debt limit. What part of "the budget is subject to statutory deficit-control requirements" seems unclear to you?

This has all been gone over and it is clearly legal. And, in fact, it has already been determined that the Treasury would have the discretion to prioritize spending, which basically renders the proposition of a "default" moot.

 

[Arkady]

And, in fact, it has already been determined that the Treasury would have the discretion to prioritize spending, which basically renders the proposition of a "default" moot.

The Treasury gets that discretion? OK. Which law, specifically, gives the Treasury that discretion? And are there any limits on that discretion? If, for example, Jack Lew decided to cut spending by ordering the release of all federal drug prisoners, firing half the army, cutting off any federal education money to states that teach "abstinence only" or creation, or who refuse to teach AGW, and defaulting on any US debt held by Israeli citizens, while we continued to fully fund all other domestic social spending, would that be within his personal authority? I'm just trying to get the feel for what the laws around this say. That seems like an awful lot of power to be vested into one unelected executive department employee.

 

[Lukey]

The Treasury gets that discretion? OK. Which law, specifically, gives the Treasury that discretion? And are there any limits on that discretion? If, for example, Jack Lew decided to cut spending by ordering the release of all federal drug prisoners, firing half the army, cutting off any federal education money to states that teach "abstinence only" or creation, or who refuse to teach AGW, and defaulting on any US debt held by Israeli citizens, while we continued to fully fund all other domestic social spending, would that be within his personal authority? I'm just trying to get the feel for what the laws around this say. That seems like an awful lot of power to be vested into one unelected executive department employee.

Well, he will certainly need to withstand the political firestorm set off by his decisions (which I would assume would have to be done with the approval of the President).

http://www.gao.gov/products/449522

 

[Arkady]

Well, he will certainly need to withstand the political firestorm set off by his decisions (which I would assume would have to be done with the approval of the President).

http://www.gao.gov/products/449522

That appears to address more narrowly the Treasury's authority to decide the order in which debts are paid, rather than having discretion when it comes to spending in general. In other words, it seems to indicate that the Treasury could decide to pay a certain class of treasury bills first, even if another class matured before that, but it doesn't seem to indicate the Treasury could decide between whether to pay civilian federal employees or military federal employees first, or whether to fully fund highway projects versus rail projects, or something like that.

 

[Lukey]

That appears to address more narrowly the Treasury's authority to decide the order in which debts are paid, rather than having discretion when it comes to spending in general. In other words, it seems to indicate that the Treasury could decide to pay a certain class of treasury bills first, even if another class matured before that, but it doesn't seem to indicate the Treasury could decide between whether to pay civilian federal employees or military federal employees first, or whether to fully fund highway projects versus rail projects, or something like that.

YOU HAVE REQUESTED OUR VIEWS ON WHETHER THE SECRETARY OF THE TREASURY HAS AUTHORITY TO DETERMINE THE ORDER IN WHICH OBLIGATIONS ARE TO BE PAID SHOULD THE CONGRESS FAIL TO RAISE THE STATUTORY LIMIT ON THE PUBLIC DEBT OR WHETHER TREASURY WOULD BE FORCED TO OPERATE ON A FIRST IN-FIRST-OUT BASIS.

 

[Arkady]

YOU HAVE REQUESTED OUR VIEWS ON WHETHER THE SECRETARY OF THE TREASURY HAS AUTHORITY TO DETERMINE THE ORDER IN WHICH OBLIGATIONS ARE TO BE PAID SHOULD THE CONGRESS FAIL TO RAISE THE STATUTORY LIMIT ON THE PUBLIC DEBT OR WHETHER TREASURY WOULD BE FORCED TO OPERATE ON A FIRST IN-FIRST-OUT BASIS.

Yes, exactly. It appears to address narrowly the Treasury's authority to decide the order in which debts are paid, rather than where other spending cuts would occur.

 

[Lukey]

Yes, exactly. It appears to address narrowly the Treasury's authority to decide the order in which debts are paid, rather than where other spending cuts would occur.

Disbursements

Actual payments made by the U.S. Treasury to recipients of a federal agency's Obligations. Also see Outlays.

https://www.nationalpriorities.org/budget-basics/federal-budget-101/glossary/

 

[Arkady]

Disbursements

Actual payments made by the U.S. Treasury to recipients of a federal agency's Obligations. Also see Outlays.

https://www.nationalpriorities.org/budget-basics/federal-budget-101/glossary/

Yes. And it appears that in this case the Treasury is being given authority to decide disbursements in the context of prioritizing among debt payments.

 

[Days]

Yes. And it appears that in this case the Treasury is being given authority to decide disbursements in the context of prioritizing among debt payments.

It certainly applies to bonds and T-Bills, but why wouldn't it also apply to any Treasury check cut from the general fund? Congress authorizes spending, but the Treasury executes that spending. I think Lukey has it right.

State of Illinois finances are not in good order. About 5 years ago, contractors were waiting a full year for their invoices to be paid. That's not the same as defaulting on their bonds, but it certainly happened as a consequence of paying off their bonds first. I imagine the state also had to choose which contractors to pay first. I'm sure this happens on the federal level as well, howbeit, no one is in as bad shape financially as the state of Illinois when it comes to cash flow.

 

[Arkady]

It certainly applies to bonds and T-Bills, but why wouldn't it also apply to any Treasury check cut from the general fund?

That's just now how the link he provided reads. It's clearly contemplating the question of whether they need to go based on priority of time or whether they can choose which to pay, which is a concept that makes sense in the context of debt payments, but doesn't make sense when it comes to general spending. Is there some link or other information making it clear they meant it more broadly? As I said, that would seem to give an insane amount of discretion to one unelected person. Hell, in theory he could start by saying Congressional salaries will be frozen for anyone voting against raising the debt cap.

 

[Days]

That's just now how the link he provided reads. It's clearly contemplating the question of whether they need to go based on priority of time or whether they can choose which to pay, which is a concept that makes sense in the context of debt payments, but doesn't make sense when it comes to general spending. Is there some link or other information making it clear they meant it more broadly? As I said, that would seem to give an insane amount of discretion to one unelected person. Hell, in theory he could start by saying Congressional salaries will be frozen for anyone voting against raising the debt cap.

That unelected person was appointed to the position by - and answers to - the Sec of the Treasury, who in turn answers to the president. I'm pretty sure that he/she brings problems to his/her boss like any other accountant would. Like you say, it is preferable to pay obligations in the order received, but not many people have the luxury of doing that. I'm sure the Treasury has to make some of the hardest choices, and yes, your intonation that this would be tantamount to deciding how to govern the nation is spot on. It probably is the biggest crucible of any policy; how much is that policy funded?

The Republicans don't want to win the white house for nothing. It gets quite frustrating watching your laws get executed in a totally different manner than the way you were hoping when you passed them.

 

[Lukey]

That's just now how the link he provided reads. It's clearly contemplating the question of whether they need to go based on priority of time or whether they can choose which to pay, which is a concept that makes sense in the context of debt payments, but doesn't make sense when it comes to general spending. Is there some link or other information making it clear they meant it more broadly? As I said, that would seem to give an insane amount of discretion to one unelected person. Hell, in theory he could start by saying Congressional salaries will be frozen for anyone voting against raising the debt cap.

Then there is no debt cap. This, of course, is an absurd concept because we know that there is. Why would there be a debt cap if it was incapable of limiting the issuance of (additional) new debt?