Some folks have inquired as to how serious the debt limit situation could become. Answer? Constitutional crisis serious:
The continuing rift between the two parties’ deficit reduction strategies has led to new consideration of untested legal remedies for the potentially devastating economic repercussions of a failure to raise the debt limit by August 2.
The country’s $14.3 trillion aggregate borrowing limit is the legacy of a 1939 congressional act designed to give Treasury more flexibility to manage the country’s finances — previously, Congress had authorized debt in installments and by need — but if the legislature fails to increase the limit and Treasury exhausts its cash supply, the administration will face unprecedented legal questions.
“Is it constitutional for Congress to refuse to pay debts that it has authorized the government to borrow?” asks Garrett Epps, a University of Baltimore law professor who argues that a little-known clause in the 14th Amendment could allow the president to simply ignore the statutory debt ceiling.