The next idiotic political fight
Jan. 7th, 2013 11:02 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
drwexComing up: round N of "the debt ceiling" fight. TL;DR version: the Republicans are making a mountain of this molehill. They have the ability to box Obama in, but in fact they don't want to because if they do it will go very badly for them. What they want instead is to use the threat of boxing Obama in to give themselves leverage.
Quick bit of background: the Constitution says that Congress is responsible for making a budget and allocating how money is to be spent. It also gives Congress the power to raise taxes. Some decades ago, Congress got unhappy with how much debt was piling up and created something we now call the "debt ceiling" which is a bill that states the amount that the government can be in debt. For years the ceiling was just pro forma raised as deficits turned into debts and nobody cared. Then someone decided to make a stink about it, and the result cost the US government its first credit rating downgrade in history.
Now there appears to be a plan afoot to create another hostage crisis in which the increase in the debt ceiling will be held hostage to Obama agreeing to Republican spending cutting plans. This is idiotic, as Wall Street and the public both put the blame for the resulting mess on Congressional Republicans, but nobody ever accused them of being fast learners. So we're going to go through this again; however, this time it's possible Obama will have found a spine somewhere and may not cave.
As a result people are talking about what happens if the ceiling isn't raised. The short answer is that everything gets more expensive since our borrowing costs will go up. The debt and the deficit will increase, and spending will not be cut. This is why the Republicans don't actually want this to happen.
If the ceiling doesn't go up, what can Obama do? He can (a) raise more revenue somehow; (b) cut spending somehow; (c) ignore the debt ceiling. C is almost certainly the illegal-but-Constitutionally-correct thing to do and it's what Obama likely will do.
A is a non-starter. Obama can't raise taxes and he has almost no levers to raise revenue. He can do a few things that affect the Executive branch exclusively, like he did with wages and pensions there at the start of the recession, but that's peanuts. No impact. He can't just magic up some higher taxes - that would get laughed out of court. There are also other laws in place that control the money supply so he can't just arbitrarily inflate his way out of this box by printing currency even if he wanted to (which would be a VERY dumb move and won't fly and he doesn't want to do that).
B is the scenario the Republicans (should) most want to avoid. Do they REALLY want to give a Democratic president who doesn't have to worry about re-election unilateral power to cut as he sees fit? That's pretty much the definition of crack-monkey insane. Also, it's almost certainly unconstitutional. Richard Nixon tried something similar and got slapped down hard by the courts. The President is more or less obliged to pay the debts that Congress has committed itself to. There are some hair-splitting moves that might be tried, such as formally "delaying" payments rather than not making them but most debt obligations have schedules and one side can't unilaterally delay payment without incurring default or other penalty. Section 4 of the 14th Amendment is pretty clear I think. It was designed to prevent the post-Civil War government from wiggling out of war debts and it has stood well since then.
That leaves C. Basically, Obama will get up and say with grave solemnity that he's very sorry he has to break this law that Congress passed but he swore an oath to uphold the Constitution and it is his Constitutional obligation to pay these legal debts. If Congress can't get its act together to raise enough revenue to pay for the debts it has incurred then the US must borrow to cover those obligations. End of story.
Actually not end of story, as I expect some showboating Republicans will try to take Obama to court over it and they'll get slapped down as well they should. The debt ceiling is a dumb law passed in another feeble attempt by Congress to create some external mechanism for itself to have to avoid taking the unpleasant steps it ought to take to get the deficit under control. Those steps are: raise revenue AND cut expenditures. Deficits have come down under Obama, but not enough.
It's frustrating me that instead of doing the real, hard work that needs to be done Congress is wasting time with these idiotic side-shows. So I write more political ranty stuff and I appreciate you all indulging me.
Quick bit of background: the Constitution says that Congress is responsible for making a budget and allocating how money is to be spent. It also gives Congress the power to raise taxes. Some decades ago, Congress got unhappy with how much debt was piling up and created something we now call the "debt ceiling" which is a bill that states the amount that the government can be in debt. For years the ceiling was just pro forma raised as deficits turned into debts and nobody cared. Then someone decided to make a stink about it, and the result cost the US government its first credit rating downgrade in history.
Now there appears to be a plan afoot to create another hostage crisis in which the increase in the debt ceiling will be held hostage to Obama agreeing to Republican spending cutting plans. This is idiotic, as Wall Street and the public both put the blame for the resulting mess on Congressional Republicans, but nobody ever accused them of being fast learners. So we're going to go through this again; however, this time it's possible Obama will have found a spine somewhere and may not cave.
As a result people are talking about what happens if the ceiling isn't raised. The short answer is that everything gets more expensive since our borrowing costs will go up. The debt and the deficit will increase, and spending will not be cut. This is why the Republicans don't actually want this to happen.
If the ceiling doesn't go up, what can Obama do? He can (a) raise more revenue somehow; (b) cut spending somehow; (c) ignore the debt ceiling. C is almost certainly the illegal-but-Constitutionally-correct thing to do and it's what Obama likely will do.
A is a non-starter. Obama can't raise taxes and he has almost no levers to raise revenue. He can do a few things that affect the Executive branch exclusively, like he did with wages and pensions there at the start of the recession, but that's peanuts. No impact. He can't just magic up some higher taxes - that would get laughed out of court. There are also other laws in place that control the money supply so he can't just arbitrarily inflate his way out of this box by printing currency even if he wanted to (which would be a VERY dumb move and won't fly and he doesn't want to do that).
B is the scenario the Republicans (should) most want to avoid. Do they REALLY want to give a Democratic president who doesn't have to worry about re-election unilateral power to cut as he sees fit? That's pretty much the definition of crack-monkey insane. Also, it's almost certainly unconstitutional. Richard Nixon tried something similar and got slapped down hard by the courts. The President is more or less obliged to pay the debts that Congress has committed itself to. There are some hair-splitting moves that might be tried, such as formally "delaying" payments rather than not making them but most debt obligations have schedules and one side can't unilaterally delay payment without incurring default or other penalty. Section 4 of the 14th Amendment is pretty clear I think. It was designed to prevent the post-Civil War government from wiggling out of war debts and it has stood well since then.
That leaves C. Basically, Obama will get up and say with grave solemnity that he's very sorry he has to break this law that Congress passed but he swore an oath to uphold the Constitution and it is his Constitutional obligation to pay these legal debts. If Congress can't get its act together to raise enough revenue to pay for the debts it has incurred then the US must borrow to cover those obligations. End of story.
Actually not end of story, as I expect some showboating Republicans will try to take Obama to court over it and they'll get slapped down as well they should. The debt ceiling is a dumb law passed in another feeble attempt by Congress to create some external mechanism for itself to have to avoid taking the unpleasant steps it ought to take to get the deficit under control. Those steps are: raise revenue AND cut expenditures. Deficits have come down under Obama, but not enough.
It's frustrating me that instead of doing the real, hard work that needs to be done Congress is wasting time with these idiotic side-shows. So I write more political ranty stuff and I appreciate you all indulging me.
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no subject
Date: 2013-01-07 04:23 pm (UTC)Why do you think present-day Republican politicians care about the debt and deficit? Goldwater Republicans, sure, but today's GOP leadership seems to me to have the top concern that a black man is president, which pisses off a lot of the GOP base ("dude, we're way over that: can we please get back to governing now?").
I thought C was legal via games of minting arbitrarily large-value platinum coins.
no subject
Date: 2013-01-07 04:41 pm (UTC)If Obama was a first-term president I could see this happening. He'd score points and be able to go on claiming he never broke any laws. He certainly used a lot of arcane maneuvers to get ACA passed. But he's second-term and he doesn't have to care about re-election now. I think the (re)nomination of Brennan is a clear sign that he's now willing to say "f you" to people where he wasn't four years ago.
I think Obama would rather be seen (now) as a guy who stood up for principles rather than a godawful end-runner. It is, to borrow a geek term, a gross hack.
no subject
Date: 2013-01-07 04:42 pm (UTC)Also, i find it ironic that DeLong would take Obama to task while neglecting to mention that Congress has acted unconstitutionally by failing to pass an annual budget as they are required to do. In theory you're not supposed to govern by continuing resolutions, but that's what we've been subject to for the last couple years since the House can't get its shit together.
no subject
Date: 2013-01-07 05:27 pm (UTC)no subject
Date: 2013-01-07 05:38 pm (UTC)no subject
Date: 2013-01-07 04:44 pm (UTC)That certainly makes a lot of sense.
no subject
Date: 2013-01-07 04:26 pm (UTC)There is some *very* wonky discussion about how Obama, acting in the interests of the 14th Amendment (and in accordance with his other Executive Branch powers), simply authorizes the Treasury to mint a 1 Trillion Dollar platinum coin that the Fed immediately borrows against. I don't think Obama is gutsy enough to do that though.
later
Tom
no subject
Date: 2013-01-07 05:29 pm (UTC)no subject
Date: 2013-01-07 05:42 pm (UTC)And, as a commenter there points out, a bit more inflation might be good for the economy since corporations are currently sitting on the sidelines with lots of capital. If they fear losing real value by staying idle with wads of cash then they may be motivated to make investments that would return more than the inflation rate, which are generally long-term strategic investments the economy would benefit from.
THAT said, I do think Obama making this move would prompt some fear reaction since again in theory there's nothing to prevent him or a future president doing it again or over-doing it. You'd see a very fast bill zap through Congress to close this loophole.
no subject
Date: 2013-01-07 04:59 pm (UTC)Really, time-wasting "idiotic side-shows" are their forte, it's reasonable to expect them to go there.
no subject
Date: 2013-01-07 05:50 pm (UTC)That is rather the problem with people who run for office solely on the basis of ideology instead of, oh, I dunno...actual ability.
no subject
Date: 2013-01-07 08:07 pm (UTC)