I'm a big fan of the trillion dollar coin, or anything else that could let Obama completely ignore the debt ceiling. Hopefully at least one such approach is legally valid.
Obama made it pretty clear that the trillion dollar coin was not going to happen and he cited legal reasons. Namely that if one gets minted no one will be able to buy it because there will be a legal challenge tied to it. By no one I mean entities with enough money to buy it, including the Fed.
The truckers were trolling. They're not going to DC.
You say that like they weren't absolutely serious right up until push came to shove, and it was clear that their grand vision of being greeted as Randian heroes wasn't going to happen. Let's not forget, they've been absolutely serious since at least September 30, they've been threatening to pull senators and congressmen out in cuffs and try them before citizen grand juries - Not the first time we've seen that happen to people, but back in the day, they called it a lynch mob - and have been sending lists of demands not only to the media, but to politicians too, with the implicit threat that noncompliance means facing the lynch mob.
So much for the old libertarian Non-Aggression principle, eh?
Not only that, they have they previously been taking donations, they're still fucking taking donations. They wern't trolling. They're using the word trolling to try and cover up the fact that they're one of two things - libertarian cowards who can't stand behind what they say when push comes to shove, or Libertarian scam artists, who always intended to take the money and run.
Obama made it pretty clear that the trillion dollar coin was not going to happen and he cited legal reasons. Namely that if one gets minted no one will be able to buy it because there will be a legal challenge tied to it. By no one I mean entities with enough money to buy it, including the Fed.
The Fed would credit the Treasury's account for the amount, the Fed doesn't "buy" the coin. The coin itself would be legal tender.
While the Fed wouldn't be happy about such a resolution, I doubt the Fed would want to be responsible for keeping a default going in such a scenario.
The reason Obama/WH publicly downplays the idea, is to not give the GOP an out, and of course, give them an excuse for another impeachment drama.
They're also constrained by the economic effects of suddenly adding $1 trillion to the money supply.
In all fairness though, while most of our recent money creation is sitting idle in bank reserves, we've gone from $800B to $3.6T since just late 2008. That is the kind of thing that makes your jaw drop when you see it on a graph, even though it hasn't had much affect on our day-to-day lives other than banks feeling more secure and helping to ease out of recession.
They're also constrained by the economic effects of suddenly adding $1 trillion to the money supply.
Compared to the effects of breaching the debt ceiling that stuff is laughable.
First of all, that $1T doesn't do anything until the Treasury spends it. Since that spending would normally happen anyway, the actual difference between the two situations is the absence of bond sales.
As such, the effects are gradual rather than sudden, and, moreover, given that interest rates are already really low, bond sales aren't really a big deal right now.
Moreover, raising the debt ceiling would no longer be about spending, since that spending would happen anyway - that kinda destroys part of the Republicans' rationale for preventing it from going up.
That said, the American people may not understand this point; but even if the Republicans use scare tactics against such strategies they can't justify their approach of not raising the debt ceiling because it wouldn't be about spending anymore; by not raising it later down the line, if interest rates were higher, all they would be doing is encouraging inflation.
At this point I don't expect anything to happen until after the debt limit deadline. I'm thinking 2:30 in the morning? And that's probably the best scenario at this point.
The main question w.r.t the 1T coin is legality; if available it's clearly a superior approach to simply going quietly over the ceiling.
Clearly it would be better if the Republicans dropped their threats, so any debt ceiling avoidance strategies are better kept quiet until the debt ceiling is actually exceeded.
However, regardless of the circumstances, it is essential that the Democrats not compromise even an inch in response to the Republicans' threats. The tactics they are using need to be off the table for the foreseeable future.
I mean it - absolutely no compromise. The debt ceiling needs to be raised with no strings attached.
If the Democrats compromise, it's all over. Such an event presents a crisis of governance close in scale to the troubles of the 1850s-60s. It would be the most significant political turning point in generations.
Yeah... The GOP line appears to be, "we only default if we miss interest payments on the debt." While I think Obama's 'household monthly bill' analogy is going over most people's heads.
While mortgage and credit card bills are analogous (money has already been borrowed/spent and must be paid back) most household bills going forward can be lowered (phone, cable, electricity) by cutting the amount being used or ditching the item all together. So in a way what he is using as an analogy to oppose the shutdown can actually be used by the GOP to support their position of reducing government spending.
The hard part for the GOP will be defining which items are cable (luxory), which items are essential but can be cut back (phone, electricity).
The debt ceiling is bullshit and each budget should include an 'elastic' increase in the debt ceiling to cover the cost of the budget. Or better yet each budget of $X should include a sale of $X in bonds and then ALL tax receipts go straight to paying off the debt incurred by the just passed budget. Any remaining debt at the end of the budget gets autatically converted into a debt limit increase. Any surplus would likewise be used to lower the debt ceiling.
Or the GOP could be really crafty and propose and end to the debt ceiling in exchange for a cap on budgets as a percent of GDP. It appears to me that their long term goal in the budget battle is to limit spending as a percentage of GDP so rather than use the debt ceiling as a club why not replace it with what they want?
The debt ceiling is bullshit and each budget should include an 'elastic' increase in the debt ceiling to cover the cost of the budget. Or better yet each budget of $X should include a sale of $X in bonds and then ALL tax receipts go straight to paying off the debt incurred by the just passed budget. Any remaining debt at the end of the budget gets autatically converted into a debt limit increase. Any surplus would likewise be used to lower the debt ceiling.
If we're talking about "shoulds", there simply shouldn't be a debt ceiling at all.
Also, the Treasury should simply be able to spend however much it wants to without needing to issue bonds; the issuing and management of bonds should be under the control of the Federal reserve and be based on genuinely important economic considerations (i.e. unemployment, growth, and inflation) rather than debt-related scare tactics.
Or the GOP could be really crafty and propose and end to the debt ceiling in exchange for a cap on budgets as a percent of GDP. It appears to me that their long term goal in the budget battle is to limit spending as a percentage of GDP so rather than use the debt ceiling as a club why not replace it with what they want?
That would be OK as long as it allows leeway - how much spending is acceptable depends on the economic circumstances.
Most critically, in a depression, not only does the GDP go down (which would cause you budget, but government spending is more necessary than ever. As such, in order to make any sense, a spending cap would have to be business-cycle aware - it would either have to change depending on the status, or (likely better) it would apply to running multi-year periods, e.g. 10 years, so that the government would be able to spend more in some years as long as it spends less in others to make up for it.
They want yelling points. Solving the problem would get rid of the manufactured outrage their base thrives on. They need an Emmanuel Goldstein against whom to do a daily 10-minutes hate.
Or the GOP could be really crafty and propose and end to the debt ceiling in exchange for a cap on budgets as a percent of GDP. It appears to me that their long term goal in the budget battle is to limit spending as a percentage of GDP so rather than use the debt ceiling as a club why not replace it with what they want?
You're making the assumption that we are talking about rational players on the R side. I simply don't believe that's the case. This is a base that has been spoon-fed that Obama and his policies will destroy America. The GOP can't put the crazy genie back in the bottle.
Leeway is always there. What government passes government can also change or repeal.
Unless the GOP tried to pass a budget limit amendment any later congress could change the budget limit law to account for acceptable leeway. Or the law could be written such a way that a supermajority of the legislature can pass budgetary addendums above the GDP cap.
So in good times there would be X% of GDP budget cap but if shit hits the fan a super majority of the legislature can pass an 'extra' appropriations bill to cover something unexpected. Said bill could also be required to pay for itself with some new revenue stream.
This could also have the unintended consequence of limiting our tendency to send troops all over the world because the spending required to go to war would have to be approved by a supermajority and declare its source of funding.
The purpose of the government imposing laws on itself that it can easily later repeal is about biases and incentives. The idea is for the government to trick itself into good policy, whereas a hard limit on government spending is, quite clearly, bad policy.
Having a fixed limit on spending creates an unreasonable bias towards not spending enough at times when it's important. This is especially an issue when it's clear that Republicans are wont to complain about spending even when it's important and beneficial. Consequently, I don't see much good reason to create further biases against crisis spending.
It would be much more intelligent to make policy that takes cyclic behaviours into account in advance, hence restricting spending based on something like a running 10-year average is clearly a superior approach.
Also, one big issue with having nominal limits on spending (which Republicans care about but only if it's on things they don't like, like healthcare) rather than on deficits (which Republicans pretend to care about but don't) is that it creates a strong incentive to leave spending at the limit while lowering taxes very far.
I'm not entirely opposed to this - taxes are bad, and current economic circumstances suggest they're probably too high as is, although I think the distribution of the tax burden is a bigger and more important issue as far as taxation is concerned.
However, if taxes kept being lowered I'm sure you would run into real trouble relatively quickly.
If the Democrats compromise, it's all over. Such an event presents a crisis of governance close in scale to the troubles of the 1850s-60s. It would be the most significant political turning point in generations.
John Boehner is a terrorist. The Tea Party has done more damage to America than any foreign organization.
Or the GOP could be really crafty and propose and end to the debt ceiling in exchange for a cap on budgets as a percent of GDP. It appears to me that their long term goal in the budget battle is to limit spending as a percentage of GDP so rather than use the debt ceiling as a club why not replace it with what they want?
You're making the assumption that we are talking about rational players on the R side. I simply don't believe that's the case. This is a base that has been spoon-fed that Obama and his policies will destroy America. The GOP can't put the crazy genie back in the bottle.
There are rational players in the Republican party. The problem the party has right now is that the same gerrymandering that has protected their house seats from democrats has also made them more susceptible to attacks from the far right. The far right is small in numbers but they are a very vocal minority with lots of money.
So yes, rational people are there but those same rational people are worried that if they act rational or cross party lines they will be replaced in the next election by crazy people!
Democrats can sit back and point fingers at the crazy TP people in the House but what is often overlooked is that the Republicans are more afraid of the TP than Democrats are.
OK, so they're rational but only in an Ayn Rand kind of way - their choices are entirely about self-interest rather than the good of the country. From the perspective of what's good for the country, which is what elected officials *should* be worrying about, they're clearly irrational.
OK, so they're rational but only in an Ayn Rand kind of way - their choices are entirely about self-interest rather than the good of the country. From the perspective of what's good for the country, which is what elected officials *should* be worrying about, they're clearly irrational.
For the good of the country or for the good of their districts?
A member of Congress from Montana is not the same as a member of Congress from FL. They both have different goals, goals that are influenced by the people they represent.
While no member of Congress should actively do things to hurt the country as a whole. What one district sees as a good for the country another district may see as a bad.
Joe Lieberman sure as fuck never represented me. He represented corporate interests through and through, but pandered enough to Connecticut pseudo-liberals that he kept getting voted back in. He also torpedoed the public option out of the ACA.
I'm not sure you can underestimate the degree to which Congressmen represent their districts at this point. At least the PEOPLE in their districts.
Comments
So much for the old libertarian Non-Aggression principle, eh?
Not only that, they have they previously been taking donations, they're still fucking taking donations. They wern't trolling. They're using the word trolling to try and cover up the fact that they're one of two things - libertarian cowards who can't stand behind what they say when push comes to shove, or Libertarian scam artists, who always intended to take the money and run.
While the Fed wouldn't be happy about such a resolution, I doubt the Fed would want to be responsible for keeping a default going in such a scenario.
The reason Obama/WH publicly downplays the idea, is to not give the GOP an out, and of course, give them an excuse for another impeachment drama.
First of all, that $1T doesn't do anything until the Treasury spends it. Since that spending would normally happen anyway, the actual difference between the two situations is the absence of bond sales.
As such, the effects are gradual rather than sudden, and, moreover, given that interest rates are already really low, bond sales aren't really a big deal right now.
Moreover, raising the debt ceiling would no longer be about spending, since that spending would happen anyway - that kinda destroys part of the Republicans' rationale for preventing it from going up.
That said, the American people may not understand this point; but even if the Republicans use scare tactics against such strategies they can't justify their approach of not raising the debt ceiling because it wouldn't be about spending anymore; by not raising it later down the line, if interest rates were higher, all they would be doing is encouraging inflation.
Oh yeah, now the GOP line is that default wouldn't be so bad: http://www.nytimes.com/2013/10/09/us/politics/many-in-gop-offer-theory-default-wouldnt-be-that-bad.html?hp&_r=1&;
Clearly it would be better if the Republicans dropped their threats, so any debt ceiling avoidance strategies are better kept quiet until the debt ceiling is actually exceeded.
However, regardless of the circumstances, it is essential that the Democrats not compromise even an inch in response to the Republicans' threats. The tactics they are using need to be off the table for the foreseeable future.
I mean it - absolutely no compromise. The debt ceiling needs to be raised with no strings attached.
While mortgage and credit card bills are analogous (money has already been borrowed/spent and must be paid back) most household bills going forward can be lowered (phone, cable, electricity) by cutting the amount being used or ditching the item all together. So in a way what he is using as an analogy to oppose the shutdown can actually be used by the GOP to support their position of reducing government spending.
The hard part for the GOP will be defining which items are cable (luxory), which items are essential but can be cut back (phone, electricity).
The debt ceiling is bullshit and each budget should include an 'elastic' increase in the debt ceiling to cover the cost of the budget. Or better yet each budget of $X should include a sale of $X in bonds and then ALL tax receipts go straight to paying off the debt incurred by the just passed budget. Any remaining debt at the end of the budget gets autatically converted into a debt limit increase. Any surplus would likewise be used to lower the debt ceiling.
Also, the Treasury should simply be able to spend however much it wants to without needing to issue bonds; the issuing and management of bonds should be under the control of the Federal reserve and be based on genuinely important economic considerations (i.e. unemployment, growth, and inflation) rather than debt-related scare tactics. That would be OK as long as it allows leeway - how much spending is acceptable depends on the economic circumstances.
Most critically, in a depression, not only does the GDP go down (which would cause you budget, but government spending is more necessary than ever. As such, in order to make any sense, a spending cap would have to be business-cycle aware - it would either have to change depending on the status, or (likely better) it would apply to running multi-year periods, e.g. 10 years, so that the government would be able to spend more in some years as long as it spends less in others to make up for it.
They want yelling points. Solving the problem would get rid of the manufactured outrage their base thrives on. They need an Emmanuel Goldstein against whom to do a daily 10-minutes hate.
Unless the GOP tried to pass a budget limit amendment any later congress could change the budget limit law to account for acceptable leeway. Or the law could be written such a way that a supermajority of the legislature can pass budgetary addendums above the GDP cap.
So in good times there would be X% of GDP budget cap but if shit hits the fan a super majority of the legislature can pass an 'extra' appropriations bill to cover something unexpected. Said bill could also be required to pay for itself with some new revenue stream.
This could also have the unintended consequence of limiting our tendency to send troops all over the world because the spending required to go to war would have to be approved by a supermajority and declare its source of funding.
Having a fixed limit on spending creates an unreasonable bias towards not spending enough at times when it's important. This is especially an issue when it's clear that Republicans are wont to complain about spending even when it's important and beneficial. Consequently, I don't see much good reason to create further biases against crisis spending.
It would be much more intelligent to make policy that takes cyclic behaviours into account in advance, hence restricting spending based on something like a running 10-year average is clearly a superior approach.
Also, one big issue with having nominal limits on spending (which Republicans care about but only if it's on things they don't like, like healthcare) rather than on deficits (which Republicans pretend to care about but don't) is that it creates a strong incentive to leave spending at the limit while lowering taxes very far.
I'm not entirely opposed to this - taxes are bad, and current economic circumstances suggest they're probably too high as is, although I think the distribution of the tax burden is a bigger and more important issue as far as taxation is concerned.
However, if taxes kept being lowered I'm sure you would run into real trouble relatively quickly.
So yes, rational people are there but those same rational people are worried that if they act rational or cross party lines they will be replaced in the next election by crazy people!
Democrats can sit back and point fingers at the crazy TP people in the House but what is often overlooked is that the Republicans are more afraid of the TP than Democrats are.
A member of Congress from Montana is not the same as a member of Congress from FL. They both have different goals, goals that are influenced by the people they represent.
While no member of Congress should actively do things to hurt the country as a whole. What one district sees as a good for the country another district may see as a bad.
I'm not sure you can underestimate the degree to which Congressmen represent their districts at this point. At least the PEOPLE in their districts.