July 24, 2011
July 23, 2011
July 18, 2011
July 17, 2011
July 15, 2011
NYT OP Eds
Two good op eds today.
http://www.nytimes.com/2011/07/15/opinion/15brooks.html?hp
http://www.nytimes.com/2011/07/15/opinion/15krugman.html?scp=3&sq=krugman&st=cse
http://www.nytimes.com/2011/07/15/opinion/15brooks.html?hp
http://www.nytimes.com/2011/07/15/opinion/15krugman.html?scp=3&sq=krugman&st=cse
July 10, 2011
July 8, 2011
Laurence Tribe on the Debt Ceiling
http://www.nytimes.com/2011/07/08/opinion/08tribe.html?hp
ON May 16, the United States hit its legal debt limit of $14.3 trillion. Unless that limit is raised, the Treasury will, on Aug. 2, be unable to pay its bills. It will then have to either stop spending money on government programs, or default on paying the nation’s creditors.
The White House and Congressional Republicans agree in principle that the debt ceiling needs to be raised, but they are at an impasse on how to constrain the deficit’s rapid growth. Meanwhile, some people have theorized that there’s a way to get around the debt limit.
Several law professors and senators, and even Treasury Secretary Timothy F. Geithner, have suggested that section 4 of the 14th Amendment, known as the public debt clause, might provide a silver bullet. This provision states that “the validity of the public debt of the United States, authorized by law ... shall not be questioned.” They argue that the public debt clause is sufficient to nullify the ceiling — or can be used to permit the president to borrow money without regard to the ceiling.
Both approaches provide the false hope of a legal answer that obviates the need for a real solution.
The Supreme Court has addressed the public debt clause only once, in 1935, in the case of Perry v. United States. The court observed only that the clause confirmed the “fundamental principle” that Congress may not “alter or destroy” debts already incurred.
Some have argued that this principle prohibits any government action that “jeopardizes” the validity of the public debt. By increasing the risk of default, they contend, any debt ceiling automatically violates the public debt clause.
This argument goes too far. It would mean that any budget deficit, tax cut or spending increase could be attacked on constitutional grounds, because each of those actions slightly increases the probability of default. Moreover, the argument is self-defeating. If it were correct, the absence of a debt ceiling could likewise be attacked as unconstitutional — after all, the greater the nation’s debt, the greater the difficulty of repaying it, and the higher the probability of default.
Other proponents of a constitutional deus ex machina have offered a more modest interpretation of the public debt clause, under which only actual default (as opposed to any action that merely increases the risk of default) is impermissible. This interpretation makes more sense. But advocates of the constitutional solution err in their next step: arguing that, because default would be unconstitutional, President Obama may violate the statutory debt ceiling to prevent it.
The Constitution grants only Congress — not the president — the power “to borrow money on the credit of the United States.” Nothing in the 14th Amendment or in any other constitutional provision suggests that the president may usurp legislative power to prevent a violation of the Constitution. Moreover, it is well established that the president’s power drops to what Justice Robert H. Jackson called its “lowest ebb” when exercised against the express will of Congress.
Worse, the argument that the president may do whatever is necessary to avoid default has no logical stopping point. In theory, Congress could pay debts not only by borrowing more money, but also by exercising its powers to impose taxes, to coin money or to sell federal property. If the president could usurp the congressional power to borrow, what would stop him from taking over all these other powers, as well?
So the arguments for ignoring the debt ceiling are unpersuasive. But even if they were persuasive, they would not resolve the crisis. Once the debt ceiling is breached, a legal cloud would hang over any newly issued bonds, because of the risk that the government might refuse to honor those debts as legitimate. This risk, in turn, would result in a steep increase in interest rates because investors would lose confidence — a fiscal disaster that would cost the nation tens of billions of dollars.
Although an authoritative judicial declaration authorizing borrowing above the debt ceiling might alleviate investors’ fears, obtaining such a declaration is no easy task. Only someone who has suffered a “particularized” harm — not one shared with the public at large — is entitled to sue. It would be difficult to conjure up a plaintiff who has suffered such specific harm from an issuance of debt beyond the ceiling. And even if such a plaintiff could be found, increased interest rates would have already inflicted terrible damage by the time the Supreme Court ruled on the matter.
A core function of the Constitution is to “force us into a conversation” about our future, Mr. Obama once wrote. Sometimes, it does this by establishing principles citizens can invoke when they believe the government has overreached. At other times, it does so by directing us back to the political drawing board.
It is this second message the Constitution is sending at this moment. As Justice John Marshall Harlan II presciently warned, “the Constitution is not a panacea for every blot upon the public welfare.” Only political courage and compromise, coupled with adherence to traditions that call upon Congress to fulfill its unique constitutional duty, can avert an impending crisis.
A Ceiling We Can’t Wish Away
By LAURENCE H. TRIBE
Published: July 7, 2011
ON May 16, the United States hit its legal debt limit of $14.3 trillion. Unless that limit is raised, the Treasury will, on Aug. 2, be unable to pay its bills. It will then have to either stop spending money on government programs, or default on paying the nation’s creditors.
The White House and Congressional Republicans agree in principle that the debt ceiling needs to be raised, but they are at an impasse on how to constrain the deficit’s rapid growth. Meanwhile, some people have theorized that there’s a way to get around the debt limit.
Several law professors and senators, and even Treasury Secretary Timothy F. Geithner, have suggested that section 4 of the 14th Amendment, known as the public debt clause, might provide a silver bullet. This provision states that “the validity of the public debt of the United States, authorized by law ... shall not be questioned.” They argue that the public debt clause is sufficient to nullify the ceiling — or can be used to permit the president to borrow money without regard to the ceiling.
Both approaches provide the false hope of a legal answer that obviates the need for a real solution.
The Supreme Court has addressed the public debt clause only once, in 1935, in the case of Perry v. United States. The court observed only that the clause confirmed the “fundamental principle” that Congress may not “alter or destroy” debts already incurred.
Some have argued that this principle prohibits any government action that “jeopardizes” the validity of the public debt. By increasing the risk of default, they contend, any debt ceiling automatically violates the public debt clause.
This argument goes too far. It would mean that any budget deficit, tax cut or spending increase could be attacked on constitutional grounds, because each of those actions slightly increases the probability of default. Moreover, the argument is self-defeating. If it were correct, the absence of a debt ceiling could likewise be attacked as unconstitutional — after all, the greater the nation’s debt, the greater the difficulty of repaying it, and the higher the probability of default.
Other proponents of a constitutional deus ex machina have offered a more modest interpretation of the public debt clause, under which only actual default (as opposed to any action that merely increases the risk of default) is impermissible. This interpretation makes more sense. But advocates of the constitutional solution err in their next step: arguing that, because default would be unconstitutional, President Obama may violate the statutory debt ceiling to prevent it.
The Constitution grants only Congress — not the president — the power “to borrow money on the credit of the United States.” Nothing in the 14th Amendment or in any other constitutional provision suggests that the president may usurp legislative power to prevent a violation of the Constitution. Moreover, it is well established that the president’s power drops to what Justice Robert H. Jackson called its “lowest ebb” when exercised against the express will of Congress.
Worse, the argument that the president may do whatever is necessary to avoid default has no logical stopping point. In theory, Congress could pay debts not only by borrowing more money, but also by exercising its powers to impose taxes, to coin money or to sell federal property. If the president could usurp the congressional power to borrow, what would stop him from taking over all these other powers, as well?
So the arguments for ignoring the debt ceiling are unpersuasive. But even if they were persuasive, they would not resolve the crisis. Once the debt ceiling is breached, a legal cloud would hang over any newly issued bonds, because of the risk that the government might refuse to honor those debts as legitimate. This risk, in turn, would result in a steep increase in interest rates because investors would lose confidence — a fiscal disaster that would cost the nation tens of billions of dollars.
Although an authoritative judicial declaration authorizing borrowing above the debt ceiling might alleviate investors’ fears, obtaining such a declaration is no easy task. Only someone who has suffered a “particularized” harm — not one shared with the public at large — is entitled to sue. It would be difficult to conjure up a plaintiff who has suffered such specific harm from an issuance of debt beyond the ceiling. And even if such a plaintiff could be found, increased interest rates would have already inflicted terrible damage by the time the Supreme Court ruled on the matter.
A core function of the Constitution is to “force us into a conversation” about our future, Mr. Obama once wrote. Sometimes, it does this by establishing principles citizens can invoke when they believe the government has overreached. At other times, it does so by directing us back to the political drawing board.
It is this second message the Constitution is sending at this moment. As Justice John Marshall Harlan II presciently warned, “the Constitution is not a panacea for every blot upon the public welfare.” Only political courage and compromise, coupled with adherence to traditions that call upon Congress to fulfill its unique constitutional duty, can avert an impending crisis.
July 7, 2011
Foreclosure Pipeline
This is why the banks do not want to foreclose and take ownership of houses. Which is why the pipeline of distressed properties will take years to clear. Which is why the Pierces might be able to afford a house in two years. Just a theory, of course.
http://www.npr.org/2011/07/07/137647997/the-cost-of-owning-150-000-foreclosed-homes?ft=1&f=1002&sc=igg2
http://www.npr.org/2011/07/07/137647997/the-cost-of-owning-150-000-foreclosed-homes?ft=1&f=1002&sc=igg2
July 3, 2011
July 1, 2011
Still Looking
The Pierces are still looking for a new rental. We've seen some real dumps. Check it out.
http://sfbay.craigslist.org/nby/apa/2461693666.html
http://sfbay.craigslist.org/pen/apa/2466483906.html
http://sfbay.craigslist.org/sfc/apa/2454377789.html
http://sfbay.craigslist.org/nby/apa/2461693666.html
http://sfbay.craigslist.org/pen/apa/2466483906.html
http://sfbay.craigslist.org/sfc/apa/2454377789.html
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