In arguing that unfunded Social Security benefit obligations should not be considered debt on the federal government balance sheet, government leaders have testified that the government has control over the law, and can change it (and Social Security benefits) when it wants to.
Last week, in testifying about the federal debt limit, Treasury Secretary Steven Mnuchin refused to prioritize payments and called on lawmakers to enact a new law raising the federal government’s debt limit. He testified in part “… The government should honor all of its obligation and the debt limit should be raised.”
Is this last sentence an oxymoron?
Maybe not, if the fact that the government can change the law when it wants to means that the government has no obligation to honor a debt limit it has set for itself.
But if the government can control the law and not honor a previous debt limit, can it also control the law and change the terms on which it pays interest and principal on Treasury debt?