Tag Archive | "debt ceiling"

An Issue of National Securities

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The following post is by Dealbreaker reader and commenter Infinite Guest.

President Obama has nothing to gain by negotiating with Republicans in Congress in order to raise the debt ceiling. The Department of Treasury doesn’t need Congressional approval to issue more debt and it will be a long time before Treasury actually needs to exceed the debt ceiling.

The analyses I’ve read on the topic are nothing if not variable, but they all assume at some level an agreement by all parties on the basic necessity of raising the debt ceiling and the general wisdom of reducing the deficit. The President knows what needs to be done, the Congress knows and so does the electorate. Based on this shared understanding, it follows that those who act in the spirit of compromise will be rewarded and those who act to obstruct
progress will be punished.

Never mind the compelling absence of evidence that any such shared understanding exists; that’s just not how things work.

The President, and this President in particular, is not answerable to Congress. The President is answerable to history, to the voting public, to our allies, to business interests including bond markets and in relatively rare cases to a 2/3 majority in the Senate. When the executive branch and the legislative branch can’t work out their differences the Supreme Court acts as referree. If Congress failed to raise the debt ceiling, history would not be kind to a President who on their advice failed to honor our debts. The bond markets would not be kind, our allies would not be kind and consequentially neither would the voting public. But a President who stood up to a hostile, inexperienced Congress and continued to honor our debts would win support from all sides. There will have been sufficient turmoil and pain following Congressional failure to raise the debt ceiling that everyone on earth will understand who the heroes and villains are.

If Congress failed to raise the debt ceiling, the President could stand up to Congress on Constitutional grounds, in which case he could count on a fairly corporatist Supreme Court to eventually rule in his favor. He could stand up to Congress on National Security grounds, in which case he might even be able to secretly issue fresh debt. He could stand up to Congress on technical grounds for a very long time without provoking a Constitutional crisis or raising the debt ceiling simply by draining the Treasurys out of trust funds and replacing them with other assets. And if he had to break the law, as President, in order to stand up to Congress, then he could break the law on moral grounds, secure in the knowledge that if he is impeached, the Senate doesn’t have enough votes to convict.

What would the electorate think of a President who defies Congress on any or all of those grounds? The Democrats would rally behind him, the Republicans would still oppose him and the independents would admire him for acting independently.

Now alternatively he can compromise to avoid a direct conflict but what’s in it for him? He could give away everything his constituents like and it still wouldn’t be enough to balance the budget. By compromising he snatches defeat from the jaws of victory. Democrats will hate him. Republicans will (rightly) say that they won. Without any drama to overcome through courageous and decisive action, independents will conclude that he’s a weak leader who stands for nothing.

Politics is not about forethought, compromise and the public good. Politics is about personalities and political narratives and the balance of power. This narrative has yet to be written, but in the politics of the debt ceiling, President Obama has all the power and his opponents in Congress have none.



Article courtesy of Dealbreaker

Talk To John Boehner About The Debt Ceiling/Spending Cuts When You’re Ready To Use The ‘T’ Word

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Boehner wants to be “talking about cuts of trillions, not just billions.”

Speaker John Boehner will call on Congress to offset a debt ceiling hike with spending cuts of a greater amount, an ambitious proposal that puts House Republicans on a collision course with Democrats who want much more modest spending restrictions attached to the vote. “Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase,” Boehner plans to tell the Economic Club of New York here this evening, according to remarks obtained by POLITICO. “And the cuts should be greater than the accompanying increase in debt authority the president is given. We should be talking about cuts of trillions, not just billions.”

Under Boehner’s vision, for example, Republicans would have to find more than $2 trillion in cuts if they wanted to raise the debt ceiling by that amount through 2012 — which is in line with Treasury’s estimates on the debt limit. But Republicans could also go for a more incremental increase in the debt ceiling, coupling that with a smaller offsetting cut in spending. Boehner’s preference is for immediate cuts, not promises to pare back spending in the future.

[Politico]



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Chuck Schumer: No More Messing Around On This Debt Ceiling Business

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House Speaker John Boehner’s appearance before Wall Street leaders tonight challenges him to provide reassurance that Congress will raise the U.S. debt limit without undercutting Republican demands for spending controls…”The stakes are high for Speaker Boehner,” Senator Chuck Schumer told reporters on a conference call today. He called on Boehner to provide “unwavering reassurance” to the credit markets that House Republicans won’t allow the U.S. to default on its obligations. “The markets do not want to hear more threats,” Schumer said. “The time for brinkmanship is over. There is a lot on the line.” [Bloomberg]



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Tim Geithner Will Let Us Borrow For A Little While Longer

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Thanks to “extraordinary measures” and “tax receipts.”

By taking “extraordinary measures,” the U.S. can keep borrowing until Aug. 2 after reaching its $14.29 trillion legal debt limit no later than May 16 unless Congress acts, Treasury Secretary Timothy F. Geithner said.

The Treasury Department will take steps starting this week to provide additional borrowing room, Geithner said in a letter today to Senate Majority Leader Harry Reid, a Nevada Democrat, and other congressional leaders. The Treasury pushed the August deadline back from July 8 “as a result of stronger-than- expected tax receipts,” Geithner said. The May 16 date is unchanged from an estimate he made last month. Geithner said the Treasury on May 6 will stop issuing State and Local Government Series securities. The bonds, known as SLGS, “fund a variety of expenditures, including infrastructure improvements across the country,” he said.

[Bloomberg]



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