Debt ceiling hit

[Jason_McCullough]

I can’t believe this has actually happened.

I guess if we default on the payments from a political spat that means we really are a banana republic.

[Gus_Smedstad1]

I suggest the first emergency measure they take is to stop paying congressmen.

[Menzo]

It’s amusing to see Republicans play their very weak hand so strongly on this. If the markets get the idea that the US would actually default then a lot of very rich people are going to lose a lot of money, very quickly. I’m sure the most influential of them are already talking to their representatives, all of whom are assuring that this is all just posturing.

The debt limit must be raised, and all but the nincompoops know it.

[Enidigm]

The same Republicans that exacerbated the 2008 crash by wrestling with and refusing the bailout day after day, whose actions probably dropped the bottom of the market by at least 1000, and probably 2000+ points? /Peter Cushing.

[Alstein]

I wish Obama would say

“Ok, since Congress won’t act on this, I will” and do things very aggravating to Republicans, then say “If you don’t like it: negotiate or impeach me.” They’ll have to negotiate.

[theblackw0lf]

@Alstein

I wish Obama would say

“Ok, since Congress won’t act on this, I will” and do things very aggravating to Republicans, then say “If you don’t like it: negotiate or impeach me.” They’ll have to negotiate.

What could he do?

[Alstein]

Unilaterally pull troops out of Afghanistan, declare “emergency taxes”

It doesn’t have to be legal, he just has to have 34 Senators on his side to block an impeachment. Would be a constitutional crisis though.

[Brettmcd]

@Alstein

Unilaterally pull troops out of Afghanistan, declare “emergency taxes”

It doesn’t have to be legal, he just has to have 34 Senators on his side to block an impeachment. Would be a constitutional crisis though.

So you want him to do things that arent legal??? How would that be the right way to do anything?

[Menzo]

Yeah, that’s silly, but I think Obama is showing a lot of restraint. He could just go on TV and tell the public that a straight up/down vote on the debt ceiling will get passed, but he won’t allow anyone to add any other riders to the bill. So Republicans, go ahead and make my day by trying to hold the country hostage. Let’s all hold hands and see what happens on the other side.

[Alstein]

@Brettmcd

So you want him to do things that arent legal??? How would that be the right way to do anything?

Sometimes what is right and what is legal aren’t always the same thing.

Besides, pretty much anything a president does is effectively “legal” unless it is overturned or he is impeached effectively.

The thing is, unless Obama does this, the Republicans can win by running out the clock- they’re likely to get both houses of Congress anyways no matter what, they just need Obama to lose- crashing the economy helps their cause.

[Strollen]

@Enidigm

The same Republicans that exacerbated the 2008 crash by wrestling with and refusing the bailout day after day, whose actions probably dropped the bottom of the market by at least 1000, and probably 2000+ points? /Peter Cushing.

For the record 95 Democrats joined 133 Republicans in rejecting the initial TARP proposal. Looking at the roll call it appears that was odd collection of liberal Democrats and conservative Republicans who triggered the Sept 29, 2008crash. It was the only time during the crisis that I was really terrified that economy was going down the tubes.

[Midnight_Son]

Time to file for bankruptcy. It’s not like the debt is ever going to be repaid anyway.

[anaqer]

@Alstein

Besides, pretty much anything a president does is effectively “legal” unless it is overturned or he is impeached effectively.

Now where have we heard this before.

[Midnight_Son]

Richard M. Nixon!

[Robert_Sharp]

Let’s go full out and cancel all debts! (especially my student loans, please!)

[Mightynute]

@Gus_Smedstad

I suggest the first emergency measure they take is to stop paying congressmen.

So what do we do once the congressmen (rightfully) quit after you stop paying them? Now we have no Congress, can’t make laws, can’t pass bills, and our government’s been effectively tanked. Way to go.

[Ben_Sones]

@Brettmcd

So you want him to do things that arent legal??? How would that be the right way to do anything?

Actually, “unilaterally” pulling troops out of Afghanistan would be perfectly legal, since that’s one of his Constitutional powers as Commander-in-Chief. The president doesn’t need congressional approval to bring troops home.

I otherwise agree–I don’t think that precipitating a Constitutional crisis is going to help the matter. I do think that Obama needs to stand up to the lunatic right on this issue, though. There are plenty of legal ways to do it.

[Bill]

A credit analyst friend of mine was at congress last week and actually heard a Republican congressional staffer say, “we should skip a coupon payment, that would show people that we’re serious.” Hopefully his boss has a better understanding of what that would mean.

[Aeon221]

I guess these guys drew all the wrong lessons from the Gingrich fiasco. Hope Obama enjoys the victory lap in '12, and the Republicans enjoy spending time with their family or whatever the code word is for people don’t trust me to do my job anymore.

Also not on the sheet are Medicare, Medicaid and Social Security. All those payments can apparently be stopped to save Treasury funds for keeping the gov’t from defaulting.

Talk about unintended consequences.

[unbongwah]

@theblackw0lf

What could he do?

Bruce Bartlett actually puts forth a reasonable argument that Obama could invoke the 14th Amendment to override the debt limit (emphasis mine):

@Bruce Bartlett

Personally, I think Republicans are playing not just with fire, but the financial equivalent of nuclear weapons. Perhaps at one time when the federal debt was owned entirely by Americans we could afford to take a chance on debt default because the consequences would only be internal. But today, more than half of the privately held public debt is owed to foreigners; the Chinese alone own more than $1.1 trillion of Treasury securities. Moreover, many countries use Treasury securities as backing for their own currencies. Thus the impact of default would be felt internationally, disrupting finances and economic policies throughout Asia, Europe and Latin America.

Therefore, a potential debt default is far more than a domestic consideration; it is a matter of foreign policy. This is why Secretary of State Hillary Clinton and Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, have been warning for some time that the public debt represents an important threat to national security. As attorney Thomas Geoghegan recently put it, “Where the validity of the debt is concerned, our national security is at stake.”

This being the case, I believe that the president would be justified in taking extreme actions to protect against a debt default. In the event that congressional irresponsibility makes default impossible to avoid, I think he should order the secretary of the Treasury to simply disregard the debt limit and sell whatever securities are necessary to raise cash to pay the nation’s debts. They are protected by the full faith and credit of the United States and preventing default is no less justified than using American military power to protect against an armed invasion without a congressional declaration of war.

Furthermore, it’s worth remembering that the debt limit is statutory law, which is trumped by the Constitution and there is a little known provision that relates to this issue. Section 4 of the 14th Amendment says, “The validity of the public debt of the United States…shall not be questioned.” This could easily justify the sort of extraordinary presidential action to avoid default that I am suggesting.