This is a big week for the debt limit. Since 1941, the federal government has had a statutory limit on the overall face value of securities—bonds, notes, bills, etc.—that can be outstanding at one time. Because the government has become increasingly reliant on borrowing, the limit now acts as a kind of ex post occasion to bargain over government expenditures: If the limit isn't raised, the government doesn't have an obvious path to raise immediate revenue and will (as spending continues) eventually run short of cash. This week, President Biden and Speaker McCarthy are negotiating over the limit. Next week, if Treasury's estimates are correct, the government is expected to run short of cash.
I left the Justice Department's Office of Legal Counsel last week to begin the move to academia. (I'm starting as an associate professor of law at Washington University in St. Louis this summer.) Leaving the Department also seemed like the right time to post my job-market paper, which is about the debt limit. I wrote the paper in 2022, after thinking a lot about the showdown over the debt limit in the fall of 2021—and also thinking about appropriations law for much of the previous four years at DOJ—but encountering only a small number of articles on the limit. (The most stimulating of these was Neil Buchanan and Michael Dorf's paper on the presumed constitutional "trilemma."). Obviously, the issue has now recurred.
Depending on what happens in the days to come, I hope to write a series of posts that address some of the technical legal details of debt limit—such as why reaching the so-called "X Date" doesn't lead to a default on the national debt, where I think Buchanan and Dorf get it wrong on the constitutional "trilemma," and the scope of the federal government's authority and obligation to make payments when it runs short of cash. (Some of these views are previewed in a short Wall Street Journal op-ed I wrote with my friend and OLC colleague Kristin Shapiro, and a short piece in The Atlantic.) But in this initial post I'll address a historical question and some of its implications: Why do we have a debt limit at all?
