Unfortunately, when considering the legal options for making payments on our obligations I made a rookie mistake. Brad DeLong cleared things up for me, with help from Yglesias. I forgot that the United States Government is not anything like businesses or households with respect to its finances. It holds debt in a currency that it has the legal authority to print. Sadly, this deeply undermines all of my earlier arguments re: constitutionality:
- Because we can print the money that our debt is in, we need not ever default on our debts. We can simply print money to satisfy them. Therefore, the debt limit does not specify a mandatory legal point of default, but instead specifies a mandatory legal point of printing money to pay for things.
- Because of 1, there is no reason to believe that in passing laws of a certain cost, congress intended to pay for it through borrowing rather than money printing, ergo, making a decision to borrow rather than print money seems clearly to be out of the powers of the presidency.
Now, lots of smart people think a little inflation might be nice for our economy right now, but somehow I don't think a shot of a couple trillion new dollars straight into the pockets of real people doing actual spending (rather than, say, giant and growing uninvested bank reserves ala QE1&2) is the safest way to do it. Either way, I can't imagine our creditors will be thrilled with the whole "let me print you some money for that bill" strategy, so it would probably do bad things to our borrowing ability in the future, but it seems like the only legal way out. THIS IS STUPID.
Dear Congressional Republicans, I fire you. Love, Rory.
P.S. On an Ironic note, the Gold Bug Anti-Inflation Hawk Republican Congress may be forcing us to adopt highly inflationary policies. I love politics.