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Most of us on the progressive side have relied on a strategy for dealing with this Teahadist putsch, this use of the debt ceiling as a veto point, that involves painting that as horribly irresponsible, playing with fire, because the consequences of failing to raise the ceiling would be horrific, an apocalyptic default. If anyone in the debate has questioned that idea that default would follow a failure to raise the ceiling, it has tended to be Teahad apologists and excuse-makers.

Well, our sides's strategy has failed. They did their blackmail thing, and it's worked. They got the D leadership to agree to sell the farm by threatening to blow up the farm.

Unfortunately, our strategy was based on a lie. If the national debt were to reach and exceed the ceiling, the only thing Treasury could do, could practically and legally do, would be to continue treating the effective ceiling as however much Treasury has to borrow to continue meeting all the legal obligations of the US. That stance would never be seriously challenged in the courts, because it would do damage to no one, and if it were challenged, it would be vindicated. For Treasury to do the opposite, and ignore the legal requirements on it to pay all US obligations, would, on the other hand, create all sorts of damage to all sorts of parties who would be able to sue. And these parties would stand an excellent chance of winning their cases against the US, and perhaps even against involved govt officials, who might conceivably be held to have come out from under their official immunity by wilfully breaking the laws that obligated the spending they refused to transact.

Great, so progressives can now defeat this monstrosity of a grand bargain by just teaming up with the Teahad fringe that's voting against any rise in the ceiling no matter what, right? Busting through the ceiling will have no effect, so it's safe to do so, while approving the grand bargain would result in disaster, so this is a no-brainer, right?

Well, except that our side has just spent months denouncing the other side for being so irresponsible as to hold default hostage. That trick failed, but in trying a manipulative ploy that was never going to work, by lying in a good cause about the supposed horrific effects of not approving a rise in the ceiling, we would now find it very difficult to defend the course of action that was always there, sure to work, certain to prevent any disastrous give-away grand bargains.

Our side should have taken the stance from the very outset that the ceiling was not at all a real veto point, that Treausry could not and would not observe any ceiling but the real legal ceiling bearing on it, which is however much money needs to be borrowed to meet all the obligations Congress has assumed by passing laws that obligate spending. We should have made it clear that we would never be voting for any bargain reached with folks who were hostage-takers for trying to get concessions by threatening default, and also idiots for imagining that denying a rise in the ceiling would cause default.

But we've played along with their delusion. It's now a delusion with a bipartisan stamp of approval, an official folie a deux. So progressives will not vote in any numbers against any grand bargain, however heinous, because we have said so long that no rise in the ceiling means default, and default is more heinous than anything imaginable.

We let this become a diving contest, in which the party that was more willing to be more passive-aggressive would win. Of course the other side won. Passive-aggressive is their signature dish. Having won with it, they will continue to use it, over and over again, in ever-escalating fashion.

That's the feature of this grand bargain they're describing that bears most attention, that it does not represent any sort of final resolution, but instead has as its main feature that it creates a process of frequent future fake veto points with which the other side will do the same damn thing that worked for them this time. Only next time, with this grand bargain passed into law, there actually will be some legal basis for the ceiling and their newly created veto points being real, and not just fake, veto points.

Despite the difficulty, despite the admission that it would involve that our side was BSing, our side's best course of action is still to vote against any rise in the ceiling except a completely clean rise. Yes, it will be more difficult to take a stand now, to explain now why that stand is correct after BSing so long to the contrary. But putting off the admission and course reversal will only make it progressively more difficult to eventually do the right thing. This problem is not going to be ended by this grand bargain. The grand bargain is just the beginning, and once it is made law, it will be much harder to stop this process that we now find hard to oppose despite the utter toothlessness of the threat.  There is going to have to be a course reversal and admission of past BS at some point, and the later that point is, the more difficult it will be.

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Comment Preferences

  •  Tip Jar (2+ / 0-)
    Recommended by:
    LHB, Pluto

    We should have destroyed the presidency before Obama took office. Too late now.

    by gtomkins on Sun Jul 31, 2011 at 10:14:24 PM PDT

  •  Agree 100% (0+ / 0-)

    This so-called deal is 100% unacceptable.  As much as I was dreading the possibility of default, I'm dreading signing off on this deal far more.

    There really isn't much left to lose if this goes through.

    To arrive at what now you do not enjoy, you must go where you do not enjoy. To reach what you do not know, you must go where you do not know. To come into possession of what you do not have, you must go where now you have nothing." SJOtC

    by LHB on Sun Jul 31, 2011 at 10:18:32 PM PDT

    •  You must be joking. (1+ / 0-)
      Recommended by:
      joemarkowitz

      You think having the government DEFAULT on its obligations is better than seeing a deal you don't agree with go through?

      Seriously?

      I'm not really advocating whether this is a good or a bad deal, but christ on a raft that's fucking dumb. You realize that is the Teabaggers' position, no?

      •  No default (0+ / 0-)

        The whole point of this diary is that I deny that failure to raise the debt ceiling will cause default.

        Maybe I'm wrong, but if I am, argue against that proposition, that there will be no default even if there is no rise in the ceiling.  Show me where I'm wrong, so I can leave the paths of error.

        But if all you have to express is panic and terror over the prospect that voting against a rise in the ceiling that is tied to a disastrous grand bargain will cause DEFAULT(!!!), therefore progressives simply have no choice but vote for the package, well, you're just illustrating my point.  Our side has painted itself into a corner by promoting the idea that the ceiling would cause default if not raised, because we imagined that we could use that supposed linkage to blackmail the Rs into voting, in the end, to raise the ceiling.

        That cunning plan didn't work.  Time to find another plan.  My suggestion is that this time we go for honesty over cunning, because the other side does cunning and ruthless and passive aggressive much better than our side ever will, but we have them dead to rights on honesty.

        We should have destroyed the presidency before Obama took office. Too late now.

        by gtomkins on Sun Jul 31, 2011 at 10:41:19 PM PDT

        [ Parent ]

        •  Well you can dive into sand and hope it's water (2+ / 0-)
          Recommended by:
          joemarkowitz, Bob Duck
          But if all you have to express is panic and terror over the prospect that voting against a rise in the ceiling that is tied to a disastrous grand bargain will cause DEFAULT(!!!), therefore progressives simply have no choice but vote for the package,

          That's certainly an option. However, in the real world where people have jobs and the financial system needs a basic liquidity instrument (T-bills), default is a bad thing.

          •  Yes, default bad (0+ / 0-)

            But no, no linkage between failure to raise debt ceiling and default.

            We agree that default would be a bad thing.

            But my point, and I'm not clear on whether you agree or disagree, is that I doubt the linkage between failure to raise the ceiling and default.  I don't think the former will cause the latter.

            We should have destroyed the presidency before Obama took office. Too late now.

            by gtomkins on Sun Jul 31, 2011 at 10:53:01 PM PDT

            [ Parent ]

            •  Depends on how much cash we have (1+ / 0-)
              Recommended by:
              gtomkins

              We can't issue treasury bonds without authorization from Congress, and no one will buy bonds with a weak provenance (14th amendment issued, etc.) So what's left is the cash we have on hand. If we run out of that cash, we default. That's no theoretical construct - when we can't service our debt, we default. That's basic financial management.

              So I guess I don't follow your point.

              •  Treasury has authorization to issue bonds (0+ / 0-)

                Congress started delegating bond issuance to Treasury almost a century ago, the process was completed over 60 years ago, and now Treasury is both authorized and obligated to borrow as much as it needs to in order to meet any projected shortfall between revenues and expenditures.

                What Treaury clearly lacks is the authority to broker spending, to decide what spending obligations would be paid, and which denied, were Treasury ever to be caught short of money to pay all obligations.

                That lack of authority to broker spending will make it impossible for Treasury to interpret the debt ceiling law as applying to its operations.  Treasury will be compelled to go by the interpretation that the ceiling in the ceiling law is intended as an internal measure applying only to Congress, as a means to force Congress to look into the place of borrowing vs revenue in meeting spending obligations.

                Even the Supreme Court is not allowed to set aside one statute because it arguably conflicts with another, imposes contradictory requirements, until and unless there is absolutely no interpretation possible that leaves all statutes standing.  The interpretation that the ceiling in the ceiling law does not apply to the operations of Treasury is the only intepretation that leaves all the relevant statutes standing.  Applying any other ceiling to Treaury's borrowing other than the ceiling it operates under every day -- however large a debt is necessary to meet all the obligaitons of the US -- would create a contradiction, and either the ceiling law or all the laws that obligate spending would have to fall.  Treasury is not allowed to let laws fall, to set their requirements aside.  In order to avoid doing what it cannot do -- setting aside the requirements of every law that obligates spending -- it will have no choice but to assume that the ceiling applies only to Congress, forces action only from Congress, and not from Treasury.  

                This interpretation, that the ceiling law is only meant to trigger a vote of Congress, has the advantage of being the interpretation of the debt ceiling law that we all went by before the clown car pulled up to the Capitol and disgorged the Teahadists.  But the interpretation carries its force from the impossiblilty of Treasury applying any other, not just from it being the common understanding of what the law meant up until a few months ago.

                No 14th needed.  No nonsense about coin seigniorage, or the Fed failing to bounce bad checks from Treasury, etc, needed.  This is just common sense.

                The only place the 14th has in this controversy, is that it arguably might prevent even a Congress voting unanimously for some grand bargain from repudiating at least some current obligations already undertaken in the past.  It isn't needed to stop anything less than a statute that purports to welch on an obligation.  It isn't needed to stop the failure of one chamber to vote from repudiating a US obligation.  Only a law can do that, change spending, and you need both chambers and the presedent's signature to change laws, not just the House.  The Rs need to win the next election if they want to change spending, because there is no House veto point created by the debt ceiling law.

                We should have destroyed the presidency before Obama took office. Too late now.

                by gtomkins on Sun Jul 31, 2011 at 11:27:45 PM PDT

                [ Parent ]

  •  How do you know? (1+ / 0-)
    Recommended by:
    gtomkins

    How do you know for sure what would have happened if the Treasury just decided to ignore the debt ceiling? Can you guarantee in that scenario that interest rates would not increase, not only for the government, but also for every homeowner and every business and every consumer in America?  Can you guarantee that that would not cause a constitutional crisis?  Do you think there is no possibility that impeachment proceedings would have started against the president for doing that? It seems to me recently we had a president impeached for much less. Do you think it would have been good for the country to go through all of THAT for the next year, instead of getting this issue mostly off the table, so that we can concentrate on the real issues that will be involved in the next election?

    And do you know for sure that your proposed strategy of promising to ignore the debt ceiling would have worked? How can you possibly know that?

    •  Getting the issue off the table (0+ / 0-)

      I think that's the weak point of both your argument and of this deal that is proposed.  The grand bargain doesn't end anything, it continues this fake crisis indefinitely.  It sets up veto point after veto point that the other side could use to continue and extend this same fight to and through the election.  Why would they choose not to take advantage?  Did anyone, did you personally, predict three months ago that they would get so much from this fight as this deal gives them?  Why would they stop now?  What prinicple, what policy goal of theirs has been fully met that trying again, from the stronger position we're allowing them in the grand bargain, might not get them closer to the maximal goals of their most extreme elements?

      Why would they stop now, especially since the grand bargain itself, once passed into law, will actually give them, for the first time, some basis in law for these veto points?  My argument about the legal status of the ceiling law is that it does not, at all, create a veto point at present.  After the grand bargain becomes law, they will have veto points that actually have the force of law, that Treasury will not be able to ignore.

      As for what happens after Treasury does the right and lawful thing should the national debt hit the ceiling, of course neither I nor anyone else can give any guarantees.  But neither can either of us give guarantees for what would happen if the ceiling was breached and Treasury tried to broker spending, or what will happen if this grand bargain is passed.  I think the consequences of the former would be so terrible that serious consideration would have to be given to just having Treasury ignore the ceiling even if that weren't the lawful and right thing to do.  Good thing there is no such conflict.  As for the latter, what happens if we let the Rs continue their little putsch, and even strengthen their ability to play constitutional hardball for them; while I cannot say what results that would have, I am convinced that they would be even worse than the riskiest projection you could make of the consequences of doing the right thing that I propose.

      We are already in a constitutional crisis.  That you try to frighten people off my suggestion to do the right thing and stand up to the putsch, with the ide that that would start a constitutional crisis, seems to me to be another example of the failure to acknowledge the situation we already find ourselves in.  It's like people who try to scare us off defending the interests of working men and women lest we start "class warfare".  Well, the other side has been waging class warfare unanswered for a while, and they have more recently been playing constitutional hardball unanswered.  

      I won't minimize the risks of doing the right thing.  I believe that the best case defending Obama's actions here, the case that does not have him acting out of a positive desire to end the new Deal, is precisely that there would be dangers from doing this right thing.  Of course, however lawful and necessary it might be for Treasury to interpret the ceiling law as not applying to its operations, however unlawful and chaotic the alternative of Treasury wilfully opting to break all the laws obligating spending, of course the Rs would portray this as KENYAN USURPATION, non-stop, 24/7.  

      In many ways, the worst of it would be that the courts would probably not jump in to give Obama or the Rs any vindication of a definitive ruling.  The only entity that could challenge this correct and lawful course of action would be Congress, but they probably wouldn't be granted cert.  What injunctive relief would they ask the courts to give them that does not lie in their own power?  How could the courts entertain the request for an injunction that Treasury stop further borrowing, when granting that relief would require that Congress instruct Treasury on the priority of spending that would be necesary to impose if further borowing were not allowed?  But such instruction could come directly, in the form of a law, without the needless step of Congress telling the courts what relief they seek, so that the courts can tell Treasury via an injunction.  To the knowledgable, denial of cert on these grounds would be a more devastating rebuke to the Rs than any actual decision for the administration's position, but this result will be sold by their noise machine as Obama getting off on a legal technicality.

      I expect the R's strategy in the event of Treasury going about its business in the wake of the ceiling being breached, would be to avoid any sort of clarity or resolution of the issue of whether that course of action is the right and lawful one.  They almost certainly would not impeach Obama over this.  The last thing they want is for the status and intent of the debt ceiling law to get the public attention it would receive in an impeachment trial.  The House's impeachment managers would end up being put on trial for the House's refusal to pass a clean rise in the ceiling, and this forum, controlled by the D Senate, would be far and away the best shot our side would have to win the PR war over this fake constitutional crisis.  They will almost certainly deny us thast best shot, though perhpas their crazies could not be restrained from it, and we would benefit.

      The other side's best shot would be to hold out the theory that the adminsitraiton's actions were Kenyan Usurpation, and to do that they have avoid actual tests of that theory, any contact of that theory with either careful scrutiny or real-world application.  

      Sure, in combination with a lousy economy, that theoretical constitutional hardball of Obama's, that he had Treasury "ignore the ceiling law", might be the rationale on which voters hang their denial of a second term to Obama.   But, frankly, if the economy is lousy on election day, they're goiing to find some rationale on which to hang that rejection.

      We should have destroyed the presidency before Obama took office. Too late now.

      by gtomkins on Mon Aug 01, 2011 at 12:31:49 AM PDT

      [ Parent ]

LHB

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