# Debt ceiling, overdrawn Fed accounts: Standing to sue? **URL:** \ **Category:** Factual Questions\ **Created:** [October 3, 2013, 1:20am UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238 "2013-10-03T01:20:49Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [October 4, 2013, 2:33pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/21 "2013-10-04T14:33:09Z")
> [@Hellestal](#): > > The first footnote in the OP was written with this objection in mind. Maybe just an empty facade. The [article I cited](http://www.cnbc.com/id/43899646) in the OP also discusses this:So there’s one legal argument that an overdraft is different from constitutionally defined debt, for whatever it’s worth. > > [Here’s a post](http://boards.straightdope.com/sdmb/showthread.php?p=15866830#post15866830) from a previous thread on the platinum coin that gets into the details. The process is essentially the same in this case, since the coin is just a legal gimmick that supposedly makes the whole thing legal. “Sterilization” is step three. The last time the US government sterilized monetary base entering the system was the 1930s, when they were issuing Treasuries to buy up gold that was flowing into the country after the devaluation. They actually went too far with it at the time. > > In today’s context, I guess some people might call it reverse-QE. Well, if they switched from buying bonds to selling them, that would be reverse QE. I don’t think that’s necessary, though. I mean, it wouldn’t do anything to change the effect on the Fed’s balance sheet - it’s going to go into the red either way. The idea of the coin is that it allowed the Fed to credit an asset to its balance sheet, so it could avoid the appearance of insolvency. If the Fed simply starts “giving” money to the Treasury, their balance sheet will go negative. I think you know that doesn’t really matter, in a practical sense. But a substantial and vocal minority will make the claim the Fed is bankrupt. At the very least you’d expect a massive spike in the price of gold. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [October 4, 2013, 3:32pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/22 "2013-10-04T15:32:55Z")
> [@Ravenman](#): > > The Constitution is not a guarantee of good laws. If you don’t like it, start a debate in another forum. I’m just telling you what the law is. Prohibition? Slaves count as 60% of a “person”? The constitution is not a guarantee of good constitution, either. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [October 4, 2013, 3:37pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/23 "2013-10-04T15:37:08Z")
> [@LinusK](#): > > Well, if they switched from buying bonds to selling them, that would be reverse QE. No, it wouldn’t be. People would call it that, but it wouldn’t be true. Quantitative easing is exactly what it says: easing monetary conditions based on changing the quantity of base money, instead of the normal technique of easing monetary conditions by adjusting interest rates. But in this case, very different, they would be selling bonds so that the quantity of base money would be unchanged, not lower. It would be sterilization, not reverse-QE. Their current QE purchases could continue as they are, completely unaffected by any of this. > [@LinusK](#): > > I don’t think that’s necessary, though. I mean, it wouldn’t do anything to change the effect on the Fed’s balance sheet - it’s going to go into the red either way. Completely untrue. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [October 4, 2013, 6:52pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/24 "2013-10-04T18:52:09Z")
> [@Hellestal](#): > > No, it wouldn’t be. > > People would call it that, but it wouldn’t be true. > > Quantitative easing is exactly what it says: easing monetary conditions based on changing the quantity of base money, instead of the normal technique of easing monetary conditions by adjusting interest rates. But in this case, very different, they would be selling bonds so that the quantity of base money would be unchanged, not lower. It would be sterilization, not reverse-QE. Their current QE purchases could continue as they are, completely unaffected by any of this. > Completely untrue. Well, I guess it would depend on the size of the liabilities they were trying to sterilize. If (and I don’t know the actual numbers, so I’m making them up) they wanted to advance to the Treasury a sum of $100 billion, and they wanted to “sterilize” the transaction, they’d need to either reduce future bond purchases by that amount, or sell an equivalent amount of existing assets. Since money is fungible, it wouldn’t matter which they did. Selling something for $100 and then buying it for $100 is the same as not buying or selling anything in the first place. The Fed’s capital is something like $50 billion, if I remember right. Once they spend through that, if they continue “gifting” money to the Treasury, their liabilities will be more than their assets. If it were an ordinary bank, that would mean it’s insolvent. Of course, they could just label it some sort of short term loan, and count the loan as an asset. But then that would contradict the idea that the the money was a gift, rather than debt. What would be nice is if people could simply accept the fact that the Federal Government has a bank that can finance any amount of debt, at interest-free rates, forever. Then we could focus on real issues, rather than the fake issue of the government running out of money. ---
**Author:** ![Lord\_Feldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lord_feldon/32/341_2.png) [@Lord\_Feldon](https://boards.straightdope.com/u/Lord_Feldon)\ **Post date:** [October 4, 2013, 11:44pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/25 "2013-10-04T23:44:18Z")
> [@md2000](#): > > Slaves count as 60% of a “person”? > The constitution is not a guarantee of good constitution, either. 60% was better than the 100% that the slavers wanted. The 14th Amendment tried to keep states from counting disenfranchised groups at all, but it was unfortunately never enforced. ---
**Author:** ![BigT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bigt/32/12044_2.png) [@BigT](https://boards.straightdope.com/u/BigT)\ **Post date:** [October 6, 2013, 3:34am UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/26 "2013-10-06T03:34:45Z")
> [@Ravenman](#): > > The Constitution is not a guarantee of good laws. If you don’t like it, start a debate in another forum. I’m just telling you what the law is. Since you are in GQ and asserting this as fact, then, I would like a citation. It sure seems like the Supreme Court often interprets laws in a non-textual way, for instance. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [October 8, 2013, 7:20pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/27 "2013-10-08T19:20:05Z")
> [@BigT](#): > > Since you are in GQ and asserting this as fact, then, I would like a citation. It sure seems like the Supreme Court often interprets laws in a non-textual way, for instance. Are you asking me for a cite for the quote, or something else? I’m happy to oblige, I would just like to know what you’re looking for. ---
**Author:** ![JM\_Hanes](https://avatars.discourse-cdn.com/v4/letter/j/6a8cbe/32.png) [@JM\_Hanes](https://boards.straightdope.com/u/JM_Hanes)\ **Post date:** [October 9, 2013, 1:37am UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/28 "2013-10-09T01:37:12Z")
> [@Richard\_Parker](#): > > The basic question for standing is whether anyone is particularly harmed beyond the general harm imposed on the public or taxpayers at large. There are other related doctrines, and of course a million wrinkles, that could come into play, but that’s the threshold inquiry. I believe even that particular bar is set higher than your wording suggests. The plaintiff must be able to argue that he has _already_ been demonstrably, uniquely, harmed. In other words, he cannot sue on the basis of either collective or _prospective_ harm. That two pronged threshold is what makes it virtually impossible for an individual to challenge the constitutionality of a law, _per se_. The Supreme Court may be the perceived arbiter of constitutionality, but issues of standing and jurisdiction prevent the preponderance of law from ever actually being tested. Separation of powers issues make judicial scrutiny an even thornier proposition, never more so than when you simultaneously toss legislative fecklessness and executive overreach into the mix. IANAL, but all of this seems increasingly problematic to me. What could be more grave than collective constitutional harm on a national scale? What damage could be more irrevocable _ex post facto_? ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [October 9, 2013, 2:19am UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/29 "2013-10-09T02:19:50Z")
> [@JM\_Hanes](#): > > In other words, he cannot sue on the basis of either collective or _prospective_ harm. This is not quite right. A sufficiently immediate future threat of harm can confer standing. ---
**Author:** ![JM\_Hanes](https://avatars.discourse-cdn.com/v4/letter/j/6a8cbe/32.png) [@JM\_Hanes](https://boards.straightdope.com/u/JM_Hanes)\ **Post date:** [October 9, 2013, 4:42am UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/30 "2013-10-09T04:42:31Z")
> [@Richard\_Parker](#): > > A sufficiently immediate future threat of harm can confer standing. Could you give me an example of what might constitute such a sufficiency in regard to challenging the constitutionality of a law or an executive branch order? I don’t mean to argue the point; I’m only working from what I’ve read about recent attempts to initiate actions on that front, and I hadn’t realized what an enormous obstacle issues of standing can be. I guess my understanding hasn’t hit the “million wrinkle” mark yet! ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [October 9, 2013, 5:22am UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/31 "2013-10-09T05:22:03Z")
> [@JM\_Hanes](#): > > Could you give me an example of what might constitute such a sufficiency in regard to challenging the constitutionality of a law or an executive branch order? I don’t mean to argue the point; I’m only working from what I’ve read about recent attempts to initiate actions on that front, and I hadn’t realized what an enormous obstacle issues of standing can be. I guess my understanding hasn’t hit the “million wrinkle” mark yet! In Gore v Bush, the Supreme Court took the case before the recount had been completed and the winner officially certified. And in fact, Florida was ordered to stop the recount until the Court ruled, at which point it became too late to complete the recount. ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [October 9, 2013, 1:15pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/32 "2013-10-09T13:15:58Z")
> [@JM\_Hanes](#): > > Could you give me an example of what might constitute such a sufficiency in regard to challenging the constitutionality of a law or an executive branch order? Sure. Here’s an example: Congress passes a law (or the President issues an executive order to the Coast Guard, if you prefer) that says all pit bulls will be killed on November 1, 2013. I have a pit bull. ---
**Author:** ![lawbuff](https://avatars.discourse-cdn.com/v4/letter/l/13edae/32.png) [@lawbuff](https://boards.straightdope.com/u/lawbuff)\ **Post date:** [October 9, 2013, 2:45pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/33 "2013-10-09T14:45:30Z")
> [@Richard\_Parker](#): > > The basic question for standing is whether anyone is particularly harmed beyond the general harm imposed on the public or taxpayers at large. There are other related doctrines, and of course a million wrinkles, that could come into play, but that’s the threshold inquiry. > > Arguably, the recipient of the funds is harmed by the legally speculative nature of the funding source, but that’s of course circular since if they don’t have standing then there’s no threat! > > Who else could be said to be harmed? Agreed, see Flast v. Cohen. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [October 9, 2013, 3:00pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/34 "2013-10-09T15:00:28Z")
> [@LinusK](#): > > Congress could sue, assuming they went that route. The President is usurping their Constitutionally-derived powers: they’re the injured party. If they did sue, I suspect the Supreme Court would take it up, and after an indeterminate number of months, render an opinion. Congress can’t sue the President. A demarcation dispute such as this is by definition a political question. SCOTUS [long ago held](http://en.wikipedia.org/wiki/Raines_v._Byrd) that members of Congress can sue _as individuals_ if they suffer a discrete, personalized injury. They can’t sue as a body for institutional injuries, on the same standing principles **Richard Parker** outlined above. ---
**Author:** ![JM\_Hanes](https://avatars.discourse-cdn.com/v4/letter/j/6a8cbe/32.png) [@JM\_Hanes](https://boards.straightdope.com/u/JM_Hanes)\ **Post date:** [October 11, 2013, 8:51pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/35 "2013-10-11T20:51:42Z")
With apologies for not returning sooner, I appreciate the examples of qualifying prospective harm (and the education). Richard Parker: If you’re still around and don’t mind another query, what would the constitutional basis for the pit bull challenge be? Aside from dramatically framing the question of public safety, would the fact that the government plans to kill your dog, not just take it away from you, have any constitutional import in its own right? If I’m wading a little too deeply into the hypothetical weeds, at this point, I’ll just say thanks for correcting my initial assertion. ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [October 11, 2013, 8:53pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/36 "2013-10-11T20:53:56Z")
> [@JM\_Hanes](#): > > With apologies for not returning sooner, I appreciate the examples of qualifying prospective harm (and the education). > > Richard Parker: If you’re still around and don’t mind another query, what would the constitutional basis for the pit bull challenge be? Aside from dramatically framing the question of public safety, would the fact that the government plans to kill your dog, not just take it away from you, have any constitutional import in its own right? > > If I’m wading a little too deeply into the hypothetical weeds, at this point, I’ll just say thanks for correcting my initial assertion. I think you are deep in the weeds since whether the challenge has any legal merit is separate from whether there is standing. But one could bring such a challenge on many grounds: rational basis review under the Fourteenth Amendment, denial of due process, denial of substantive due process, and equal protection all come to mind. ---
**Author:** ![runningdude](https://avatars.discourse-cdn.com/v4/letter/r/e9c0ed/32.png) [@runningdude](https://boards.straightdope.com/u/runningdude)\ **Post date:** [October 11, 2013, 10:41pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/37 "2013-10-11T22:41:04Z")
> [@Hellestal](#): > > This is a GQ. Factual answers about the law, such as there are. > > I was trying to read up on the legalities of various unorthodox responses to the debt ceiling issue. > … > > \*Two interesting wrinkles: > > 1. If it were me, I’m not sure I’d actually give the Treasury account itself a debit balance. For propriety’s sake, I might put the Treasury account at 0 and then open a new account with an apparently innocuous title to keep track of how much they’re overdrawn. > > 2. Given the current size of the Fed’s balance sheet, they could overdraw the account for a long time by quite a lot of money, a trillion dollars or more, and still have no monetary effect on the economy, since the Fed would “sterilize” such a large injection, almost exactly like what central banks used to do in the olden days when they received an unexpectedly large influx of gold. This would work very much like the platinum coin, actually, and delay a debt ceiling confrontation by a year or more, at which time we could have the same sorts of fun financial discussions once again when the currency was in a much more precarious state. Not a high probability scenario. Only temporary overdraws seem likely given a debt ceiling impasse. Legally, there may be no consequences; however the debt ceiling problem is about the Full Faith and Credit of the United States of America. The financial shenanigans you described may be enough to make creditors weary; even if the interest payment is _technically_ early, new money is effectively being printed by maintaining “overdrawn” accounts. This money is not quite legally sanctioned, and its value is no longer as safe, as it could lead to drastic inflation. Investors will want higher interest rates to make up for the uncertainty. The value of our money is based almost solely on the good name of our government. The strategies you suggest would tarnish our reputation. ---
**Author:** ![JM\_Hanes](https://avatars.discourse-cdn.com/v4/letter/j/6a8cbe/32.png) [@JM\_Hanes](https://boards.straightdope.com/u/JM_Hanes)\ **Post date:** [October 11, 2013, 11:41pm UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/38 "2013-10-11T23:41:43Z")
Thanks, Richard. I see that I have been misguidedly conflating merit and standing. In retrospect, the central flaw in the cases I had in mind may have been that the prospective harm was not sufficiently immediate or defined to warrant hearing, but, as you suggest, that would still be an issue of merit, not standing. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [October 12, 2013, 1:13am UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/39 "2013-10-12T01:13:53Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Congress can’t sue the President. A demarcation dispute such as this is by definition a political question. SCOTUS [long ago held](http://en.wikipedia.org/wiki/Raines_v._Byrd) that members of Congress can sue _as individuals_ if they suffer a discrete, personalized injury. They can’t sue as a body for institutional injuries, on the same standing principles **Richard Parker** outlined above. Ah. Thank you for correcting me. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [October 12, 2013, 1:15am UTC](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238/40 "2013-10-12T01:15:57Z")
> [@runningdude](#): > > Legally, there may be no consequences; however the debt ceiling problem is about the Full Faith and Credit of the United States of America. The financial shenanigans you described may be enough to make creditors weary; even if the interest payment is _technically_ early, new money is effectively being printed by maintaining “overdrawn” accounts. This money is not quite legally sanctioned, and its value is no longer as safe, as it could lead to drastic inflation. Investors will want higher interest rates to make up for the uncertainty. > > The value of our money is based almost solely on the good name of our government. The strategies you suggest would tarnish our reputation. The value of our money is based on the ability of the government to extract taxes, and the ability of banks to foreclose or otherwise force people to pay back their debts. [Previous page](https://boards.straightdope.com/t/debt-ceiling-overdrawn-fed-accounts-standing-to-sue/670238.md?page=1)