The Democrats seem oddly confident that they will succeed in killing off the debt ceiling. Obama doesn’t seem like he even wants to discuss the debt ceiling:
“I will not play that game,” Obama told the Business Roundtable, an organization of CEOs. “Because we’ve got to break that habit before it starts.”
The Republicans will never give up their new toy. If they can’t blackmail the administration, the Tea Party will have no more reason to exist. But listen to Chuck Schumer:
A group of Democratic senators predicted Wednesday that Republicans won’t push the debt ceiling issue during ongoing fiscal cliff negotiations.
“I think they learned their lesson with the debt ceiling,” said Sen. Chuck Schumer. “I don’t think it’s leverage at all. Any talk that that is leverage for them, I think, is false.”
I’m tempted to ask what Chuck has been smoking.
This is sheer speculation on my part, but I wouldn’t be surprised if President Obama has already decided how he will handle another attempt by congressional Republicans to use the debt ceiling to “take hostages”.
One option is having the Treasury mint a trillion dollar coin thereby increasing the nation’s reserves by $1 trillion. (Apparently you can do that if you control your own currency.)
Another is the constitutional option—the argument that the 14th amendment (section 4: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”) allows the president to pay any and all of the public debt authorized by Congress.
I wouldn’t want to be around to clean up all the exploded Republican brains.
Not to mention all those of the Washington “centrists”.
For what it’s worth (again, speculation on my part), I wouldn’t be surprised if Gov. Deval Patrick chatted with his old and good friend about how to use executive power in one’s second term when dining at the White House last month.
I wouldn’t think it would be that big a mess. Couple minutes with a swiffer should do it.
It would sure be fun though.
Thanks for that summary. These are the options TarheelDem alluded to earlier. The only question is could Obama pull either of these moves off without stirring up ratings agencies or financial markets too much? I’m guessing he could if he played his cards well.
As long as the US is likely to pay the interest on the national debt and the repurchase of the T-bill on time, the credit agencies aren’t that worried. The last debt limit crisis made them question whether that would happen because of the political stalemate and Obama’s sense that he had to obey the debt limit.
Politically, the President’s hand is stronger this time around.
That makes sense. As long as everyone knows we’re going to pay it back.
Some might think minting one or two trillion dollar coins is silly and absurd. But it isn’t any more absurd than some of the procedures Republicans in both the House and Senate have taken us through. 🙂
It’s all play money anyway and some of the CDO crap upon which S & P has given its highest blessings was pure manure.
What it does is handle an accounting issue with the Fed buying back government debt.
Here’s a thought: “moderate” republicans recognize that debt ceiling hostage-taking is a political loser, especially in light of an election in which they took losses in every branch of the federal government. However, they rely on right-wing ideologues to keep their offices. What’s a pander bear to do?
Well, one option is to theatrically fight, and lose, for the right to keep the debt ceiling hostage. They could negotiate these terms a priori, if need be.
…and not because of the Affordable Care Act its because of the Republican economic sabotage.
CNN – People on Edge
If they screw with the debt limit again later Obama needs to raise it and then let it go to the courts. Believe me the Repugs will not fight for something that could come back to haunt them in so many ways.
They truly do not get it this is so dangerous, bond markets can be very unforgiving when they smell a chance to make money. We have to unwind from this bond bubble at some point. Having rates skyrocket because of the debt ceiling crap is not something the idiot repugs want. They are just too stupid to realize it.
Up until now, the GOP had Obama by the short and curlies because he needed a recovering economy to achieve re-election. Now he has them by the short and curlies because their donors need a recovering economy to make more money.
But there is an even more basic reason why Repuplican donors want this issue resolved: For every $ public debt there is a private creditor (or foreign state) which holds that debt and who is receiving interest on it. The great untold secret is that the rich actually love a big public debt because:
The Government doesn’t even have to tax the wealthy to stop that scam. It could simply print the money and pay of the debt itself (that is why the analogy between state and family finances so beloved of the right wing is actually misleading and false, Families can’t print money).
Everybody will scream “but that will cause massive inflation and hurt everyone” – well yes and no. Because the US economy is no where near capacity, the effect on inflation will be minimal. And secondly, whatever inflation it may eventually cause does not effect the rich and poor equally – the effect of inflation is mostly to reduce the value of the retained wealth owned by the rich – which is why they hate inflation so much. When interest rates are at 1% and inflation is at 3%, the rich are actually losing wealth on their cash horde.
What we have to understand is that basically “the national debt” is an accounting scam caused by a government NOT printing enough money to cover the cost of its programs, and agreeing, entirely unnecessarily, to pay more money to the already wealthy, for the privilege of borrowing back its own money. Tax, in this context, is merely what a Government uses to “retire” money out of circulation to prevent inflation caused by excessive money supply – over and above that required to enable efficient functioning of an economy.
According to Modern Monetary Theory, a Government does not have to raise tax to fund its services – it prints money to so – and uses tax to control excessive inflation that would otherwise result from a never ending increase in the money supply.
Time to de-boogeyman inflation. Excessive inflation is bad, but when money is being hoarded and inflation is low, it’s a good way to poke rich fuckers into putting their $$ into circulation
And we have a large amount of public and private debt that needs to be paid off.
And we have a large number of underwater mortgages.
Another point or two of inflation over the next few years would be a good thing.
TRILLION DOLLAR COIN!
DO IT NOW!
The last president to attempt to get the US Treasury to print United States Notes instead of Federal Reserve Notes was named John F Kennedy by Executive Order 11110 on June 4, 1963.
Wonder how that one worked out when he challenged the power of the FED, and the private banking system that actually owns the FED.
Find me a court that says the President cannot act to enforce the first sentence of Section 4 of the 14th Amendment (which is explicit).
Obama will issue an executive order directing that the national debt be paid. Not even our freaky Supreme Court will say he is prohibited from defending our solvency.
Justice Roberts caved on Obamacare. He will NOT be the justice to put us in default. Neither will Alito, nor Scalia. Thomas will, but only because it will be 8-1 against him.
This is going to happen. Goodbye, debt ceiling.
I’m tempted to ask what Chuck has been smoking.
The Republicans took a pretty awful beating in the 2011 debt ceiling showdown. That’s when their approval rating dropped into the single digits, and never really recovered.