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View Diary: White House issues veto threat over House's proposed 'Pay China First' bill (62 comments)

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  •  Kind of on the fence about this one. (2+ / 0-)
    Recommended by:
    Sparhawk, Neuroptimalian

    I understand the politics of it all, but the bill only mandates what the Constitution already requires.

    But the President has been clear that he will not negotiate around whether to uphold the full faith and credit of the United States. Congress must pay the bills it has already racked up; failure to do so would put the Nation into default. The President will not tolerate political gamesmanship, which proved so harmful to the Nation's economy in 2011. For this reason, if the President is presented with legislation that would result in the Congress choosing to default on the full faith and credit of the United States, he would veto it.
    This is a pretty questionable reason.  Basically, it looks like Obama is vetoing this so he can still claim (incorrectly) that Republican intransigence on the budget could lead to national default.
    •  The Constitution does NOT require prioritizing... (0+ / 0-)

      ... one or more types of creditors over others. HR 807 does, by specifying principal and interest payments and OASD obligations (essentially Social Security and Disability).

      And this GOP bill gambit is directly linked to the debt ceiling, not to deficit spending. So why might the White House link it? Because the Republican-controlled House is dodging, by every trick and artifice it can muster, bellying up to Federal spending Congress itself authorized.

      One Republican-created debt-and-deficit hostage crises after another has preoccupied the country and its creditors - of all kinds - over the last couple of years, and stalemated Federal legislative action on other priorities. This veto threat is the coming home to roost of Republican policies.

      2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

      by TRPChicago on Tue May 07, 2013 at 07:46:55 PM PDT

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      •  the US govt has no creditors (0+ / 0-)

        The US Govt is not a household or business

        "The Earth is my country and Science my religion" Christiaan Huygens

        by Auburn Parks on Tue May 07, 2013 at 08:05:58 PM PDT

        [ Parent ]

        •  You don't think those to whom the US owes money... (0+ / 0-)

          ... consider themselves creditors? We borrowed money from them by selling them debt we issued - what does that make us?

          2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

          by TRPChicago on Wed May 08, 2013 at 05:22:03 AM PDT

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          •  The US Govt does not borrow money. (0+ / 0-)

            When you buy a US Treasury security, all you are doing is depositing your money into a savings account at the Fed bank.  It is perfectly analogous to you depositing your money into a CD a your local Chase bank with the only difference being that the Federal Govt has no need of your money since they create money at will by crediting bank accounts through the Govt's bank...the Fed.
            When the US Govt deficit spends the money supply goes up an equivalent amount.  If they were using your money to spend...they would just be transferring money around but the money supply would stay exactly the same....this is not at all how our fiat monetary system works.

            This link is the best summary I've seen to date (And I spend ALOT of time on this stuff).....please take some time to read through the 2 pages as the more progressives who understand that the US Govt is not alike a household or business the less powerful the deficit and jobs terrorists of the right wing  will be.

            MMT = Reality

            "The Earth is my country and Science my religion" Christiaan Huygens

            by Auburn Parks on Wed May 08, 2013 at 05:32:42 AM PDT

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            •  Ah, another captive of fiat money theory ... (0+ / 0-)

              ... and confident of the all the truth that seems to convey.

              Yes, all money is "fiat money" unless it's backed by something "hard." In the eyes of the "Gold Bugs," for example, the "something" is gold or silver. From that simple, high level abstraction - that it is our trust and belief that assigns value to, say, dollar bills or conch shells or promises to pay - a wondrous array of approaches to economics and government monetary and fiscal policies can be devised.

              But Yes, too, the US borrows money by issuing debt on its promise to pay it back. It could print more money, too. Its promise to pay back with interest and its creditors' belief that it will - actually, it's we, the taxpayers, who will - is the basis of the debt. (And Yes, unlike government, individuals and businesses don't have the power to print money. But they do promise to pay when they borrow money, just like the US does when it issues debt.)

              Whether we care about fiat money theory or not, we are stuck with a Congress who authorizes and appropriates money for spending and then threatens to renege on the nation's promise to pay by refusing to raise the debt ceiling.

              It's the GOP-controlled House of Representatives who does not understand. They might find a lecture on fiat money or big shiny sovereign coins to address the deficit very interesting.

              2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

              by TRPChicago on Wed May 08, 2013 at 06:09:35 AM PDT

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            •  Your problems are 2 (0+ / 0-)

              Your problems are (at least) two.
              1) You don't understand the legal situation.
              2) You don't understand the economics.

              1) The US Government can solve its problems in this regard, but the US Government includes the House of Representatives, who must act. The US Treasurey doesn't produce doallars; the Federal Ereserve does, but that is a seperate operation. What happens when the Fed produces money is that it does so by buying treasury bonds. That is, the treaury cannot simply create the money to pay its bills. Congress has passed several laws which control the income it gets and the outgo -- the difference is its deficit. Congress has also passed another law which limits the debt. The two sets of laws are obviously incompatible.

              2) Money is several things, including (see any into Economics text) a means of valuation and a medium of exchange. The government might produce all the medium of exchange it desires. (The US government, as i said, does not but empowers the FRB to do so.) It hasn't the same power to produce a means of vqaluation. The Confederacy actually tried this. Most of the money it raised for domestic use was simply by printing it. The result was rampant inflation.

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