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General News    H2'ed 10/15/13

Denial in the Face of Default

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Go back to 2011 for a moment, the first time the people's hostage-takers held the Debt Ceiling gun to the country's head.  President Obama, whether due to inexperience or philosophy or some other sad trait, played nice and made concession after concession after concession resulting not only in a loss off billions of dollars to the economy, not only in an unprecedented downgrade in the U.S. credit rating, but finally in an unjustifiable "compromise" that solved nothing and opened the way to the rolling fiscal crises we have experienced ever since, including the current double-barreled one (Debt Ceiling and shutdown). 

President Obama blew it in 2011. But everyone else who could make any difference also blew it in 2011, so the blame was diffused and minimized and apparently forgotten and here we are again. Thanks 2011 mud wrestle, the increased cost of government borrowing alone was $18.9 billion, according to the General Accounting Office (GAO).

If President Obama blows it again this time, he should be impeached.

Impeachment for this, or any other reason, seems hardly likely, which is another measure of the country's cultural impotence, of our collective, national inability to see what matters most, never mind our unwillingness to act in the interest of the common good.  

The president says, in a voice too whiny, that he is "exasperated" with Republicans in Congress and makes fun of some of the absurd things they say, but this is on the level of cable news infotainment and makes the president look like part of the problem.  Another reason for that look is that he is part of the problem.  The president can complain all he wants about Speaker Boehner's refusal to let the House vote on a budget bill that, by all accounts, would pass easily.  But that creates the false impression that the president is helpless, that he is limited to an "Obama's Complaint" approach to governing, when the more important issue is his unwillingness to take decisive action. 

There is a Gordian Knot solution to the problem of the moment -- in fact there are at least three such solution that cut through the political knot and restore the country to a rational state where the possibility of fiscal sanity and health replaces the looming uncertainty and disaster the Republican true believers would pull down on us all. 

How about a trillion-dollar coin?  Or special premium Treasury Bonds? 

Two of the president's possible solutions are relatively simple, but somewhat gimmicky -- and certainly vulnerable to Congressional reaction and rollback. 

One is for the Treasury to issue trillion dollar platinum commemorative coins, then borrow against them, indefinitely.  According to Yale Law School's professor of constitutional law Jack Balkin, this is both legal and constitutional, thanks to the loose way Congress wrote the law governing platinum commemorative coins.  But it's hard to see how this sort of dodge would escape challenge legally, legislatively, politically, and rhetorically, especially in the talk radio fact-free zone.  And it's hard to see the public understanding the ploy, much less cheering for the president. 

The second Gordian knot solution is even more baroque and gimmicky, involving the Treasury Dept. creating "premium" Treasury Bonds that Treasury could then manipulate to control the calculation of the national debt to keep it technically under the Debt Ceiling.  The full explanation of how all this works relies on a recondite rendering of the intricate interplay of par values, pricing, interest rates, rollovers, face values, and other variables that can be managed in their own fantastical way to fit within the chimera of the Debt Ceiling.  This might be less vulnerable to attack because it's so hard to explain, but that would make it hard to defend, too. In the present moment already awash with suspicion and distrust, this response to the Debt Ceiling seems unlikely to clear the air at all. 

So is this the situation the Constitution mandates?  Really? 

The third immediate, and perhaps permanent, means of stalling the Debt Ceiling crisis machine is for the president to throw a constitutional wrench in its gears. 

This is the much-discussed 14th Amendment solution. The Fourteenth Amendment to the United States Constitution was ratified and adopted in 1868. Relevant to the Debt Ceiling mirage is the amendment's little-litigated section 4: 

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.  [emphasis added] 

The plain meaning of the first sentence certainly seems to be, roughly: the public debt incurred by Congress shall be paid. Period. In 1935, in a Supreme Court case not directly related to the Debt Ceiling (Perry v. United States, 294 U.S. 330), the court's holding stated in highly relevant part: 

"By virtue of the power to borrow money "on the credit of the United States,' Congress is authorized to pledge that credit as assurance of payment as stipulated -- as the highest assurance the Government can give -- its plighted faith. To say that Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise, a pledge having no other sanction than the pleasure and convenience of the pledgor. When the United States, with constitutional authority, makes contracts, it has rights and incurs responsibilities similar to those of individuals who are parties to such instruments.

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Vermonter living in Woodstock: elected to five terms (served 20 years) as side judge (sitting in Superior, Family, and Small Claims Courts); public radio producer, "The Panther Program" -- nationally distributed, three albums (at CD Baby), some (more...)
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