Debt Ceiling – Are We Screwed?
Ezra Klein had this sobering piece yesterday after President Obama’s press conference:
The best advice I’ve gotten for assessing the debt-ceiling negotiations was to “watch for the day when the White House goes public.” As long as the Obama administration was refusing to attack Republicans publicly, my source said, they believed they could cut a deal. And that held true. They were quiet when the negotiations were going on. They were restrained after Eric Cantor and Jon Kyl walked out last week. Press Secretary Jay Carney simply said, “We are confident that we can continue to seek common ground and that we will achieve a balanced approach to deficit reduction.” But today they went public. The negotiations have failed.
…
The conventional wisdom is that now this fight moves to the people. I’d put it differently. Now this fight moves to the consequences. Neither side is going to give in the face of purely rhetorical salvos. The White House is expecting Republicans to accuse them of wanting to raise taxes. The Republicans are expecting the White House to accuse them of putting the interests of large corporations and wealthy donors in front of the needs of seniors, children and the poor. Both parties have seen the poll numbers behind their positions. If a few news conferences were going to be sufficient to end this, it would never have started.
What the two parties are really doing is trying to position themselves politically to survive the consequences of their failure. We don’t yet know if we’ll get to the point where the market will panic, but it could. We’re very likely to get to the point where we have to stop funding certain government services, which could mean as little as delaying payments to military contractors and hospitals or as much as halting Social Security checks. Either way, the public is likely to ignore the political breakdown until the consequences begin. At that point, both parties are hoping they will have framed the debate such that the electorate’s fury falls squarely on the other’s shoulders. That’s what today’s news conference was about.
The administration thinks it can win this fight and they do have several advantages.
- Framing – There were several good frames advanced by Obama yesterday, like a do-nothing Congress, Obama as the adult and Republicans as the party of corporate jets. The administration must like their chances here and taxing the rich and ending loopholes polls very well. Of course, Republicans have argued that taxes are evil successfully for 30 years, so they fell pretty good about their chances as well.
- Tax cut expiration from the 2010 tax deal. Republicans are at a disadvantage here because they have nothing to offer. They know that the tax cuts will expire in 2012 and Obama has the upper hand. He’s already stated that he won’t sign a full renewal of the tax cuts. Obama merely has to wait to get what he wants and there is nothing Republicans can do to stop it.
- The 14th Amendment argument declaring the debt ceiling unconstitutional. This argument has been advanced by Chris Coons and other Democrats.
“The validity of the public debt of the United States, authorized by law… shall not be questioned,” reads the 14th Amendment.
“This is an issue that’s been raised in some private debate between senators as to whether in fact we can default, or whether that provision of the Constitution can be held up as preventing default,” Sen. Chris Coons (D-Del.), an attorney, told The Huffington Post Tuesday. “I don’t think, as of a couple weeks ago, when this was first raised, it was seen as a pressing option. But I’ll tell you that it’s going to get a pretty strong second look as a way of saying, ‘Is there some way to save us from ourselves?'”
By declaring the debt ceiling unconstitutional, the White House could continue to meet its financial obligations, leaving Tea Party-backed Republicans in the difficult position of arguing against the plain wording of the Constitution. Bipartisan negotiators are debating the size of the cuts, now in the trillions, that will come along with raising the debt ceiling.
I assume this would be an option of last resort but having it ready has to put Republicans on the defensive. Many think that even if Republicans objected, they wouldn’t have standing in court to sue since they can’t prove a harm. Only hedge funds hedging on America to default would have the standing to sue (and Eric Cantor, I guess).
Tags: Debt Ceiling, Federal Budget
Republicans as the party of corporate jets
Man, Obama SUCKS at class warfare. America’s wealthy are killing jobs, shrinking our middle class, foreclosing on our houses, cutting our health care, and all he can come up with is “corporate jets?” That shit is straight from the 1970s.
Republicans are undefeated at turning Democratic frames back on us, and they will do it again. We called them “tax cuts for the rich,” but Bush “tax cuts for everyone who pays taxes” – remember that? It worked, as Dem wage-earners swallowed it hook line and sinker and sealed their fate.
They know that the tax cuts will expire in 2012 and Obama has the upper hand.
They also know Obama had the same upper hand last year, and it went limp. Republicans have yet to lose a bet on Dem capitulation.
He’s already stated that he won’t sign a full renewal of the tax cuts.
Too late. A veto threat last December on the Senate version of the tax cut would have avoided this whole situation.
And Obama has a credibility problem. The great Ben Feller said it best at Obama’s Pearl Harbor Day press conference:
there is a bit of selective memory going on here.
‘if the politics of the moment demand it’ is a pretty inaccurate way to portray the impact of not extending unemployment benefits to those whose benefits were expiring last December. That is not ‘politics of the moment’ but both a caring and an economic tradeoff that Obama accepted.
That the Republicans were willing to use the unemployed as pawns in their chess game over tax cuts for the rich is abhorent, but business as usual for the GOP. Where is the outrage over that?
So you bought the “hostage” narrative. I thought it was a false dilemma.
The hostage narrative was endorsed by both sides, remember. Obama needed cover for breaking his campaign promise. My outrage meter for Republicans has been maxed out for years, but I expected better from Obama.
Well, we’re largely screwed because we are having this fairly useless argument about deficits rather than about jobs. The deficits don’t matter as much right now as the genuine drags on the economy — jobs and housing.
The thing that Ezra misses here is the business community which is basically the constituency of the Republicans. I’m going to invoke my favorite image of how much corporate America is reliant upon the government — and that is the buildings you see along the DC Beltway from the Vietnam Memorial bridge to the Wilson Bridge. Massive numbers of people are in those buildings are working on government contracts. For the government to stop paying these folks is a pretty big problem. Lockheed Martin is busily building planes, missiles, missile parts, detection systems, sensors, logistics support — most of their business is the US Government. GE is busily building and supplying stuff to the Government. A default means that these companies are not getting paid. And you can bet they won’t be carrying the Government.
The question is what do they do? Frankly, they have no dog in the spending fight. They do have a dog in the fight of getting paid for work they have under contract.
Chuck Schumer (D-Wall Street) is reminding the GOP that they will need D votes to pass a debt ceiling increase in the House. From where I sit, it looks like the fire is being built under the GOP pot.
Which isn’t to underestimate how quick Democrats can be to undermine their own position. But they’ve got most of the cards here.
If Obama can get Repubs to vote for tax increases, without cutting Medicare, I may have to forgive him everything and start believing in eleven-dimensional chess again. If he then follows through on expiring the tax cuts for the rich, I might fund a statue of Obama in Rodney Square.
And when I say tax increases, I mean real tax increases on the rich which will be a downpayment on digging us out of the grave they dug for us. Not some penny-ante “fees” or surcharge on corporate jets (but I’ll take that too).
White House snubs McConnell invitation to Obama Photo 12:51pm EDT WASHINGTON (Reuters) – The White House effectively turned down an invitation by Republican Senate Leader Mitch McConnell for President Barack Obama to visit his members on Capitol Hill on Thursday to discuss raising the debt limit.
“The validity of the public debt of the United States, authorized by law… shall not be questioned,” reads the 14th Amendment.
Apparently Libs can’t quite figure out what “Authorized By Law” means.
Apparently Libs can’t quite figure out what “Authorized By Law” means.
The debt was authorized by law when Congress passed the budget.
This is basically the way Bush ran the wars. Finally, Rovian arrogance used in the service of Democrats!
It’s not a great idea, just a backup plan to make Republicans sweat. I can’t really approve of anything that promotes increased spending without tax increases.
The debt is authorized by law when agencies write contracts for goods and services.
Unless you are thinking Lockheed Martin is doing work on a handshake.
Jonathan Bernstein writes about what he’s worried about in this gamesmanship.
I think we are depending on the business community to get the Republicans in line.
Chuck Schumer just queued up the best arguments ever on this debt ceiling problem on Countdown. Hey Media! You guys like the bomb throwing and Schumer just hit a bunch of targets.
Obama should start to lead invoke the 14TH amendment prevent default and cut all the Repuk’s programs
If we default on our debt payments, we face the potential for total economic meltdown.
You libtards might want to buy a firearm or two and learn how to use it. Once the free gubmint cheese runs out, you’ll be BEGGING for a gun.
If the masses are starving and law enforcement is laid off, I think wealthy Republicans will suddenly discover the virtues of gun control.
ah kaveman, using threats of violence to get what you want. spoken like a true conservative.
Republicans with dreams of bloody Mad Max scenarios dancing in thier pea sized brains are a dime a dozen. In fact, we have some in Congress and had one in the White House for a while.
the republicans in their stubborness in not dealing with the issues they are elected to office to present have become farcial and flawed.