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The debt limit and the White House

Races for the Senate, U.S. House, etc. and other issues of national importance.

If Congress can't reach an agreement, what should the Executive Branch do?

(1) Ignore the debt limit, under the rationale that it conflicts with the 14th amendment.
8
57%
(2) Unilaterally decide what obligations to pay, and what to default on.
1
7%
(3) Unilaterally raise taxes to whatever level is needed to pay obligations.
0
No votes
4) Engage in various gimmicks (e.g., trillion-dollar platinum coins).
2
14%
(5) Start issuing IOUs.
1
7%
(6) Something else (what?)
2
14%
 
Total votes : 14

The debt limit and the White House

Postby kurt_w » Tue Jan 08, 2013 8:53 pm

Let's fast-forward to March. The debt limit is fast approaching, and Congress is utterly deadlocked. The House and Senate are unable to agree on a bill to either raise taxes, cut spending, or lift the debt limit. In a matter of days -- or hours -- the US government will start to default on its financial obligations.

What, exactly, should the Executive Branch do? It has no authority to raise taxes or cut spending -- that's Congress's job under the Constitution.

None of the options look good.

(1) Ignore the debt limit, under the rationale that it conflicts with the 14th amendment.

(2) Unilaterally decide what obligations to pay, and what to default on.

(3) Unilaterally raise taxes to whatever level is needed to pay obligations.

(4) Engage in various gimmicks such as minting trillion-dollar platinum coins, or selling government property to the Fed and then buying it back at 1% of the original price, or whatever.

(5) Start issuing IOUs.

(6) Something else (what?)

I'd be particularly interested in hearing the opinions of forons who consider themselves "conservative".

Right now, I'd say that (1) is the least awful choice.

Options (2) and (3) both seem like dangerous and unconstitutional expansions of executive power. Do we really want to give the President the power to overrule Congress and start writing and enforcing his own budgets?

(5) is just a variant of (2), I'd say. The question here is who gets paid in real dollars and who gets pieces of paper saying that the US will pay the recipient at some unspecified time in the future. Anyone who likes this option should remember that it won't be you making the decisions. Now or in the future, it will be a bunch of White House staffers from the party that you oppose.
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Re: The debt limit and the White House

Postby gargantua » Tue Jan 08, 2013 9:53 pm

I hope that Obama sticks with his current posture, i.e. there will be no negotiations. Just tell Congress to do its job, and take responsibility for the consequences for failure to do so.

It is time to break them of the habit of taking the American economy hostage.
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Re: The debt limit and the White House

Postby snoqueen » Wed Jan 09, 2013 11:16 am

The 14th Amendment approach is least awful to me as well, but a showdown before the USSC is hardly something to be desired. I'm joining gargantua and hoping either the crazies see the light (unlikely) or Boehner puts the best interests of the country and the world ahead of his party, and allows the entire House to vote on a reasonable bill. That was the message I was getting from his address to the House after being re-elected, and that would be the adult and responsible thing for the Speaker to do.

Of course, the crazy in me says OK, go ahead and blow the whole thing up. I believe the other countries of the world would step in quickly and orderly processes would resume faster than we imagine. The US would be permanently knocked off its pedestal, a more level world economic structure would form, and the result would be more decentralized and more multi-level in a good way.

But that's too sudden, so I'm hoping we maintain stability.
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Re: The debt limit and the White House

Postby pjbogart » Wed Jan 09, 2013 12:01 pm

Obama needs to make it clear to the American people that it is the Congress' responsibility to write a passable budget, which they have failed to do for several years running. Boehner's continued insistence that the House will not vote on any bill that doesn't have the approval of his caucus is allowing the Tea Party Republicans to hijack our entire political and budgetary system. When people understand that it is the Congress that is at fault for not submitting a budget, perhaps public pressure could break their intransigence.
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Re: The debt limit and the White House

Postby kurt_w » Wed Jan 09, 2013 1:10 pm

One Republican representative is trying to get Congress to pass a law removing the platinum coin loophole. He does it via a rather stupid analogy of the US government to a small business. John Chait respondsto that, then continues:

But let us try to take Walden’s small business analogy seriously. Suppose the problem is that we’re a business whose expenses are outstripping our income. We propose some measures to correct it — say, cutting expenses when possible and also working some longer hours. But we have a business partner who listens to a lot of Rush Limbaugh and has some different ideas. He says increasing revenue by working longer hours — even a single longer minute when we have customers waiting in line at closing time — is totally off the table. He says the answer is to cut our employees’ pay and ban them from taking bathroom breaks. And he also informs us that, unless we approve the savings ideas he wants, with none of the savings ideas we want, he’ll refuse to pay vendors who have already delivered things to us, thereby ruining our credit rating forever.

That would be terrible! You would probably stop thinking about optimal ways to run your business and start looking for back-door solutions to prevent your crazy business partner from permanently ruining your credit rating. Then he would probably start getting really angry about it. That’s where we are right now.
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Re: The debt limit and the White House

Postby kurt_w » Wed Jan 09, 2013 1:22 pm

Apparently, a guy who actually was director of the US Mint, and was chief of staff for the Treasury Department, and who co-wrote the law authorizing platinum coins, addresses the issue here.

He seems a lot more sanguine about the idea than I am.
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Re: The debt limit and the White House

Postby DCB » Wed Jan 09, 2013 1:31 pm

pjbogart wrote:Boehner's continued insistence that the House will not vote on any bill that doesn't have the approval of his caucus is allowing the Tea Party Republicans to hijack our entire political and budgetary system.

During the last vote, Boehner had to break with tradition and violate the 'majority of the majority' rule. boo hoo.

What we've really got is the 'minority of the minority' having undue control over the Federal government. The only reason the GOP has a majority in the House is gerrymandering. And even with that, they lost seats in the last election - and the ones they lost were the most extremist.

The Tea Party has had its 15 minutes. Its time to let sane people make decisions again.
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Re: The debt limit and the White House

Postby Detritus » Wed Jan 09, 2013 1:48 pm

I voted for option 1, because this has to be settled once and for all. If it takes a "constitutional crisis" to do that, so be it. However, having voted for option 1 does not mean that's the option I think Obama will take. My guess is that he will take the weakest, most craven option possible, allowing the Republicans once again to use their hostage tactics successfully.
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Re: The debt limit and the White House

Postby ArturoBandini » Wed Jan 09, 2013 4:40 pm

I'm not convinced the ball will land in Obama's hands when it gets down to the wire, and it's not his legally responsibility to do anything about spending anyway. I think that Congress will find some way to kick the can down the road yet again. As far as I'm concerned, we are already over the cliff - there is no magic combination of taxing/spending modifications that will get the government to the level that they'll meet their obligations. The squabbling over legal details at this point is merely rearranging the deck chairs.

I think your Option #1 needs clarification. Do you mean "ignore" as in, "not employ the Justice Department to enforce the debt ceiling law against the Treasury"? It's not clear to me what enforcement would even look like - does someone go to jail? If so, who? Or does one branch of the government pay a fine to another branch? Regardless, it's a toothless bureaucratic rule whose main (and unintended) function is to highlight the fecklessness of our entire political class.

And isn't #1 an expansion of executive power too? In that vein, I submit another option - the Executive preemptively sues someone (Congress?) over the conflicting demands put on it by Congress (to execute spending while respecting a limit that prevents such execution).
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Re: The debt limit and the White House

Postby Donald » Wed Jan 09, 2013 5:51 pm

#1 is my choice, but I would signal it right now, or not do it. If you signal it, you get a sense as to how the markets and financial institutions worldwide will react---will they accept that the President has this power, or will they look at it as a giant overstep that is going to put more uncertainty in. Surely, the Republican nutcases would go ballistic, and they would try to de-stabilize the economy and try to blame it on Obama's action. About the only way out of this mess is to put the Republicans where they belong---the looney bin.
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Re: The debt limit and the White House

Postby Francis Di Domizio » Wed Jan 09, 2013 11:33 pm

Given Obama is (so far) stating that #1 isn't even being considered I'm curious as to why so many people are second guessing him? Seeing as it's actually the simplest answer to the problem, I would assume someone in the White House sees a drawback in challenging the legality of the Debt Limit law.

The only think I can think of is that the Debt Limit conflict with the 14th Amendment in much the same way that the War Powers Act conflict with the Presidential powers defined in Article II. Neither directly contradict the Constitution but both seek to confine the powers/rules that it sets forth. Perhaps that's not a can of worms the White House wants opened up.

In any event, Obama would be best served by sitting back and letting congress duke it out since it's their job. He's got at least 2 years of a divided congress, and getting too heavy handed right out of the gate isn't going to make that go any smoother, or make him look any better. It can't effect his future election chances, but it can definitely effect the mid-terms.
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Re: The debt limit and the White House

Postby DCB » Wed Jan 09, 2013 11:34 pm

I voted for the gimmick, because I like gimmicks. Also, platinum is cool. And a $1,000,000,000,000.00 coin? That would kick ass.

The whole debt ceiling nonsense is nonsense. Either its pro-forma and serves no purpose, or its a tool to destroy the credit of the USA. Get rid of it.
In 1963, Treasury Secretary Douglas Dillon delivered a speech at a University of Connecticut awards luncheon—reproduced in the pages of the New York Federal Reserve's monthly review—that argued that no fiscal-policy issue was "in need of more light and less heat as the debt limit." And his arguments are strikingly familiar.

"[L]et no one labor under the delusion that the debt ceiling is either a sane or an effective instrument for the control of federal expenditures," he said.


http://nationaljournal.com/budget/debt- ... s-20130108

But unfortunately I expect that Detritus is correct - Obama will avoid the path of expediency and/or maximum entertainment value, believing against all empirical evidence that he can negotiate in good faith with the Republicans to come up with a "reasonable compromise".
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Re: The debt limit and the White House

Postby pjbogart » Thu Jan 10, 2013 1:34 am

DCB wrote:I voted for the gimmick, because I like gimmicks. Also, platinum is cool. And a $1,000,000,000,000.00 coin? That would kick ass.


Can you imagine if they mis-struck that bitch??? Man, that would be worth some bank!
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Re: The debt limit and the White House

Postby kurt_w » Thu Jan 10, 2013 7:56 am

ArturoBandini wrote:I'm not convinced the ball will land in Obama's hands when it gets down to the wire, and it's not his legally responsibility to do anything about spending anyway. I think that Congress will find some way to kick the can down the road yet again.


I'm not convinced that this will happen, either; I agree that the most likely scenario is that they reach some last-minute compromise that nobody likes and that just postpones the crisis by a few months.

The point of this thread, though, is to ask in principle what the Executive Branch ought to do when given three mutually contradictory pieces of law from the Legislative Branch ... and failure to resolve the issue by a given date would imply that the US government would default on its obligations.

In other words, I'm not asking "Do you think Congress will eventually manage to work out a compromise before the deadline?" I'm asking "What does the White House do if Congress can't work out a compromise?"

Given the awful consequences of defaulting, and the totally dysfunctional nature of Congress right now, it sure seems like there ought to be some sort of fallback plan here. Right?
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Re: The debt limit and the White House

Postby Francis Di Domizio » Thu Jan 10, 2013 9:13 am

kurt_w wrote:The point of this thread, though, is to ask in principle what the Executive Branch ought to do when given three mutually contradictory pieces of law from the Legislative Branch ... and failure to resolve the issue by a given date would imply that the US government would default on its obligations.

In other words, I'm not asking "Do you think Congress will eventually manage to work out a compromise before the deadline?" I'm asking "What does the White House do if Congress can't work out a compromise?"

Given the awful consequences of defaulting, and the totally dysfunctional nature of Congress right now, it sure seems like there ought to be some sort of fallback plan here. Right?


Given that he has no authority to raise taxes on his own, #3 is out. #2 really doesn't solve anything as we would still be defaulting on loans. #5 is redundant and again doesn't solve the defaulting issue. I don't know if #4 will work, and I still suspect there is a legal reason Obama doesn't want to use #1 but those two seem like the only reasonable options, with #1 being far ahead of #4 from a practical view.
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