Eliminate the Debt Ceiling

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Obama Administration

Word is that debt ceiling hostage taking will now be the new normal. This is according to Sen. Mitch McConnell, who should know. Michael Shear writes,

The very real threat of forcing the nation into a first-ever financial default — along with the potential for economic calamity — will forever be a powerful tool used by lawmakers and presidents alike, the Senate’s top Republican predicted.

“Never again will any president, from either party, be allowed to raise the debt ceiling without being held accountable for it by the American people and without having to engage in the kind of debate we’ve just come through,” Mr. McConnell said moments before the Senate vote on the deal he worked out to raise the debt ceiling by $2.1 trillion.

Ezra Klein adds,

Previously, I’ve compared the debt ceiling to a bomb ticking away at the base of the economy. We don’t much notice it because it’s always been there and, despite a couple of close calls, it’s never gone off. But that doesn’t mean it won’t ever go off. Particularly if these sorts of showdowns become the norm.

And even if it doesn’t go off, Congress’s decision to make the risk of default more visible might well be enough to scare the markets. If you were an investor, would you want to put your money in a country that regularly held bitter partisan brawls over whether you would be paid back? Or would, say, German bonds begin looking like a comparatively better bet?

Just getting close to default caused the world’s economy to stumble, according to Reuters. And Ezra’s right; if the U.S. goes through this same game every few months, investors are going to think twice about investing here.

The debt ceiling is merely a procedural device. It’s a way for Congress to give blanket authorization to the Treasury Department to eliminate having to vote on every separate bond issue. Most nations manage their finances some other way.

However, if we eliminate the debt ceiling, what will take its place that wouldn’t require a constitutional amendment? The Constitution gives responsibility for managing public debt to Congress. I believe we all agree that we don’t want to go back to the practice of requiring a vote on every separate bond issue.

Shearer has what might be a workable idea —

Democratic lawmakers repeatedly argued over the last several weeks that a little-studied section of the 14th Amendment to the Constitution gave Mr. Obama (and future presidents) the authority to simply raise the debt ceiling without waiting for Congress to act.

“The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion shall not be questioned,” the section reads.

An executive order by Mr. Obama could seek to clarify that section, perhaps written to apply only to future presidents to avoid the impression of a power grab. That might lessen the ability of future Congresses to play games of chicken over the debt ceiling.

Or, perhaps he could write the order to go into effect on January 21, 2013, which is the day after the next presidential inauguration. The current debt ceiling deal ought to make it possible for the nation to hold out until then.

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23 Comments

23 Comments

  1. c u n d gulag  •  Aug 3, 2011 @9:51 am

    Mitch “Yertle the anti-Gay, Gay Turtle” McConnell said the following:
    “Never again will any president, from either party, be allowed to raise the debt ceiling without being held accountable for it by the American people…”

    Something tells me that under President Jeb Bush, Vice President Liz Cheney will remind everyone that Reagan proved that deficits don’t matter.

    And I suspect that Mitch won’t say a word. And neither will Boehner.

    Anyone want to bet that this can’t happen?

  2. buckyblue  •  Aug 3, 2011 @9:56 am

    How we do the debt ceiling is also just another example of how out of whack our budgetary process is, and the whole law making process is as well. Congress can authorize to spend crazy amounts of money but then not agree to borrow the money to pay for those things. They can then blame the president for spending the money in the first place, the money they authorized. But it goes part and parcel with the filibuster and appointment holds and the like. I get this part of the Teabaggers, Washington is broken and I have deep questions whether they can solve ANY problem. I just tend to say, yes, I want better government where as they say, screw it, I want little or no gov’t. If you look around the world countries with populations like ours have terribly inefficient and corrupt governments: India, China, Indonesia, Brazil. Why should we think we would be any different.

  3. Lynne  •  Aug 3, 2011 @10:47 am

    Well, what more can I say? The President doesn’t raise the debt ceiling. effing liars.

  4. Swami  •  Aug 3, 2011 @10:59 am

    Well, don’t complain to your Congressman…They are on vacation for the next month..After all their hard work they deserve to kick back and soak up some rays.

  5. moonbat  •  Aug 3, 2011 @11:44 am

    From someone who teaches contracts and negotation, How the GOP Lost on the Debt Deal.

    ….The reason the president beat the odds is simple: The Republicans blinked.

    …Next, consider some basic negotiation theory. Every negotiator begins by looking to what is inelegantly called the BATNA, or Best Alternative to a Negotiated Agreement. No one will rationally accept a deal that is worse than his BATNA. That’s why the party that can do well without a deal almost always does better with a deal….

  6. LongHairedWeirdo  •  Aug 3, 2011 @12:37 pm

    The original idea of the debt ceiling, as I understood it, was to prevent some program from running away and going out of control, with no chance for a congressional check.

    Congress could give unlimited borrowing authority, but require a report on every so many dollars, and retain the ability to set a new limit. At this time, however, the only time the Republicans would go along with this would be if there looked to be a chance that a Democratic Congress might hobble a Republican President.

  7. giantslor  •  Aug 3, 2011 @12:54 pm

    Is it even possible for Republicans to be more obstinate than they already are regarding the debt ceiling? On the other hand, Democrats have a lot of room and leverage to hold firm next time. They can simply say the GOP wants to take our economy hostage and bring it to the brink of disaster, just like last time. The public doesn’t want to go through that again. Advantage, Democrats.

  8. Alex_Votocracy  •  Aug 3, 2011 @1:30 pm

    Will eliminating it really help us out of our current situation? Now there is a committee designated to cut spending back…how long will that take for both sides to agree on?!

  9. moonbat  •  Aug 3, 2011 @3:54 pm

    Al Jazeera documentary on Wealth Inequality in America. Stuff our own media would never touch these days.

  10. maha  •  Aug 3, 2011 @3:54 pm

    Will eliminating it really help us out of our current situation?

    I think we need to stop being idiots and start thinking beyond our current situation.

    Now there is a committee designated to cut spending back…how long will that take for both sides to agree on?!

    They’ve got to December 23, and then automatic cuts go into effect. Try to keep up.

  11. c u n d gulag  •  Aug 3, 2011 @4:02 pm

    This “Super Committee” is very poorly named.

    It should be “The Mexican Standoff Committee” – but that’s not PC.
    At least we Liberals hope that they won’t put a few Red Dogs (ain’t nothin’ blue about ‘em) on there , otherwise. it may end up being “The Capitulation Committee..”

    So, how about “The Super-duper Stupor Committee?”

    Or, “The Gridlock Committee.”

    This is not going to go well…

  12. maha  •  Aug 3, 2011 @4:08 pm

    The original idea of the debt ceiling, as I understood it, was to prevent some program from running away and going out of control, with no chance for a congressional check.

    No, that’s not exactly right. Under the Constitution, Congress is responsible for managing the debt, so there has to be some mechanism whereby Congress has a say in what Treasury is doing to raise revenue to pay for the stuff Congress has already “bought.” Before World War I, Congress used to vote on every individual bond issue. Then Congress decided that was eating too much time, so it devised the debt ceiling as a means to give Treasury blanket authorization for some period of time to get the bond issue stuff out of Congress’s hair.

    If a program suddenly goes out of control and eats more money than anticipated, Congress can step in and modify the program. It doesn’t have to stop the Treasury Department from paying for it.

    I assume Congress could give Treasury unlimited borrowing authority while retaining the power to set limits if it wants to, or else set up some mechanism whereby debt ceiling increases are automatic unless Congress acts to stop them.

  13. maha  •  Aug 3, 2011 @4:19 pm

    moonbat — yeah, I read that, too. Like I said, I don’t think the deal is an unmitigated disaster. Conventional wisdom is that Obama was a chump to negotiate at all, and maybe that’s true, but once that door was open there was no closing it. The way it ended up could turn out to be a political advantage down the road.

  14. erinyes  •  Aug 3, 2011 @6:16 pm

    If they had paid as much attention and used as much emotion and principle in the “debate” to go to war, we wouldn’t be having this situation. Someone needs to rub their noses in that pile o’ poop.

    “kick back and soak up some rays.” Yeah, the stinging kind on Clearwater Beach…

    It is so ironic that the truth in journalism is now found on” Russia Today” and “Al Jazeera”.

  15. Lynne  •  Aug 3, 2011 @6:50 pm

    Erinyes, I had that thought, too.

  16. Swami  •  Aug 3, 2011 @8:28 pm

    If they had paid as much attention and used as much emotion and principle in the “debate” to go to war, we wouldn’t be having this situation.

    Yeah, but it wasn’t just any old war..It was the Global War on Terrra. You don’t “debate” an existential threat. Saddam had nuclear weapons and was just mere hours away from wiping out our entire country.. I thank God that Bush and Cheney were at the helm in our nation’s most perilous moment.

  17. Doug Hughes  •  Aug 3, 2011 @8:55 pm

    Once there was a deadline when the US would default, the game of musical chairs began. The music stopped, with one less chair, every time a deal proposed and rejected, every time the GOP walked away, whenever the House or Senate passed a deal the other could not swallow. When the music stopped the last time, the Tea Party stood the risk of taking the blame … all the blame… so they blinked.

    If Obama had refused to get involved, he would have been constitutionally correct, but to many voters HE would have appeared to be the stubborn impediment to a deal. Congress is deadlocked for the next year. All the fights are about the 2012 CONGRESSIONAL races.

  18. Porllock Junior  •  Aug 4, 2011 @5:17 am

    This 14th amendment thing has me confused and wondering if people are serious. Not because it needs clarification,but because its meaning (with its context) is perfectly clear (but then, so is the infamous 3/5 rule, which everybody insists on getting exactly bass ackwards, but I digress):

    We are not paying one goddam penny of the debt the insurrectionists ran up, and you’re an idiot to suggest it. We are, however, paying every cent of the debt of the United States of America, just as we have since Alexander Hamilton, including all it cost to put down the bloody rebellion, and if you have some bullshit argument about the expenses of saving the Union being illegitimate, it will be illegal for the courts even to listen to you.

    Naturally, the drafters were a little more terse than that. But has anyone suggested why “shall not be questioned” should be taken in any other sense than this?

  19. erinyes  •  Aug 4, 2011 @5:21 am

    How true, Swami; but let’s not forget John Ashcroft,PBUH.
    When I was but a wee lad, and did something to REALLY piss off me mum, she would give me a good smack and say “are you happy NOW?”
    I would like to send a bill to the members of the previous administration, and would like to see a law making administrators responsible for bad judgement, they currently appear to be immune to prosecution for just about everything.(except sex hijinks)

    Storm prep is on the menu today; I hope this season is nothing like ’04.

  20. Bill Bush  •  Aug 4, 2011 @7:54 am

    One little bright spot: think of all the things the Republicans and ‘baggers have said during the debt ceiling “debate” that will come back to haunt them in the next election. Their lack of concern for the regular people as opposed to the wealthy and big corporations should provide fodder for some hard-hitting ads. I have personally caught enough glimpses of Eric Cantor’s power-mad, sanctimonious heart to know that a montage of about six good revealing moments would sour many voters on him.

    Cundgulag, your first comment was right on. And I stilll maintain that I am right about racism being the real motivator behind the campaign against Obama, just so no one forgets.

  21. maha  •  Aug 4, 2011 @8:51 am

    Porllock — I understand that a few constitutional scholars and also the Congressional Research Service have said that the 14th really does not give the president authority to raise the debt ceiling. I don’t know what their arguments are. But the point is that there is genuine honest disagreement on the matter.

  22. maha  •  Aug 4, 2011 @8:53 am

    One little bright spot: think of all the things the Republicans and ‘baggers have said during the debt ceiling “debate” that will come back to haunt them in the next election.

    That might be true if progressives collectively were smart enough to be going all out right now reinforcing that point. However, most of the Left is too busy whining about President Obama.

  23. Felicity  •  Aug 4, 2011 @11:08 am

    The other day my new neighbor told me that he had planned to do some major renovation of the house he recently purchased but wouldn’t until he had some assurance that the economy was going to stabilize.

    Across the country, corporations are sitting on piles of money, as are banks, afraid to invest in anything for the very same reason as my neighbor – an unstable, what’s-going-to-happen-tomorrow, economy. Of course, this situation only feeds into a recession, some say even creates one.

    If the deadly game, debt-raising-not-debt-raising, becomes a staple of governing we can rest assure that the recession will not only continue, it will deepen.



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