If It’s Debt Ceiling Time It Must be Time to Bring On The Coin Again! - UPDATED!

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The Rethugs are acting like badasses again and threatening to shut down the government, destroy the economy and wreak whatever havoc is necessary upon our hapless nation unless President Obama yields to their will and throws social security under the bus.  Sounds like the plot of an old time melodrama but in fact it’s just life in Washington DC these days.

The Prez, for his part, has said “no dice”.  He will have no negotiations over raising the debt ceiling (which after all is NOT new spending, it’s just paying the bill for spending already incurred.  By, you know, Congress.)  Whether you believe the president or not depends pretty much on whether or not you believe his presidency has been just a series of betrayals of true progressives. 

Some people just don’t even want to find out and are once again bringing up the alternative option of minting a one trillion dollar platinum coin, depositing it with the federal reserve then continuing to write the checks to keep the government going and, happily, *not* default on the public debt.

But can he even do that?  Because it sounds pretty crazy.  Apparently it’s the result of a law which allows platinum coins to be minted in any denomination.  As has been pointed out, the purpose of the law was to make, and sell,  commemorative and/or collectible coins.  But still, it says what it says.

Paul Krugman, for one, thinks that we not only can mint that coin but should mint that coin.  And let’s face it, he’s no light weight on matters fiscal.

Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely. He will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous. The decision should be obvious.

While others,  Kevin Drum, for example, think the idea is beyond nuts.

But put that aside for a moment. I want to ask something else: is this really the road liberals want to go down? Do we really want to be on record endorsing the idea that if a president doesn’t get his way, he should simply twist the law like a pretzel and essentially do what he wants by fiat? My recollection is that we didn’t think very highly of this kind of thing when we thought George Bush was doing it.

This whole thing is not just a ridiculous idea, it’s a bad idea too. Republicans seem willing to set the country on fire to please their increasingly fever-swampish base, and eventually they’ll pay a price for that at the polls. Sooner than that, they’ll pay a price with the business community. This is a problem that we should work out via politics and public opinion, not by pretending the law allows the president to do anything he wants.

Myself, I’m torn.  On the one hand I’d love to see Republican heads assploding all over the rooftops if he did.  On the other hand it could back-fire and result in more credit downgrades because, once again, we appear to not have a functional government.

Nancy Smash has a different solution.  She’s pulling for the 14th Amendment option.

Nancy Pelosi: Well, you ask the Republicans, because we always passed the debt ceiling. When President Bush was president, as he was incurring these massive debts, and the Republicans weren’t saying ‘boo’ at the time. There should be, this is a conversation where there should be no doubt. In fact, if I were president, I’d use the 14th Amendment, which says that the debt of the United States will always be paid.

Bob Schieffer: You would just go ahead and do it, you wouldn’t wait for the Congress?

Nancy Pelosi: I would just go do it. But the Congress has incurred much of this debt. And so what are you saying, we incurred it but we’re not going to pay it? If you want to say, ‘We are not going to do it so much in the future,’ well that’s another thing. But you can’t say, ‘I’m not paying my past debts.’

But apparently the White House is not convinced that the executive branch has the authority to ignore Congress on this.

I think the solution is just for the administration to just hang tough and refuse to negotiate.  There is a general agreement by Dems that it was a mistake to have done so before.  So maybe Bamz just needs to TRIPLE DOG DARE the Thugs to collapse the economy and stare them down.

What are your thoughts?

UPDATE:

A co-author of the original platinum coin legislation weighs in at Daily Kos.  He seems to think it’s a GO!  (h/t to donnah in comments)

Posted by marindenver on 01/07/13 at 07:30 PM • Permalink

Categories: PoliticsBarack ObamaBedwettersElection '12Manic ProgressivesNuttersTeabaggery

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>>>(which after all is NOT new spending, it’s just paying the bill for spending already incurred.<<<

This is absolutely wrong - as is this continuous tendency everywhere to characterize hitting the ceiling as a default on the debt.

The debt grows to fund continuing government expenditures as well as servicing the debt. When we hit the ceiling, the government has a choice to cut spending on programs and/or reduce the debt service. I think about the only thing you can be almost certain of is that the US will NOT default on any debt. The 14th amendment is very clear on this. The situation is not as clear on the spending side due to conflicting measures passed by congress. The government will cut spending on existing programs before it defaults on any debt obligations. It will fully service the debt and spend whatever is left over from current revenues to fund some subset of programs. I don’t think that social security will be affected because it has its own revenue stream that is still adequate to fund existing benefits. Many federal workers in critical positions will be required to work without compensation. Everything else will be on the table.

I’m no expert, but the trillion dollar coin solution seems gimmicky to me. Unfortunately, one of our two political parties has gone loonie-tunes, and were gonna have to confront that head on.

@lumpkin - Excuse me but it is absolutely right.  The debt ceiling is not being raised to fund new spending programs - it is being raised to fund spending programs previously approved by Congress.  It’s like charging stuff on your credit care (ala G W Bush & wars & stuff) then refusing to pay the bills that come due.  Cut spending going forward if you need but you do have to pay for what you already bought.

The $1 Trillion coin is a wonderful gimmick but ultimately the clowns in the HOR should just be stared down.  That’s what Obama says he is going to do. I hope he realizes that he really has no other choice if he hopes to have any credibility for the next four years.

I’m for “stare down” as well. Interceding with a gimmick, like the trillion dollar coin, means it will be called just that—a gimmick, and it won’t stop the toddlers from throwing the tantrum again down the road. Pulling constitutional rank with the 14th Amendment is sure to bring out the Tenthers and black helicopter folks—a pretty tiresome circus. If they are going to do it, either choice bails them out just a little with the public by offering a distraction.  The simplest of all possible narratives is “Here’s what they are doing, and oh yes, it’s their doing.”

Lumpkin—the debt ceiling, as best I understand it, is an authority to borrow—it is true that revenues are still coming in and some bills can be paid from them, which it why cons are saying reassuring things like “partial shutdown”. The pain in the ass part is—what gets prioritized in the interim, and in what way can we—quickly, mind you—pare down to financing our debt and still retaining some semblance of being, you know, the United States. All things considered, there are many things—including our current debt situation, that I find less scary than a scramble, shutdown, credit downgrade, recession, and the cream of the jest—probably a big-time slip in GDP, meaning this whole affair shrinks government while costing us more.

I believe the GOP is currently calling this “fiscal conservatism”. I liked this joke better when it was called “the aristocrats.”

(Sorry—for explanation of the consequences of not raising the ceiling, I don’t know who explains better than Ezra.)

(Yes, I did that on purpose.)

Look - I’m not suggesting that any of these consequences are good, just trying to clarify what we are talking about.

The government spends money that mostly comes from 2 sources - taxes and borrowing. When we hit the ceiling, it will only come from taxes. At that point available funds go down and choices must be made. Contrary to popular opinion this does not mean an automatic debt default. In fact as I already pointed out, this is the least likely option.

And yes - the debt ceiling is raised to fund future spending. I did not say it is raised to fund future programs, only to fund current and future spending - which I agree is already committed, but I also addressed that point in the discussion about conflicting measures from congress.

The debt is absolutely not devoted to only paying for past spending and existing debt. Not sure why people hold on to this notion so hard.

>>>The debt is absolutely not devoted to only paying for past spending and existing debt. Not sure why people hold on to this notion so hard.<<

I should have said the debt ceiling is not meant to limit payments on only past spending and existing debt….

So lumpkin, I’m just trying to clarify what you are saying here.  The Congress has passed certain programs which require funding.  In addition we have debt which, like a mortgage or credit card requires regular payments.  Under the situation which we have now, the sum of these payments is more than our income from various kinds of taxes (mainly).  So we need to put out bonds for sale to raise some extra funds to a.  fund the programs we agreed to fund and b.  service our debt.

So Congress then says “NO WE WILL NOT PUT OUT ANY MORE BONDS FOR SALE and fk our obligations to pay for the programs we already authorized and pay the debt service on the previously existing bonds!  And this is something you see as an OK thing?

Dude, what don’t you get about the need to honor our obligations here?  Seriously?

The Rethugs are acting like badasses again and threatening to shut down the government, destroy the economy and wreak whatever havoc is necessary upon our hapless nation unless President Obama yields to their will and throws social security under the bus

They’re not acting like badasses, they’re acting like bad asses.

Right I don’t really understand debt ceilings ‘cos I’ve only been in debt once and I only owed $250, so Marin can you tell me if I understand this correctly using the credit card analogy.

I have a credit card and decided to shop up large at Pagani and spent 16 trillion dollars.  My bank says “no more credit for you Missy until you pay this off!”  I’m like “shit, how am I going to pay for anything when I’ve got this 16 trillion to pay off and I only bring in $707 dollars a week???”. 

Therefore I can’t pay for anything new because all my dollars are going to pay for this old debt UNLESS I can get a loan to pay for new stuff from somewhere else (or get a job that pays trillions).

Is that about it?  TIA.

The whole issue of past/future spending is simpler than all this—if Congress passes a bill that calls for multiple appropriations over time some appropriations extend into the future but they are committed debts.

Is that about it?

I’m no wiser myself, but I think it’s more like if you shared a credit card with your long-term partner, who helped you run up a big debt, spending the lion’s share on stuff he wanted for himself when he was in charge of the family finances, eventually got declared bankrupt and resentfully was forced to hand management of your joint finances over to you, then when you said, “Er, we’ve got this letter from the bank ... if we don’t extend the overdraft, they’ll foreclose,” he said, “Screw you, you keep overspending, let them do their worst.”

Here’s a link to an informed source from the Treasury:

http://www.dailykos.com/story/2013/01/08/1177211/-Co -author-of-platinum-coin-law-weighs-in-on-trillion-dollar-co in

Comment by donnah on 01/08/13 at 11:30 AM

@BBBB - heh.  Thanks for the correction. ;-)

marindenver: We are on the same side. I did not explain my point well and apparently did not understand yours. I should not have said you were wrong. My apologies.

l

Hey lumpkin, no problem.  Sometimes these discussions get a little heated and we miss each others’ points.

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