The Budget Control Act Of 2011 Violates Constitutional Order

Herbert W. Titus and William J. Olson,FloydReports.com

 

In a Constitutional Republic of the sort that we thought we had,the process
by which laws are made is at least as important as the laws that are enacted.
Our Constitution prescribes that law-making process in some detail,but those who
voted for the “Budget Control Act of 2011″(“BCA 2011″) were wholly unconcerned
about trampling upon required constitutional processes on the way to the nirvana
of “bi-partisan consensus “to avert a supposed crisis. At least two titles of
the bill now being rushed through Congress are unconstitutional.

First,the “Debt Ceiling Disapproval Process”in BCA 2011 Title III
unconstitutionally upends the legislative process.

The
Constitution’s Article I,Section 8,Clause 2
vests in Congress the power “to
borrow Money on the credit of the United States.”As two of America’s leading
constitutionalists,St. George Tucker and Joseph Story,observed,the power to
borrow money is “inseparably connected”with that of “raising a
revenue.”Thus,from the founding of the American republic through 1917,Congress
—vested with the power “to lay and collect taxes,duties and imposts,”—kept a
tight rein on borrowing,and authorized each individual debt issuance
separately.

To provide more flexibility to finance the United States involvement in World
War I,Congress established an aggregate limit,or ceiling,on the total amount of
bonds that could be issued. This gave birth to the congressional practice of
setting a limit on all federal debt. While Congress no longer approved each
individual debt issuance,it determined the upper limit above which borrowing was
not permitted. Thus,on February 12,2010,Congress set a debt ceiling of $14.294
trillion,which President Obama signed into law.

However,a different approach was used when BCA 2011 was signed into law on
August 2,2011. Title III of the Act reads the “Debt Ceiling Disapproval
Process.”Under this title Congress has transferred to the President the power to
“determine”that the debt ceiling is too low,and that further borrowing is
required to meet existing commitments,”subject only to congressional
“disapproval.”For the first time in American history the power to borrow money
on the credit of the United States has been disconnected from the power to raise
revenue. What St. George Tucker and Joseph Story stated were inseparable powers
have now by statute been separated.

Under the new process established by this bill,if the President determines,no
later than December 31,2011,that the nation’s debt is within $100 billion of the
existing debt limit and that further borrowing is required to meet existing
commitments,the debt limit automatically increases. The President need only to
certify to Congress that he has made the required determination. Once the
President acts,the Secretary of the Treasury may borrow $900 billion “subject to
the enactment of a joint resolution of disapproval enacted”by Congress.

But this is not all. Title III also provides that if Congress fails to
disapprove the debt ceiling increase in the amount of $900 billion,the President
may again certify to Congress that he has determined that the debt subject to
the new ceiling is within $100 billion and that further borrowing is required to
meet existing commitments. So the Secretary of Treasury is authorized to borrow
another $1.2 trillion. Indeed,the Secretary may borrow even more —up to $1.5
trillion if a proposed balanced budget amendment has been submitted to the
states for ratification. As was true of the first round of ceiling raising and
borrowing,the President and Secretary of the Treasury are constrained only by
the possibility of a congressional resolution of disapproval which,itself,is
subject to veto by the President.

By giving the President the authority to increase the debt ceiling and to
determine that borrowing is necessary to meet the nation’s commitments,this
bill….

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Freddie Mac asks for fresh 10.6 billion dollar bailout

Freddie Mac asks for fresh 10.6 billion dollar bailout

AFP – Thursday, May 6
Troubled US government-backed mortgage firm Freddie Mac on Wednesday asked for an additional 10.6 billion dollars from the Treasury Department to cover losses.

WASHINGTON (AFP) – – Troubled US government-backed mortgage firm Freddie Mac on Wednesday asked for an additional 10.6 billion dollars from the Treasury Department to cover losses.

Announcing a 6.7 billion dollar loss in the first quarter, Freddie Mac said it would need the new funding by June 30 this year.

The Washington-area company has already received more than 50 billion dollars in taxpayers cash to cover losses from toxic assets.

It warned that further demands would be on the way: “Freddie Mac expects to request additional draws,” the firm said in a statement.

“The size and timing of such draws will be determined by a variety of factors that could adversely affect the company’s net worth.”

In 2008, the government pledged to ensure that Freddie Mac, and its larger sister organization Fannie Mae, kept a “positive net worth.”

The deal was designed to prop up the vital US housing market from collapsing totally and pushing the economy over the precipice.

But in a sign that the US housing sector is still in difficulty, Freddie said the percentage of its loans not paid on time or in full rose to 4.13 percent in the first three months of the year.

In the final three months of last year the rate stood at 3.98 percent.

The future of Fannie and Freddie has become the latest bone of contention between Democrats who argue they must remain government-backed to aid low-income housing and Republicans who advocate their privatization.

In March, Treasury Secretary Timothy Geithner swatted aside pressure for a swift reform of the mortgage giants as data pointed to a still struggling real estate market.

Geithner told Congress any restructuring of Fannie Mae and Freddie Mac, which received a 100-billion-dollar-plus government bailout at the height of the housing crisis, “must be done as part of a reform of the wider housing finance system.”

Geithner argued reforms would “take several months” to develop and should only be “enacted and executed at a time of greater market stability.”