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Forget Compromise: The Debt Ceiling Is Unconstitutional

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The debt ceiling crisis can be averted by enforcing the Fourteenth Amendment, which mandates the government to pay its debts already incurred, including pensions.   That means Social Security, which IS an "entitlement," in the original sense of the word.   We're entitled to it because we've paid for it with taxes.      

The game of Russian roulette being played with the U.S. federal debt has been called a "grotesque political carnival" and political blackmail.   The uproar stems from a statute that is unique to the United States and never did make much sense.   First passed in 1917 and revised multiple times since, it imposes a dollar limit on the federal debt.   What doesn't make sense is that the same Congress that voted on the statute votes on the budget, which periodically exceeds the limit, requiring the statute to be revised.   The debt ceiling has been raised 74 times since 1962, 10 of them since 2001.   The most recent   increase, to $14.294 trillion by H.J.Res. 45, was signed into law on February 12, 2010.  

Taxes aren't collected until after th e annual budget is passed, so Congress can't know in advance whether or how much additional borrowing will be required.   Inevitably, there will be some years that the budget pushes the debt over the limit, requiring new legislation.   And inevitably, now that this tactic has been discovered, there will be a costly battle over the increase, wasting congressional time, destabilizing markets, and rattling faith in the American financial and political systems.   There will be continual blackmail, arm-twisting and concessions.   The situation is untenable and cries out for a definitive resolution.            

Fortunately, there is one.   A bevy of legal scholars are recommending that the issue be eliminated altogether by playing the Constitutional trump card.   The Fourteenth Amendment provides at Section 4:

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.

Where statute and the Constitution collide, the Constitution prevails.   Whether the government should pay the bills it has already incurred is not a matter of negotiation.   It is a Constitutional mandate.   And those are the bills we are talking about here, as President Obama stressed in his remarks on the issue last Friday.   He said:

Raising the debt ceiling simply gives our country the ability to pay the bills that Congress has already racked up.   I want to emphasize that.   The debt ceiling does not determine how much more money we can spend, it simply authorizes us to pay the bills we already have racked up.  It gives the United States of America the ability to keep its word. 

Ignoring the debt ceiling on Constitutional grounds would not, as Michelle Bachmann declares, make President Obama a "dictator."   It would simply mean he is complying with his Constitutional mandate to pay the government's bills on time and in full.  

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Social Security Is Not Welfare.   It Is a Debt Due and Owing.

The President could have a clean resolution of the issue, but he is not jumping at the opportunity.   Rather, he appears to be ready to throw Granny under the bus by slashing Social Security, Medicare and Medicaid, all in the name of "compromise."  

The Fourteenth Amendment says debts already incurred shall not be questioned, "including debts incurred for payment of pensions."   That includes Social Security, which is an "entitlement" in the true sense of the word: we're entitled to it because we've already paid for it.   In fact, the Social Security Act was originally sold to Congress and the nation in 1935 not as a government benefit, but as a retirement savings program. Earlier this year, the Urban Institute published a study evaluating the program in this way, concluding that the average worker who retires today will withdraw from Social Security just about the same amount he put in over the years, with a modest 2% real interest rate (after inflation). This interest is actually less than the historic average paid by Treasury Bonds in which the Social Security Trust is nominally invested.

A deal is a deal.   We paid for it, we are owed it, and the U.S. government is good for it.   To change the terms of the deal ex post facto is both a breach of contract and a violation of the Constitution.  

          Where to Get the Money: Ron Paul's Creative Plan

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A sovereign nation can always find the money to pay debts owed in its own currency.   The U.S. could, if it wished, pay its bills using debt-free U.S. Notes or Greenbacks, just as President Lincoln did to avoid a crippling debt during the Civil War.   Alternatively, it could eliminate the deficit with Ron Paul's plan, which amounts to the same thing.   As Stephen Gandel explains Paul's solution in Time Magazine:   

"In the last year or two the Fed has been buying up U.S. Treasury bonds in an effort to lower interest rates and boost the economy. The most recent round of that buying has been dubbed QE2, and has come under a good deal of criticism, though most economists agree that it was a generally helpful policy. The result is that the Fed now holds nearly $1.7 trillion in U.S. debt. But that is really phony debt. The Treasury pays the interest on the debt on behalf of the U.S. government to the Fed, which in turn returns 90 percent of the payments it gets back to the Treasury. Nonetheless, that $1.7 trillion in U.S. bonds that the Fed owns, despite the shell game of payments, is still counted in the debt ceiling number, which caps that amount of total federal debt at $14.3 trillion.

"Paul's plan: Get the Fed and the Treasury to rip up that debt. It's fake debt anyway. And the Fed is legally allowed to return the debt to the Treasury to be destroyed. A trillion and a half dollars is currently about what spending is expected to exceed tax revenue in 2011."

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Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling WEB OF DEBT. In THE PUBLIC BANK SOLUTION, her latest book, she explores successful public banking models historically and (more...)
 

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Brown is correct once again. The debt ceiling is u... by R A Bows on Sunday, Jul 31, 2011 at 2:40:37 PM
Right on!  Thanks R.A.... by Ellen Brown on Sunday, Jul 31, 2011 at 2:43:43 PM
Commenter said:  "the left ("Democrats") and ... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 7:31:30 PM
Ellen is absolutely correct (as usual - Gosh, how'... by Scott Baker on Sunday, Jul 31, 2011 at 2:51:30 PM
The fourteenth Amendment was enacted to prevent th... by Michael Rivero on Sunday, Jul 31, 2011 at 3:00:39 PM
Gee Michael, I loved your eleventh marble story, b... by Ellen Brown on Sunday, Jul 31, 2011 at 3:06:21 PM
Since the Federal Reserve Act was signed in 1913, ... by Michael Rivero on Sunday, Jul 31, 2011 at 3:17:27 PM
I totally agree with that.  In fact it's the ... by Ellen Brown on Sunday, Jul 31, 2011 at 3:37:11 PM
Raising the debt ceiling makes the problem worse, ... by Michael Rivero on Sunday, Jul 31, 2011 at 3:55:04 PM
Rivero: "We need to get rid of these private centr... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 7:44:20 PM
Ms Brown, you agree with the premise  "loans ... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 7:34:45 PM
The Fed is only allowed to buy federal bonds on th... by Ellen Brown on Sunday, Jul 31, 2011 at 9:07:18 PM
"the US Government has the legal right to create t... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 7:40:52 PM
I'm supporting this one idea of Ron Paul.  Yo... by Ellen Brown on Sunday, Jul 31, 2011 at 9:11:31 PM
It's nice to see that you and Ellen Brown agree on... by Ernie Messerschmidt on Monday, Aug 1, 2011 at 9:39:50 AM
You said if the government creates the eleventh ... by Willie Davis on Sunday, Jul 31, 2011 at 4:27:06 PM
If each new marble is the proceed of a loan, then ... by Michael Rivero on Sunday, Jul 31, 2011 at 5:55:39 PM
MR:  Under the Federal Reserve (or the Bank o... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 7:46:10 PM
that will lock the middle class into debt peonage'... by Samuel Bryan on Sunday, Jul 31, 2011 at 4:36:24 PM
I agree!  the military (past and present) con... by Ellen Brown on Sunday, Jul 31, 2011 at 9:02:06 PM
 Virtually all money today is debt.  No ... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 7:27:55 PM
All U.S. money today originates as debt except coi... by Ellen Brown on Sunday, Jul 31, 2011 at 9:30:47 PM
All U.S. money today originates as debt except coi... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 10:21:06 PM
Look through the comments here and elsewhere - man... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 10:22:14 PM
Ellen my Dear,He can't understand the fundamental ... by Robert Bostick on Monday, Aug 1, 2011 at 9:33:05 AM
Thanks Potomac Oracle, you said it really simply y... by Ellen Brown on Tuesday, Aug 2, 2011 at 1:01:33 AM
Ms Brown ..........you have an endorsement on you... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 8:20:01 PM
I've never heard of Willis Carto and I don't ask f... by Ellen Brown on Sunday, Jul 31, 2011 at 9:35:29 PM
Wow.  Fair enough, but in your own turn you a... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 9:54:44 PM
Too late, it's already on my book cover.  But... by Ellen Brown on Sunday, Jul 31, 2011 at 10:18:06 PM
You can't get anyone else to write "it's like Tom ... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 10:31:24 PM
Excuse me, but isn't this off subject?  Brown... by Ernie Messerschmidt on Sunday, Jul 31, 2011 at 11:17:23 PM
The point **is** about debt, finance and policy.Of... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 11:34:01 PM
Since you bring up the term "fascist", the private... by Ernie Messerschmidt on Monday, Aug 1, 2011 at 8:42:23 AM
"Govt in private hands" doesn't make sense.Nor is ... by Working-class UK Socialist on Monday, Aug 1, 2011 at 11:16:29 AM
I understand you can't check every person whom giv... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 11:01:31 PM
The masthead uptop says "progressive" and "liberal... by Working-class UK Socialist on Sunday, Jul 31, 2011 at 11:22:30 PM
I used to read the Spotlight years ago and thought... by Ellen Brown on Tuesday, Aug 2, 2011 at 1:06:41 AM
Ellen bears the scars of the truly curious and inq... by Scott Baker on Tuesday, Aug 2, 2011 at 4:04:27 PM
It isn't just some "label".It isn't just a bit of ... by Working-class UK Socialist on Tuesday, Aug 2, 2011 at 7:27:41 PM
These troglodytes would have you writing with invi... by Robert Bostick on Monday, Aug 1, 2011 at 9:19:07 AM
"Joe Public" is not Everyman. He's a pro. Give us ... by Joseph Danison on Monday, Aug 1, 2011 at 10:15:38 PM
The man does typeth too much. He could have writte... by Mike Preston on Tuesday, Aug 2, 2011 at 12:41:12 AM
Ha!  Thanks Joseph.  I was wondering tha... by Ellen Brown on Tuesday, Aug 2, 2011 at 12:57:50 AM
I am sympathetic to MMT.   Are you?I find it ... by Working-class UK Socialist on Tuesday, Aug 2, 2011 at 10:21:12 AM
Some good links on it: http://bilbo.economicoutloo... by Working-class UK Socialist on Monday, Aug 1, 2011 at 12:23:55 AM
Quote from blog linked above :------" The imp... by Working-class UK Socialist on Monday, Aug 1, 2011 at 12:42:29 AM
Okay, I'll buy that you're well-intentioned.  ... by Ellen Brown on Tuesday, Aug 2, 2011 at 1:09:46 AM
I've been aware of MMT for only a few months, but ... by Working-class UK Socialist on Tuesday, Aug 2, 2011 at 10:10:50 AM
Your naivete extends to putting them on your book ... by Working-class UK Socialist on Tuesday, Aug 2, 2011 at 10:12:06 AM
I don't know what you mean by "fascist."  I t... by Ellen Brown on Tuesday, Aug 2, 2011 at 10:39:37 PM
Who watches "politically correct movies" to obtain... by Working-class UK Socialist on Wednesday, Aug 3, 2011 at 9:43:17 AM
Leonard Zeskind positions Carto at the pinnacle o... by Working-class UK Socialist on Wednesday, Aug 3, 2011 at 9:44:01 AM
If you are interested in finding out what fascism ... by Working-class UK Socialist on Wednesday, Aug 3, 2011 at 10:02:46 AM
You've carried this to an absurd extreme, "Joe... by Ernie Messerschmidt on Wednesday, Aug 3, 2011 at 1:18:35 PM
Ellen Brown simply quotes a comment from some... by Working-class UK Socialist on Thursday, Aug 4, 2011 at 4:49:18 PM
She is indeed a courageous intellectualShe m... by Working-class UK Socialist on Thursday, Aug 4, 2011 at 4:50:37 PM
A closely related set of social issues: &nbs... by William Finnerty on Monday, Aug 1, 2011 at 5:46:09 AM
The spending cuts derived from this debt ceiling ... by Love to a Muse on Monday, Aug 1, 2011 at 7:32:59 AM
Excellent point!  I'll write on that.  ... by Ellen Brown on Tuesday, Aug 2, 2011 at 12:54:11 AM
I absolutely agree with you Ellen. The 14th Amendm... by Howard Schneider on Monday, Aug 1, 2011 at 5:46:27 PM
Yes it is being used as a tool.  But like wit... by Ellen Brown on Tuesday, Aug 2, 2011 at 12:56:03 AM
Since when has Congress abide by the Constitution.... by John Shriver on Tuesday, Aug 2, 2011 at 9:45:23 AM
Thanks for your article, Ellen. I was very interes... by JaneAnne Jeffries Johnson on Tuesday, Aug 2, 2011 at 11:57:40 PM
Let's find out and expose the new york financials ... by Ray O. Sunshine on Wednesday, Aug 3, 2011 at 4:05:38 PM