Saving the country? Socialism!
elucidator takes a position similar to Bruce Bartlett, who maintains that the debt limit is unconstitutional. That’s one possible angle. In a previous thread last year, Ravenman didn’t think that would fly IIRC. Yes, taking the economy hostage has become that routine.
Has there been any indication he might do this? Not the sort of thing you want to advertise I guess.
Of course that only works if the horses remain unspooked, hansel’s argument above is compelling – just having to take those measures would probably be enough to screw-up confidence and have a major impact.
If the limit isn’t increased then it wouldn’t be unreasonable for Obama to conclude that he’s not going to get anything useful done over the next year and he may as well deal with the courts rather than potential financial Armageddon.
The problem is that many people aren’t convinced that default leads to the smoking ruin situation. If they’re not convinced by that then there’s no country/world saving going on, just a president breaking the law (maybe).
I’m not American, I have no dog in this fight although the dollar tanking would probably not be good news for me. I’m just trying to work out what might happen.
Bruce Bartlett: Especially at a time of war, any threat to the Treasury’s financing is a threat to national security. And, lest we forget, the nation is still at war in Afghanistan. …
…law professors Neil Buchanan and Michael Dorf… point out that the law does not permit the Treasury to prioritize payments or to decline to pay some so that others can be paid. Nor does the president have the legal authority to unilaterally raise taxes to pay debts that are due. Ignoring the debt limit would also be a violation of law, but Buchanan and Dorf argue that doing so is the least unconstitutional option.
On the other hand, Prof. Howell Jackson of the Harvard Law School argues that prioritizing payments is the least unconstitutional option. Bruce Bartlett was the architect of the Kemp-Roth tax cuts. When he wrote a critical piece on George W Bush, his think tank sent him to the cornfield. Modern conservative commentators are expected to toe the line, or else.
Also, I retract my earlier point about debt prioritization:
This point was made by Morgan Stanley economist David Greenlaw in a July 8, 2011 report:
Debt prioritization is not a realistic option. It is being advocated by people who simply do not understand Treasury cash flows. While it is true that the government takes in a good deal more in receipts than it pays out in interest on the debt over the course of a full year, on certain days the government takes in much less than it pays out. For example, the Treasury has an interest payment of about $30 billion due on August 15. On that day, it will take in about $15 billion in tax receipts, so it won’t even have enough to make the interest payment alone. Are the proponents of prioritization suggesting that the Treasury should withhold all of the $22 billion social security payment due on August 3, so it can cover a debt service interest payment that is due a couple of weeks later? If so, what is the legal basis for Treasury to do this? I’m guessing the legal basis would be the 14th amendment, flouted by the Republican hostage-takers: 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.
First, the President is mandated to spend money Congress authorizes, so not spending it might be as illegal as ignoring the debt ceiling. It would take a long trial to know for use.
Second, impeachment means indictment, it does not mean conviction. There are enough votes in the House today to pass the budget - the problem is that the more moderate Republicans are scared of the extremists. Voting to impeach an action that stopped a default might be politically very tough. (Boehner is refusing to allow a vote now - he can’t do that for an impeachment.)
If Obama is impeached, he would never be convicted in the Senate.
But I don’t disagree about the impact on world markets.
True, but something has to give. The President cannot unilaterally raise the debt ceiling, raise taxes, default on the debt, or prioritize payment. Well, he has to do at least one of those four things.
I would argue that prioritizing payments, in this circumstance only, would be legal. I would argue in court to distinguish it from the case that outlawed executive impoundment because in that case it was being done for policy reasons.
I would contend that as long as Obama prioritizes payments in good faith, then he is not breaking the law. IOW, no full funding for Nancy Pelosi’s district and zero funding for Boehner’s district. A good faith disbursement of cash where he thinks it is best; sort of like a trustee.
It’s the best of the four options.
The Treasury Dept. makes over 80 million automatic payments per day. Please outline the procedure for evaluating each one so as not to run afoul of your conditions for good faith.
Simple. If the government is thirty percent short, pay those invoices that have the last number of the invoice as any one of seven randomly chosen. Those who are unlucky are invited to try again next month. And if that seems stupid to you, keep in mind that sequestration is currently the law, and adjust your boundaries for “stupid”.
Besides the practical impossibility of it, any decisions made can easily be imputed to policy. Food stamps versus payments on a weapons system? A bridge here versus a bridge there. How would you propose devising guidelines in a few days?
Raising the debt ceiling is obviously the best alternative. First, it ignores only one Congressional directive instead of hundreds of them. Second, it doesn’t really even do that - the debt ceiling, so far, has not been rejected; it has not been brought up for a vote. It is likely it would pass the House if not for the extremists.
Plus, the harm caused by raising the debt ceiling is zero or small. The risk of not raising it is gigantic, the risk of raising it is tiny. At worst we’d be a few billion dollars more in debt than otherwise, clearly trivial compared to the harm of not funding Social Security, or food inspection or the military.
Examine the zip code of the recipient. Tea Party District? Delay it. Not? Republican District? Delay it (but ahead of TP). Otherwise, pay it.
Yeah, it’s shitty and infantile, but hey, I yam what I yam.
Well holders of Treasuries have no right to demand other forms of payment, Treasuries get repaid in USD, they have no right of demand of other forms of payment ala the demand for gold payments in the Versailles Reparations with Germany after WWI.
Additionally, the collapse of the full faith and credit of the U.S. Government would be such a huge clusterfuck for many reasons, a principal reason being there is no other vehicle that can absorb the amount of capital currently in Treasuries. It’s not just a matter of everyone being like “well fuck the U.S. and their dysfunctional system, we’re going to sell off all our Treasuries and buy only bonds from other countries.” There isn’t enough debt being issued in the rest of the world to absorb this kind of money. That’s a problem people had when they talked of things like gold or pouring all their money into Swiss Francs or German Bonds or Norwegian bonds or Chinese RMB etc. There just isn’t enough of it, on an individual level some people will indeed be able to skip away into gold or francs or bonds backed by CHK or Norwegian bonds or etc. But the huge, hundreds of billions of dollars in holdings or even $1T+ in holdings that some countries have of Treasuries simply can’t be replaced with anything other than just holding their own cash and that causes problems too.