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Two Points On the Gentle Fiscal Incline

[ 95 ] December 12, 2012 |
  • I suspect both Chait and Suderman are overestimating the political impact of raising the Medicare eligibility age.   But if we’re talking about direction rather than intensity, I think Suderman has a better case and (from my perspective) this is bad.   Doing this would do more to undermine support for Medicare than it would to strengthen the PPACA, particularly since the people negatively affected are more likely to live in states where support for Obama is lowest.   To reiterate, this would be a horrible idea and nothing the Republicans could plausibly offer would justify it.  Fortunately, the fact that both Nancy Pelosi and Neera Tanden came out in explicit opposition this weekend makes it highly unlikely that the Obama administration supports it.
  • This is a good start:

    Whatever House Republicans might think, the White House is all steel when it comes to the debt ceiling. Their position is simple, and it’s typically delivered in the tone of voice that Bruce Willis reserves for talking to terrorists: They’re happy to raise the debt ceiling on their own, as would be the case under their proposal to take authority for the debt ceiling away from Congress. But if Congress rejects that offer, then the debt ceiling is Congress’s problem, and the White House will not help.

    A good start, but not far enough. In the event that the GOP shoots the hostage, the Obama administration needs to make it clear that it will use its authority under the 14th Amendment to prevent the United States from defaulting, putting further pressure on Congress. Should the GOP refuse at that point to call the ambulance, we can talk about more radical solutions.  (Although probably not realistic, I like the “I.O.Us to Republican zip codes” solution.)

Comments (95)

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  1. liberal says:

    OT: is there a general policitical science explanation of all these blue states with Rethuglican governors and/or state legislatures?

    I started thinking of this again when the danger that the Rethugs in PA will decide to split their electoral votes in future elections.

    • Hogan says:

      Off-year election turnout and aggressive redistricting after the last two censi come to mind.

      For roughly the last forty years PA has alternated between Republican and Democratic governors, each elected to two terms.

    • Murc says:

      is there a general policitical science explanation of all these blue states with Rethuglican governors and/or state legislatures?

      This isn’t really complicated. It’s a combination of incumbent fatigue, the fact that a lot of people vote the person, not the party, and bad candidates.

      For example; I live in New York. We had a Republican Governor for twelve years recently, three whole terms, because 1) people were sick and fucking fed up with Mario Cuomo’s general douchebaggery, and 2) the Democratic Party kept throwing weak-ass nonentities at him. Coupled with the fact that Pataki was a decent, not stellar, but decent politicians, and despite NYS being super-blue it is no surprise he retained office for a long time.

      Other states have different dynamics, of course.

  2. thusbloggedanderson says:

    The 14th-Amendment theory is both uncertain and unnecessary. I’m with Jack Balkin here:

    the proper course for the president is simple. He should make clear that his first obligation under section 4 of the 14th amendment is to make sure that the validity of the public debt is not put into question. That means continuing to pay bondholders (and holders of other similar federal obligations already undertaken) even after the debt ceiling is reached. This will inevitably lead to a partial government shutdown, with more and more government functions shut down as time goes on. Such a shutdown will lead to a replay of the events in the winter of 1995 during the Clinton Administration. The Republican leadership in Congress will properly get the blame for putting the country in this situation.

    If the president makes his position on the debt ceiling clear in advance, the Republicans will realize that if they are intransigent all they will succeed in doing is shutting down the government– which will be wildly unpopular. Knowing this, they will also recognize that they cannot use the debt ceiling as a regular instrument of politics. Of course, preventing this sort of tactic is the original purpose of section 4 of the Fourteenth Amendment.

    Obama needs to have as much spine as Clinton did during the shutdown in 1995.

    • Scott Lemieux says:

      The Jack Balkin article I linked to, you mean?

    • Murc says:

      Actually, we should clarify terms here.

      It was pretty clear to me (but I’ve been wrong before) that when Scott referred to the President using his authority under the 14th amendment to stop defaulting, he meant it in a narrow sense; that the government wouldn’t default on its debt obligations.

      There are those arguing that under the 14th Amendment, the President can issue any debt he wants unilaterally in order to fund any spending already approved by Congress, i.e that the debt ceiling itself is entirely unconstitutional. I find this… dubious, at best, but I don’t think Scott was arguing for it.

      • thusbloggedanderson says:

        Yeah, I see now that Scott meant the narrow sense, but I took it the other way.

      • Scott Lemieux says:

        Yes.

      • “There are those arguing that under the 14th Amendment, the President can issue any debt he wants unilaterally in order to fund any spending already approved by Congress, i.e that the debt ceiling itself is entirely unconstitutional. I find this… dubious, at best, but I don’t think Scott was arguing for it.”

        I don’t know about un-Constitutional, but it clearly represents a catch-22. Either the President ignores the debt ceiling, or he fails to allocate legally appropriated funds. As far as legal chicken goes, I doubt there’s much of a risk to ignoring the debt ceiling altogether, if only because it would put Republicans in the position of forcefully arguing for a government shut down.

        Alternatively, I think the legal theory would be best articulated by Yglesias: that Congress passes a de facto debt ceiling increase when they legislate a budget that requires more borrowing.

        • Glenn says:

          Just to note, re “failure to allocate legally appropriated funds,” the appropriations bills actually say, “That the following sums are appropriated, out of any money in the Treasury not otherwise appropriated…” If no money in the Treasury, then clearly the President isn’t failing to follow Congress’ appropriations directions. Also, I think that might be the answer to Yglesias’ argument, since in fact Congress only directs spending to the extent there’s money available; it’s the authorization of debt that puts the money in the Treasury to appropriate.

          • But unless I’m missing something, the executive would still have to decide which money to appropriate before the money ran out. In any case, the politics here are golden, since the only way for the Republican House to do anything about it would be pursue action in courts in which they more or less had to affirmatively argue for at least a partial government shutdown.

  3. tonycpsu says:

    I think the multi-trillion dollar platinum coin seigniorage solution is better than invoking the 14th, because it relies on a very wide-open loophole in an existing law (which Obama veto veto any attempts to close) instead of something that would end up in a constitutional crisis type situation adjudicated by a SCOTUS that probably wouldn’t be friendly to Obama’s use of the 14th.

    • Malaclypse says:

      Even beyond the constitutional issues with the 14th Amendment thing, if you were an institutional investor, would you buy a 14A bond at the same rate as a pre-14A bond, knowing that SCOTUS might declare the bond valueless?

    • Murc says:

      nstead of something that would end up in a constitutional crisis type situation adjudicated by a SCOTUS that probably wouldn’t be friendly to Obama’s use of the 14th.

      … why would they be?

      The 14th amendment is pretty clear about the debt of the United States being unquestionable, AND the current Supremes have among their number several corporate whores who are more than willing to stick up for the rights of bondholders. If Obama issues rolling debt under the 14th amendment in order to satisfy governmental debt obligations, why wouldn’t they approve of it?

      Now, that’s limited to debt obligations, of course. If he just tries to unilaterally fund the government, you are indeed correct they’d likely take a dim view of that.

      • tonycpsu says:

        If Obama issues rolling debt under the 14th amendment in order to satisfy governmental debt obligations, why wouldn’t they approve of it?

        It’s my view that the court as presently-constituted would place the Republican partisan concern of screwing Obama above even their love of corporate whores and bondholder. Kennedy’s the wild card, of course, and Scott is in a better position to game this out than I am, but I would not take the chance on the option that’s more likely to end up in the Roberts court.

        • Murc says:

          If this were true, wouldn’t they have gutted the ACA when they had the chance?

          • tonycpsu says:

            Yeah, I almost added “Robert’s PPACA heresy notwithstanding” but left it out because I don’t think we know enough about why Roberts did what he did. There’s that theory about a rift between him and the conservative wing, there’s the idea that he did it to burnish his “I just call balls and strikes” image, there’s the possibility that it gives him a way to attack the commerce clause later… Without knowing these things, it’s hard to say whether his vote was really in tension with Republican partisan interests in the medium to long term. But your point is well taken that allowing it to pass obviously did give Obama some short-term political advantage.

    • Both the trillion dollar coin and the novel “14th Amendment option” remind me of alchemy. People think that if they can combine this verbiage and that law cleverly enough, they can create some new substance and make an end run around established law, practice, and political reality.

      • Murc says:

        I am inherently sympathetic to using the law-as-written to do weird shit, but in this situation there are other options before we even GET to the weird shit.

        Monetizing our debt, for example. That’s not entirely kosher but it’s way more of a realistic option than either the trillion dollar coin or the ‘debt ceiling is unconstitutional’ scenarios.

        • Malaclypse says:

          Monetizing our debt, for example.

          Except, trillion-dollar-coin aside, the money supply is controlled by the Fed, not the government.

        • UserGoogol says:

          Well, in an accounting identities sort of sense, a trillion dollar coin is equivalent to monetizing the debt. Instead of the Federal Reserve directly buying bonds, they would “buy” a coin which is officially legal tender. It just has to use a rather silly loophole to get it to be legal tender.

      • tonycpsu says:

        <

        People think that if they can combine this verbiage and that law cleverly enough, they can create some new substance and make an end run around established law

        Platinum coin seigniorage is explicitly codified into law, so it would not represent and end run around established law.

        practice

        The practice was never to hold the country and world economy hostage in debt ceiling negotiations. Desperate times call for desperate measures.

        political reality

        The political reality is that the public doesn’t support entitlement cuts, doesn’t care about the deficit, and wants taxes to go up on high earners. Obama has a veto pen, and would be able to stop any attempt to close the loophole that very clearly states Treasury’s authority to mint platinum coins of any denomination. Where are the political reality constraints in this equatino?

        • thusbloggedanderson says:

          Yah, “established practice” is pretty much out the window.

          I think the $1T coins would work in practice and be upheld if challenged legally; but this is politics, and I don’t know how the optics would work. Whereas the shutdown seems more likely to go Obama’s way. I could be wrong.

        • The Supreme Court.

          The markets.

          The blowback that would come in other political fights.

          Cleverly putting together an explanation of how it is technically possible without explicitly violating a law, like pointing out the lack of formal veto points, does not address the issue of political reality.

          • tonycpsu says:

            The Supreme Court.

            On what grounds would someone bring a case to SCOTUS? What constitutional law does the $1T platinum coin loophole violate?

            The markets.

            And the markets will react cheerfully to any other available options?

            The blowback that would come in other political fights.

            Yes, because if there’s one thing we’ve learned, it’s that Democrats are rewarded with future political capital when they compromise with Republicans.

            You’ve completely failed to show that this is less politically viable than any other options available.

            • On what grounds would someone bring a case to SCOTUS?

              I was thinking more about the “14th Amendment option” there.

              And the markets will react cheerfully to any other available options?

              Did I say that? Or are you falling victim to the “It can’t be worse” fallacy?

              Yes, because if there’s one thing we’ve learned, it’s that Democrats are rewarded with future political capital when they compromise with Republicans.

              I see it’s “Option 2″ above. I also see you’re still stuck in the rut of thinking that the Democratic and Republican parties are the only factors in American politics.

              You’ve completely failed to show that this is less politically viable than any other options available.

              1. Says you, with the above-referenced holes in your thinking.

              2. The burden of proof always falls on the guy claiming YOU CAN EAT WHATEVER YOU WANT AND STILL LOSE WAIT.

              • tonycpsu says:

                YOU CAN EAT WHATEVER YOU WANT AND STILL LOSE WAIT.

                Weight, what?

                (Sorry, couldn’t resist.)

                Since you seem to be acknowledging that that the platinum coin option probably passes constitutional muster, let’s focus on TEH MARKETS and the size of the political blowback.

                The political norms have always been such that Congress extends the debt ceiling with little fuss. Some in the minority vote against it symbolically, but never in large enough to seriously threaten default. At least not until 2011, when US debt was downgraded, not because the ratings agency didn’t like anything about the fundamentals of the US economy, but because the political dysfunction was leading to a situation where the US had a greater-than-negligible default risk.

                Given this history, which do you think sends a better signal to TEH MARKETS in this situation: the executive branch finds a creative way to keep paying its bills to avoid default, or the executive branch agrees to savage austerity in order to save the hostage? Nevermind the impact of the austerity itself — our credit downgrade was specifically about the dysfunction of hostage-taking as standard procedure, but finding an end-around the hostage-taking will cause a negative reaction in the markets? Does not compute.

                In terms of political blowback: yes, the Democrats and Republicans are the only entities that matter in this discussion. Name another political entity that matters, given that there are no constitutionality problems.

                • Right: if you think the markets are going to be more freaked out by a President resorting to any mechanism at hand to make sure the U.S. government pays all of its bills than by the opposition party using the debt ceiling as a perpetual political weapon, you’ve pretty much lost track of what rabbit hole you’re in.

          • Well if the world were rainbows and bunny farts that would be great. Given a crisis, however, you fight with whatever tools are available to you, and it doesn’t even seem controversial from my vantage point that the President would have the nominal authority to do this. I believe it was Yglesias who recently observed that FDR used some pretty nimble legal gymnastics to take the U.S. off of the gold standard. Perhaps that wasn’t kosher, and financiers certainly hated it, but it was also absolutely necessary to ending the Depression. Desperate times and all that.

            • We aren’t in a depression.

              Nor do we want to be.

              Neither you nor anyone else can tell me what the long-terms consequences of such a dodgy stunt would be, and you don’t want to be experimenting on a highwire unless you are in circumstances as serious as those FDR was facing.

              • Well, obviously, you wouldn’t be “experimenting” until after Republicans declined to raise the debt ceiling so I don’t know what it is you find so objectionable about it.

        • The whole mode of thought stinks of free-lunch-ism, and it is always the person making the claim that you can EAT WHATEVER YOU WANT AND STILL LOSE WEIGHT!!! will always have the burden of proof.

          • njorl says:

            I think that there would be consequences to using such a ploy. However, there are also consequences to shutting down the government, and consequences to giving in to extortion. I want Republicans to believe that Obama will order the minting of these platinum coins if they go to far. Hell, I want him to have a mock up of one of these coins in his pocket while he is negotiating so he can pull it out and shove it in Boehner’s face at an opportune moment.

            And it should have Reagan’s face on the front and the pentagon on the back.

            • NonyNony says:

              And it should have Reagan’s face on the front

              If they were to ever take the approach of minting a trillion dollar coin, this is exactly who needs to be on the face.

              Not only would it be hilarious to watch Republicans denounce the minting of the Reagan Coin, it would also serve as a nice in-joke reminder of who exactly got us so much of the debt we’re dealing with in the first place.

              (I’d say put GWB’s face on it, but only if I thought it would help them ignore its existence altogether. I don’t think that particular aspect of W would carry over to a platinum coin though.)

          • ” EAT WHATEVER YOU WANT AND STILL LOSE WEIGHT!!! will always have the burden of proof.”

            Um, I’m not sure how this affects your metaphor, but you actually can eat whatever you want to and lose weight. All you have to do is be sure to consume fewer calories than you burn off over a given time period. So…yeah.

          • tonycpsu says:

            You’re guilty of the tunnel vision you’re accusing others of in assuming that other courses of action (or doing nothing) will have no political blowback, will not impact TEH MARKETS negatively, etc. We don’t have the luxury of a world without GOP nihilists who will burn this fucker down for a 5% drop in Obama’s approval rating.

          • thusbloggedanderson says:

            It’s just printing money, pure & simple. We know the pros and cons of that – it’s not like it hasn’t been done before.

    • Daniel says:

      In addition, the existence of a trillion dollar platinum coin would inevitably lead to dozens of awesome heist movies, so it’s clearly the preferable option.

      • Stan Gable says:

        Dunno, I see a Goldfinger-esque heist scene followed by a re-enactment of the money laundering scene in Office Space.

      • janastas359 says:

        I can’t be the only person reminded of the Simpsons episode where the US printed a trillion dollar bill that was stolen by Mr. Burns.

        “Our wealthiest, and therefore most trustworthy citizen”

  4. Mike D. says:

    Far from bolstering support for ACA, mightn’t this change undermine it? Does anyone claim that the benefits of ACA rival the benefits of Medicare eligibility? if the creator of Obamacare itself signs off on a reduction in Medicare eligibility that is premised on the notion of ACA being a satisfactory replacement, won’t the experience of the shortfall in comprehensiveness and cost control likely sour the reception of ACA among a critical constituency (i.e. higher-medical-needs older adults who are in any case on the cusp of full enrollment in government-supported if not government-run health coverage systems)?

    I don’t think Chait merely overestimates the magnitude of the political impact re ACA here; I think he possibly completely misreads its direction.

    • Scott Lemieux says:

      That’s entirely possible, I agree.

    • snarkout says:

      I agree, especially because it’s very, very easy to spin as “Obama gutted the Arcadian paradise of Medicare in order to shove you grey-hairs into the purgatory of Obamacare.”

      (On a side note, Lieberman’s backtracking from his own floated idea of allowing 62-year-olds to buy into Medicare during the ACA negotiations — an idea would have produced enormous savings, as well as alleviating real human suffering — continues to make me see red.)

      • Josh G. says:

        I agree, especially because it’s very, very easy to spin as “Obama gutted the Arcadian paradise of Medicare in order to shove you grey-hairs into the purgatory of Obamacare.”

        I don’t think that’s “spin” – it’s actual fact (or would be, if the Democrats were really stupid enough to sign off on a Medicare cut). Obamacare is purgatory, which we were willing to accept as an improvement over the Hell that was unregulated private insurance, but it’s a distinctly second-best choice compared to single payer (Medicare) which was and always should be the progressive ideal. With the PPACA, we got insufficient but real improvements for a large portion of the population and didn’t have to give up anything substantive in return. An incremental advance, but better than nothing. On the other hand, if the price for PPACA had been raising the Medicare age, it wouldn’t have been worth it.

        • “On the other hand, if the price for PPACA had been raising the Medicare age, it wouldn’t have been worth it.”

          That’s probably not true, but it’s certainly not all that relevant either. There’s no good argument for raising the Medicare eligibility age on its own terms, you don’t need to even consider trading that for other goals at the moment, therefore don’t even entertain it.

    • Djur says:

      Considering that the bloody shirt the GOP won on in 2010 was “Obama undermined Medicare in favor of Obamacare”, I think actually undermining Medicare in favor of Obamacare is a terrible political move as well as bad policy.

  5. c u n d gulag says:

    I like the zip code idea.

    Sure, it’ll hurt some Liberals in those areas, but that’s the only way to really make the ones causing the most hurt, and the ones likely to be hurt the most themselves, to feel the pain.

    Besides, it’ll be fun watching S. King, Gohmert, and especially Bachmann scream and whine!!!

  6. Walt says:

    I actually don’t understand how it’s constitutional to shut down parts of the government. The executive doesn’t have the authority to pick and choose which Congressional authorizations to actually spend, right? Why does the President suddenly gain that ability under the debt ceiling?

    • njorl says:

      I believe the law requires the president to submit decisions not to spend money to congress for their approval. It would be interesting to see what congressional Republicans would do with such a request.

      • JKTHs says:

        The President does gain that ability if he chooses to violate the Impoundment Control Act and not violate the debt ceiling. Or he could do the reverse. Either way, there’s no way a law isn’t violated.

        • Josh G. says:

          I think Lincoln said it best: “To state the question more directly, are all the laws, but one, to go unexecuted, and the government itself go to pieces, lest that one law be violated?”

          If Congress refuses to increase the debt ceiling, then it will be literally impossible for President Obama to follow the entirety of federal law. He will have to either violate the debt ceiling, or else he will be unable to spend funds Congress has appropriated for countless other laws – which would break not only those laws but also the Impoundment Control Act. This, more than anything else, is why the debt ceiling is garbage; it forces the President to act illegally no matter what he does. Indeed, I suspect for some Republicans in Congress this may actually be the point; you just know they want badly to impeach him, and now that Benghazi has proven to be a nothingburger, the debt ceiling showdown is as good an excuse as any. (Of course, they still won’t be able to get a conviction in the Senate, so such an attempt would amount to nothing more than political grandstanding.)

    • I actually don’t understand how it’s constitutional to shut down parts of the government.

      The flip side of this is, I don’t understand how it’s constitutional for the Congress to refuse to allocate funds for spending it has ordered the President to engage in.

      Ultimately, it comes down to the Courts saying “It’s a political question.”

      • Murc says:

        The flip side of this is, I don’t understand how it’s constitutional for the Congress to refuse to allocate funds for spending it has ordered the President to engage in.

        There’s no rule that the Constitution has to make sense, unfortunately. Or that the legal framework surrounding it does.

        Basically, it seems like these various obligations are structured around the assumption, not unreasonable, that Congress will either 1) agree to honor the acts of previous Congresses, or 2) legally nullify those acts. I don’t think anyone envisioned a scenario in which Congress refused to do either, because that’s the height of gross irresponsibility. The assumption may have been at that point governance has broken down completely and people would be reaching for guns.

        • “There’s no rule that the Constitution has to make sense, unfortunately. Or that the legal framework surrounding it does.”

          Well, yes there is. There’s certainly a “rule” that mutually exclusive laws can’t exist in the same time and place.

          • Walt says:

            Right, and the usual interpretation is that in case of a contradiction, a new law overrides an old law. I don’t see why that’s not the automatic legal outcome here, rather than the President suddenly developing discretionary authority.

    • Murc says:

      The executive doesn’t have the authority to pick and choose which Congressional authorizations to actually spend, right?

      If you mean formally, no. But the executive actually doesn’t have a lot of formal powers spelled out in the constitution. It’s a short document.

      If Congress tells the President “do all these things, which cost [X] dollars” and then gives him less than [X], it is implied that absent other guidance on the part of Congress, the President may pick and choose what parts of the government don’t get funded.

      As a practical matter, no court in the country would touch that issue with a ten-foot pole (‘political question’) and if the Congress were at the point of impeaching him over something like this they could find other, better reasons.

      • “If Congress tells the President “do all these things, which cost [X] dollars” and then gives him less than [X], it is implied that absent other guidance on the part of Congress, the President may pick and choose what parts of the government don’t get funded.

        As a practical matter, no court in the country would touch that issue with a ten-foot pole (‘political question’) and if the Congress were at the point of impeaching him over something like this they could find other, better reasons.”

        I don’t see how either of these are true. For one thing, I don’t see how SCOTUS avoids ruling on the matter in the event that it becomes an all out Constitutional crisis between the other two branches. Secondly, declaring the debt ceiling to have precedence would be pretty precipitous relative to the alternative. Just imagine a world in which the roles are reversed, and it’s the President who doesn’t want the debt ceiling increased. Does it really follow that a President could just veto the increase in the debt ceiling, then use that veto as a means to claim unilateral power over taking a hatchet to the federal budget?

        Realistically, it seems to me that Obama would have a nearly air tight argument merely on the basis of his authority to faithfully execute the laws of the United States.

        • Murc says:

          For one thing, I don’t see how SCOTUS avoids ruling on the matter in the event that it becomes an all out Constitutional crisis between the other two branches.

          They refuse to hear the case, declaring it a political question.

          The courts, historically, do not intervene in situations like this. They declare it a political question and step back.

          This isn’t even a weird case. If Congress simultaneously refuses to raise the debt limit, refuses to pass a budget that matches the money available, AND takes umbrage with the budgetary triage that the President chooses to undertake, the Courts are, basically, going to say to Congress “You have a ton of options at your disposal to resolve this. There is neither a legal nor a constitutional issue here for us to settle.”

          You’re framing this as a constitutional crisis. It really isn’t; it’s a political one. The only way the Constitution comes into play is if Congress or someone else with standing makes a colorable charge that the President isn’t fulfilling his Constitutional duties, and given the courts extreme reluctance to get involved in those sorts of showdowns…

    • parsimon says:

      The executive doesn’t have the authority to pick and choose which Congressional authorizations to actually spend, right?

      I don’t know. I’d guess that yes, it does. It’s the executive. It executes to the best of its ability, and I’m not sure it needs additional permission to do so once the spending authorization has been passed.

      Huh. Interesting question.

    • thusbloggedanderson says:

      That’s where the 14th Amendment comes in. The president has a *constitutional* duty to pay the debts of the U.S. – he has to put that above garden-variety spending.

  7. NonyNony says:

    In the event that the GOP shoots the hostage, the Obama administration needs to make it clear that it will use its authority under the 14th Amendment to prevent the United States from defaulting, putting further pressure on Congress.

    I’m uncertain by what mechanism this actually puts pressure on Congress, given that the road blocks in Congress are a group of people who believe that the unpopularity of Newt Gingrich’s “shut down the government” tactic in the 90s is a lie spread by the liberal media.

    I suppose a case could be made that once the government is shut down, the “sane Republicans” will decide to vote with the Democrats to come up with something to keep things running. But that assumes that there are Republicans left in the House who are willing to vote with Democrats on something this high profile. I don’t see evidence that that’s actually true though.

    • It’s a lot easier to believe that the bat isn’t made of wood before it smacks you in the head.

      Perhaps that Congressional reps believe that now. Should there be a government shutdown, I doubt they would continue to believe.

      • NonyNony says:

        Should there be a government shutdown, I doubt they would continue to believe.

        Again there’s an assumption here that empirical evidence will make a difference.

        That’s normally the safe bet, but with the group that controls the House these days I’d be willing to take the “under” on that bet.

        There seems to be a good size chunk of the House that could stand there getting hit with a wooden bat repeatedly to the face and continue to maintain that the bat is made of Nerf as they lose teeth.

        • Cody says:

          Well, lets look at it this way:

          If Republicans shut down the government, and see no need to relent we will all be chilling in DC actively revolting against our now non-function government.

          I would think there is no other outcome once they decide to shoot he whole nation in the head.

          Even Republican constituents would be there, as they also do not want a government shutdown. Some are just stupid and think they do until their welfare checks stop coming.

        • There seems to be a good size chunk of the House that could stand there getting hit with a wooden bat repeatedly to the face and continue to maintain that the bat is made of Nerf as they lose teeth.

          I don’t think that’s true. I think they’ve been able to get away with their denial of reality because it hasn’t been their teeth getting knocked out.

          That’s what made the Unskewed Polls phenomenon so interesting – they, themselves, actually suffered an unpleasant consequence from their fantasy-land misunderstandings, and they sure do seem to have internalized reality in sort oder on that question.

          • Bruce Baugh says:

            They do? Who exactly, who’s prominent and influential among Republicans, has said anything like “we need to stop this bullshit and pay more attention to realities we may not like”? And is anyone around them listening?

  8. rea says:

    In the event that the GOP shoots the hostage, the Obama administration needs to make it clear that it will use its authority under the 14th Amendment to prevent the United States from defaulting, putting further pressure on Congress.

    Actually, announcing this in advance makes in clear that the Republicans can decline to extend the debt ceiling, gain an opportunity to portray Obama as lawless, and suffer no adverse consequences. Impeachment hearings . . .

    • Murc says:

      and suffer no adverse consequences.

      … the last time the President shut down the government because the Congress declined to fund it, they suffered many adverse consequences. Why would this time be different?

  9. JoyfulA says:

    Should we go over the fiscal cliff, we may not reach the debt ceiling for a long time.

  10. Glenn says:

    I have what I’m sure must be a stupid question (not that that has ever stopped me) to which there is a simple answer, but if we hit a debt ceiling, what stops the Fed from simply writing off some of the US Treasury debt it holds in order to keep the total US debt below the ceiling? I mean as a stopgap measure, not a permanent solution. It’s kind of similar in effect to the platinum coin idea, I suppose.

    • Walt says:

      This would technically make the Fed insolvent. I don’t know what the legal consequences of this would be.

    • Total says:

      Oh God. Do we really want purchasers of US debt wondering if their debt is next in line to be written off?

    • Murc says:

      The Fed would monetize debt long before it started writing it off.

      • Glenn says:

        Well, I didn’t mean write it off because the Fed actually deemed it worthless, I meant, in effect, forgiving it so as to reduce the outstanding US indebtedness below the ceiling. “Monetizing” it, if I understand what you mean, would not do anything to actually reduce the debt. Make no mistake, I’m talking about the Fed taking one for the team here. As Walt says, depending on how much was done that could drop the Fed’s assets below its liabilities, but I’m not sure what the actual impact of that is.

        But this is admittedly already way over my understanding of how the Fed actually operates.

        • Murc says:

          Well, I didn’t mean write it off because the Fed actually deemed it worthless, I meant, in effect, forgiving it so as to reduce the outstanding US indebtedness

          … how would this work?

          Our national debt is owed to banks and people and nations and companies and so forth who own US bonds. When those bonds mature, they go to the Fed and exchange them for cash.

          The Fed is the one on the hook; it is the debtor, not the creditor. Debtors cannot ‘forgive’ their own debts. They can write them off, but that’s different.

          However, unlike regular people or companies, the Fed has another tool at its disposal; monetization. Monetizing the debt means that the Fed simply prints money and hands it to the bondholders, rather than rolling it over. This tends to be pretty inflationary, which is why it isn’t used a lot, but in terms of what the Fed would prefer, I think they would proceed with monetization, which is well-understood and well within its power, before they started messing around with cutesy debt

          • Malaclypse says:

            No, Treasury is the debtor. The Fed purchases large numbers of bonds from Treasury, but is by no means the only bondholder. And it is highly debatable whether monetizing debt is allowed under the Fed’s dual mandate, given their goal of price stability.

  11. Cody says:

    I move to rename it the “Automatic Austerity Deadline” to make it clear how crazy this is.

    How can one argue that this Austerity is bad, when your whole party’s platform is we should be doing exactly what you’re trying to prevent for the last four years?

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