Debt Ceiling Blues

The public debt in the 14th Amendment, section 4:

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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Not that the House nutjobs care, but that seems to be saying that not raising the debt ceiling to allow payment of public debt is unconstitutional. Further, there are other laws that don’t give the executive branch much wiggle room about paying for stuff. Josh Marshall explains,

If the Treasury cannot borrow money to finance legally mandated government functions, the President is faced with a menu of options each of which violate the law and the federal constitution. If Congress says X must be spent on Social Security and Y must be spent on defense, the President can’t simply decide not to do so. It’s the law and the President’s primary constitutional responsibility is to see that the laws be faithfully executed.

The nation’s op ed writers have mixed opinions about what to do. I’d already linked to this Paul Krugman column (no paywall):

A debt crisis, then, would be bad and possibly catastrophic. So should Democrats give in to Republican demands?

No. A party that barely controls one house of Congress shouldn’t get to impose deeply unpopular policies on the nation as a whole.

It’s important, Krugman thinks, to not save Republicans from themselves. If they drive the economy off a cliff, maybe we should let them.

Jeffrey Frankel writes at the Los Angeles Times,

Unfortunately, letting Republicans drive the U.S. economy off a cliff may be President Biden’s best option right now. The U.S. still has at least five months to jump out of the car. Treasury Secretary Janet L. Yellen said last week that she will pursue a set of “extraordinary measures” (all of which have become rather ordinary in recent decades) to postpone America’s day of reckoning until early June.  …

Ultimately, Republicans would have to back down. Because the GOP’s rebels have become even more intransigent over the last decade, the standoff will probably go down to the wire, and the government may be forced to shirk some obligations for a few days, or even weeks.

By then, perhaps crashing securities markets, outraged beneficiaries and shifting voter attitudes would finally persuade enough holdouts to raise the debt ceiling. In the meantime, we have no choice but to let this game of chicken play out.

Frankel proposes this option:

Biden could invoke the 14th Amendment and single-handedly raise the debt limit — as former President Clinton suggested during the debt-ceiling standoff of 2011. Adopted in the immediate aftermath of the Civil War and ratified in 1868, the amendment states that the “validity of the public debt of the United States … shall not be questioned.”

This would have huge political risks, and who knows if the nutjob Supreme Court would uphold it?

Jamelle Bouie, the New York Times makes the same suggestion, noting that President Biden has vowed to not negotiate.

This is the right approach — there were, after all, no negotiations over the debt limit when Donald Trump was president — but Biden could and should go further than rejecting Republican brinkmanship; he should reject the debt limit itself as an unconstitutional use of congressional power.

Basically, not raising the debt ceiling isn’t just a matter of economic catastrophe. It also creates a constitutional crisis because not honoring the debt is unconstitutional and the President under law has to spend the money Congress has appropriated.

The Democrats appear to be united against negotiation with the exception of Joe Manchin, who is flapping around wanting to be all bipartisan and shit. If Princess Kyrsten has said anything about the debt ceiling I haven’t heard it. The Washington Post is reporting that White House people want to force the House Republicans to abandon their hostage taking.

The GOP’s stance has forced White House officials to grapple in recent weeks with what their options would be if the Treasury Department can no longer meet the federal government’s payment obligations, according to five people with knowledge of preliminary internal conversations.

Those discussions have led administration officials to conclude, at least for now, that the only viable path is to press Republicans to abandon their demands to extract policy concessions over the debt limit — a position they have publicly reaffirmed in recent weeks. The Biden administration is focused on pressing the GOP to unveil a debt limit plan that includes spending cuts, with the hope that such a proposal will prove so divisive among Republicans that they are forced to abandon brinkmanship. This strategy stems in part from the belief among White House officials that it would be enormously risky either to negotiate policy with the GOP on the debt limit or try to solve it via executive order — and they appear willing to put that premise to the test.

President Biden says he and Kevin McCarthy are “going to have a little discussion” on the debt ceiling. Should be fun. I assume the President will tell the Speaker that whatever damage he does to the economy will be hung around his neck.

8 thoughts on “Debt Ceiling Blues

  1. "Debt Ceiling Blues."

    Wasn't that the title of a great song by 'Derek and the Dominos,' with Eric Clapton playing guitar and singing?

    What?

    Oh.

    I'm being told the song by Derek and the Dominos, was " Bell-bottom Blues."

    My apologies, folks…

  2. The term often used for this kind of brinksmanship, is "playing a game of chicken."

    That needs to be changed to "playing a game of 'stupid.'"

    To play "chicken" with cars, is 'stupid'!

    To play "chicken" with our (and maybe the world's) economy, is 'stupid'!

    'Stupider', actually!!!

    Because with cars, only a few people may get hurt, or die.

    But with today's interconnected economies, potentially millions of people may get hurt, or die due to our equally stupid procedure needed to raise our debt ceiling.

    Billions of people, even!

    And as to said stupid debt ceiling issue, the Good Ol' Boys of the GQP's "He Man Woman Haters Club (No Gurlz Allowed), are like teenage boys who want to demonstrate their high testosterone levels by playing chicken with cars, or with whatever else is at hand (pun kinda intended).

    So essentially, here's what all of all of this debt ceiling bullshit comes down to:  "Whose Manlier?  (AKA: "Whose Dick Is Bigger?").

    All of these KKKonservative MAGATs, like their demi-god, tRUMP, always need to prove how "manly" they are – how much they veritably OOZE "machismo"!

    In short:  " The KKKonservative Inferiority KKKomplex KKKrew" is always trying to prove that their hands are not small.  THEY'RE HUGE!!!

    The world's economy might swirl down the toilet.

    And it's all because RepubliKKKLAN men have small peckers.

    They feel inadequate, the poor dears…

  3. Oy!

    I used a bad word, and so my comment's twit-filtered.

    I'm such a twit…

    HEY!

    You don't have to agree with me, ya know?!?

  4. An option entirely within Biden's authority not subject to review by the USSC…

    https://en.wikipedia.org/wiki/Trillion-dollar_coin

    There's politics and strategy here. The GOP is demolishing its credibility with the segment of voters they will need in 2024. I understand the temptation not to get in the way of the self-immolation of the GOP but a lot of others may get burned.

    Second, if Biden takes away the debt ceiling, especially too soon, the GOP will pivot to a 'regular' budget showdown with a federal government shutdown. The objective needs to be for the GOP to take the max level of public punishment for the debt ceiling crisis before you transition to the next GOP-created crisis.  You want the public to be fed up with the BS before they start the government shutdown. Taking the first crisis away too soon means the GOP hasn't even started to perceive a ground-swell of resentment from voters, many of whom haven't yet tuned in.

    Last, Biden needs to have a populist plan ready to go after the debt-ceiling. It needs to be based on closing the gap between revenue and expenses by raising taxes ONLY on people earning over a half-million (or so) It should lower corporate taxes slightly but completely eliminate tax loopholes. And the plan needs to go after offshore money and tax cheats – absolutely NOT the regular wage earner who has no intention of cheating and little opportunity anyway. Make it totally clear who the GOP is working for and protecting! Again, this is AFTER the debt ceiling and as we enter the budget process. HAMMER that the Democrats stand ready to close the gap between revenue and spending but NOT by stripping seniors of benefits or health care and not by taking food out of the mouths of the hungry.

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  5. On this planet, only Denmark and the United States have "debt ceilings".  It is an artificial construct created by the federal legislature.  From the founding of our country until 1917, there was no "debt ceiling" law but the Congress had to vote to approve every bond issue.

    In 1917, in order to pay for WWI spending, Congress created the "debt ceiling" as a way to bypass voting on every bond issue.  For decades, the debt ceiling was not a real contentious issue.  In 1970, the Congress passed a law automatically tying the debt ceiling to the federal budget – the "Gebhardt" rule.  Kudos to Missouri for that. 

    In 1995, Newt's "burn down the barn brigade" insisted on eliminating the Gebhardt rule and the senate went along with it and Billy Bob Clinton signed it into law.  Since then, the "debt ceiling" becomes the center of the political universe whenever there is a Democratic President and a republican controlled House.  Hopefully, Biden and the Democratic leaders have learned from that lesson that giving in to radical House republicans leads to worse in the future.

    Krugman is probably right about what the Dems need to do although it may be one hell of a price for our country and the world to pay.  Long term the "debt ceiling" needs to go away or go back to the Gebhardt Rule.  If not, the country will be wallowing in this pig trough again and again in the future.

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  6. Such duplicity and foolishness on the part of the republicans.  If they paid taxes fairly and honestly our national debt would be half of what it currently is.  Libertarians are the worst.  The first Libertarians I ever saw were at the main Kansas City post office at 11:00 PM on April 15th about 50 years ago when mailing my tax returns.  A small group was assembled there protesting the income tax.  Later I noticed that conservative publications routinely ran advertisements on schemes to not pay taxes.  It was many years later that I ran into a couple of rabid tax dodgers with a torrent of anti-tax information delivered in evangelical fashion.  The zeal must come from finding converts to validate their trip down the rabbit hole they inhabited.  Most had a gold bug angle to their diatribes.  

    Like a bunch of freeloaders, though, they still though they should be able to run the country they did not fund.  Quite the irony.    To them I have nothing to say but shut up and pay up.

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  7. “This would have huge political risks, and who knows if the nutjob Supreme Court would uphold [the 14th Amendment]” 

    Based on Dobbs (also known as Dred Scott on steroids), we already know most of SCOTUS does not acknowledge 14A. I guess the Founding Fathers didn’t have that in the original Bill of Rights. I doubt they accept the 13th or 19th either. Why should they? They can’t easily be fired.

    That said, I vote NO NEGOTIATIONS with budget terrorists. They’ll cave.

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