drwex | The next idiotic political fight

Coming 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.