Comments on: Can Treasury prioritize bond payments? A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: TFF Sun, 31 Jul 2011 14:21:13 +0000 “It’s been at least two decades since both the volume and speed of the computer processing used by Treasury’s FMS exceeded the capability of an equivalent all-human system.”

It is a very weak system if they can’t already differentiate between categories of payments. Would take huge amounts of reprogramming to do anything complicated, but it shouldn’t be impossible to simply halt all Medicare reimbursements, or all contractor payments, or something like that.


By: FelixSalmon Sun, 31 Jul 2011 04:59:41 +0000 @Greycap — Thanks, fixed

By: lauradeen Sun, 31 Jul 2011 01:31:23 +0000 doc19, I have the same question. At the heart of the matter is this: there is no constitutional authority that allows Tim Geithner to decide who the U.S. will pay. In fact, there isn’t one that allows the President this power. All of the debt of this country is equal with regards to its need to be repaid.

@hsvkitty, in a theoretical world, it’s possible to do by hand what is now done by computer. In our real world, it’s no longer possible. It’s been at least two decades since both the volume and speed of the computer processing used by Treasury’s FMS exceeded the capability of an equivalent all-human system.

By: doc19 Sat, 30 Jul 2011 20:08:31 +0000 My question, and I’m hoping someone can answer it, is prioritization of payments Constitutional? The executive branch has the power to faithfully execute laws… but if it is left up to the Treasury or the President to decide what bills get paid and what bills do not, is that not essentially picking and choosing which laws are being executed and essentially forcing the President to make his own budget based on tax revenue being brought in? And thereby bypassing the budget making process?

Furthermore, if it does actually come to pass and its left up to the President to decide what bills get paid, is that not a terrible precedent to set? Who is to say that a future President can use this event to decide what he wants to pay for, regardless of the budget passed by Congress.

It seems to me that the President is bound to execute the last budget resolution passed by Congress. No prioritization, just pay the bills as they come in and when the money runs out, it runs out… the government will then shut down and default. Constitutionally speaking it would be left to Congress to come up with a new budget that will allow the government to operate under the debt ceiling based on revenue brought in. God help us all if that happens.

I am not a constitutional law expert by any means… but I don’t see how the President choosing what to spend can be seen as constitutional, especially considering Clinton v. New York City, where the SCOTUS declared the line item veto unconstitutional. This would be essentially a budgetary line item veto.

By: FifthDecade Sat, 30 Jul 2011 14:32:14 +0000 Worldwide the US is being made to look an ass (the equine variety, although if the cap fits…) from this idiotic self-righteous sour grapes of the ultra right wing Republicans.

If Military spending hadn’t doubled all that time ago, there really wouldn’t be a deficit problem now. Who spent that money? Republicans. Who benefitted from that money? Republicans. Who do Republicans care about? Republicans.

People used to worry about the political influence the Communist Party had over the Chinese economy; now we worry about the political influence the Republican Party has over the US economy. From over here, it looks like the laissez faire Communists are better at running an economy than the partisan Republicans.

By: hsvkitty Fri, 29 Jul 2011 22:50:23 +0000 @jpersonna, exactly right. Although it is entirely possible to do “by hand” what was once done on paper, the people who used to implement those actions are no longer around. Now that nearly everything is electronic and computerized, asking anyone to do most ANYTHING in their heads is laughable.

Reprogramming the system means the system will be stymied. People will have to think on their feet. (I see deer in the headlights looks galore) The people who can do that kind of programming are hard to find and it could be months before a system is in place. (which may be why there is no plan B… why reprogram for temporary payments when there isn’t even a budget in place?)

By: tom_o Fri, 29 Jul 2011 18:05:10 +0000 I don’t think they’ll physically be able to prioritize payments any more than they’ll be able to halt any of the thousands of payments that get payed automatically.

From one of Felix’s posts earlier this month, “purely as a practical matter, it’s far from clear that it’s even possible to stop making the 3 million payments that Treasury makes automatically every day. Doing so involves a massive computer-reprogramming effort which I’m sure could not be implemented overnight” 11/07/07/what-happens-on-august-3/

By: NukerDoggie Fri, 29 Jul 2011 15:26:46 +0000 What happens if there’s a natural disaster, like a hurricane or earthquake? Or wildfires? What if we get more than one natural disaster this summer?

What if we get hit by another terrorist attack?

Where’s the money going to come from to handle such events? Is Treasury going to keep paying China while Americans die and remain homeless in such a scenario?

Prioritizing payments is fraught with very many risks and roadblocks.

I’m convinced that if that’s where we’re going in this crisis, then the credit ratings agencies will see it similarly, and will hit America’s AAA very hard – down enough notches to truly endanger investor confidence even in short-term Treasuries.

By: Greycap Fri, 29 Jul 2011 14:44:26 +0000 There is a glitch in the post: you appear to have intended to block-quote the paragraph beginning “Your letter is based …” but instead quoted the following paragraph beginning “A payment default …”, which I take to be your own writing.

By: jpersonna Fri, 29 Jul 2011 14:43:04 +0000 I doubt the fed (or in more general terms, the government) has _systems_ to prioritize payment.

There seems this assumption that bureaucracies, and computers, can think on their feet. Neither really has that ability.