The
United States Constitution is clear: “All Bills for raising Revenue shall originate
in the House of Representatives; but the Senate may propose or concur with
Amendments as on other Bills.” (Article I, Section 7)
If
the Republicans decide not to submit a budget, the government will shut down.
That is what we are being told. But is this correct?
If
the Republicans do not submit a budget that the Senate and the President sign
into law, the Treasury Department will run out of ways to cook the books this
month. It will have to stop paying interest on the federal debt. That will harm
the “full faith and credit of the United States,” which is the traditional
mantra of those who favor unlimited debt for the federal government. That would
increase risk for debt-holders. The government’s credit rating would fall. But
is this correct?
Let
us assume that the biggest bankers decide that a cessation of debt payments
would be pending. The banking industry has remained silent on this so
far. Here is a huge story, we are told, but we do not see warnings being issued
by the American Bankers Association.
What
if, on October 17, the day the Treasury runs out of games to lock in the debt
of the government at $16.7 trillion, the House still does not submit a budget.
The Treasury supposedly will not be able to borrow any more money. Legally, the
government will be unable to fund whatever the borrowed money would have been
used for.
For
a while, the President will decry all this. He will blame the Republicans for
not doing what he wants them to do.
The
two sides will assess political damage. But the government will not be able to
pay all of its bills. Increases in the federal deficit will end. We will get a
balanced budget.
What
if the Republicans do not capitulate before the government’s inability to
borrow forces budget cuts in the Defense Department and discretionary spending?
Is the solvency of the government really at stake?
No.
Because Obama can issue an executive order that orders the Treasury to borrow.
Why
not? The President issues lots of these orders. Why not another one?
Would
he be impeached by the House? Probably not. If he is impeached in a long trial,
will the Senate convict? No.
Who
can tell the President to rescind such an order? Not Congress. The Senate will
not issue such an order to the President.
This
country has a Constitution. But it is interpreted by the President. He decides
what to enforce, and how to enforce it. The Supreme Court decides cases. But
would it decide in favor of the House? This is not clear. Besides, it could
decide not to hear the case.
The
President can play chicken with the House. The furloughs will stand.
He
can cut defense spending to keep the government afloat.
Or
he can bite the bullet in the name of government solvency and sign an executive
order authorizing the Treasury to borrow. Who is to say he can’t? Boehner?
It
is all politics. The Constitution is honored when it is convenient. It is
ignored when politicians decide to ignore it. When a President decides to go to
war without a declaration of war, he does. Obama threatened this with Syria.
Putin outfoxed him with the chemical weapons ploy, but that was a matter of
politics, not the Constitution.
We
may get to see the credit ratings agencies downgrade federal debt. But as for
the government shutting down completely, the threat is not credible.
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