The real crisis is that our governing elites are dismantling the social safety net while simultaneously giving tax cuts to the uberrich. F’ing autocorrect changes uberrich to unerring– can’t make this stuff up.

These poll numbers though, make it seem like far too little has been done to explain to regular people what is actually going on in the debate and what is at stake

it’s not just the poll numbers, the poll questions too. maybe far too little has been done to explain to pew what is actually going on.

the entire debt limit “crisis” is a fucking farce.

here’s a question i’d like to see asked: how many people, even fdl readers, know that it’s not necessary to raise the debt limit in order for the fed govt to meet all current financial obligations (no default) and even increase deficit spending?

Fox news just had a big peice on about how it’s no big deal. They said that we have to pay the debt because of the constitution…that we will pay it…cause we have to…but that we don’t have to raise the debt limit to make the payments. They did some math showing that we have plenty of money with all the income from taxes to pay the debt with money left over. It was PURE CRAP. But if enough people want to believe…they will.

If raising the debt ceiling relies on stripping the middle class of the last of its wealth, why should we?

We can’t fight fox news…when they make it so “simple” and reassure people. We have plenty of money. Obama is just trying to raise taxes. That’s all! God it’s maddening. How do we counter the lies?? I guess we can’t .

i have no doubt re fox news. but there is a way (possibly several) for the administration to get around the debt limit. here’s one, QE3, Treasury Style—Go Around, Not Over the Debt Ceiling Limit, that’s been discussed here at fdl for over half a year. it was beowulf’s original idea and here is his diary from january: Coin Seigniorage and the Irrelevance of the Debt Limit.

In my feeble mind, it just is not going to happen.
Wall Street will not let it happen. The Repubs have taken this “debt crisis” hostage to cut the safety net they despise.
Obama is destroying the one issue that Dems can run on in 2012 and he does not care one wit.
The “tell” was when he congratulated the winner in NY-26, but did not give credit to the issue she ran on about Repubs killing Medicare.

“The Obama Administration seems fairly proud of their current performance and think they are politically winning the debate over the debt ceiling right now by appearing to be more reasonable and the “only adult in the room.”

Soon Obama will be the only person in the room, dems and gopers are going to walk out on him

this is Obama shock docrine plot gone bad

these talks don’t help any dems politically, and most dems view OBAMA as a 1 termer now, why would any dem waste their politcal capital sitting around with OBAMA

Obama intentionally gave up his levarage on the debt ceiling back in December and everyone now knows it.

yes FYI, few GOPers want to cut social programs

I’ll second that question, selise, and would appreciate seeing a non-manipulative, as well as “educational”, poll which might show the results of some actual understanding beyond merely “paying” glib, and comfortably(?) shallow “attention” to the superficial “framing” of spurious “issues”.

DW

Any questions about why there is a need to raise the ceiling?

Any questions about short fall in revenues tied to tax loopholes, rich not paying taxes, people unemployed and therefor not contributing to the revenue base?

Where are the questions that matter or are we stuck in the raygun mode of simplistic answers to important questions?

Where are the questions about not raising the ceiling therefor having to cut desperately needed services?

More like a peew survey as far as I can see.

The Obama Administration seems fairly proud of their current performance and think they are politically winning the debate over the debt ceiling right now by appearing to be more reasonable and the “only adult in the room.”

Ha…Only adult in the room….In a Pigs Eye !

Just more Kabuki from our corporate shrill in the WH.

How can you trust a poll when the question asked has only two responses and one of the two is factually incorrect?

Americans Don’t See Failure to Raise the Debt Ceiling as a Crisis

And yet all this nonsense about threating not to raise the debt ceiling and the bullshit about it being a crisis does represent a failure and the fact that there is a crisis of leadership in this country.

Obama, I don’t know if you were a Trojan Horse when they propped you up to become the presidential nominee, but you’ve been a total failure as a leader since taking office.

I think you have enough intelligence to recognize it and enough sense of right and wrong to be ashamed.

Why don’t you use this last year and a half of what’s left of your presidency to help the American people and try to fix this country?

If you are an ordinary American, failure to raise the debt ceiling is not a crisis. Constitutionally, the US government is prohibited from default. Period. Full stop. Creditors might get inflated money in payment or deferred interest payments or a cut in military spending. Or even a temporary cut in Medicare, Social Security, and Medicaid (middle class nursing home payments).

Tax money still comes in. And in order to appropriate funds for FY 2012, Congress will either have to raise the debt ceiling or vote on actual cuts.

And BTW the banksters, who would be first hurt, are not nervous enough to call off their attack dogs in Congress.

August 2 will be just another day.

When Wall Street thinks it is real, they will panic. Then they will buy back on Aug 2.

So breathe and get ready to run some candidates in dark red districts in 2012.

If there is a shock, we should be ready to capitalize on it. It’s the only way that that any temporary damage will be reversed. So get those Green and other third party candidates on the ballots in Texas, Alabama, Nebraska, Kansas, Oklahoma, Mississippi…No better time for “a plague on both your houses” where it would do some good.

Most of us didnt see a “crisis” until Obama started throwing crap on the table.

I think most people see this as the manufactured, attention-whoring non-issue it is.

And frankly, Obama would have scored more of the points he and the others crave so much if he had just said no to anything but a clean bill from the get go. The fact he is even negotiating is a sign of weakness.

I personally hope the repubs just balk. The current deal is a worse than a brief uptick in interest rates.

Me Me Me Me Me. Call on me.

BTW, did you see Scott Fulweiler’s idea?
QE3: Treasury Style

It’s loopy as heck, but looks like a way to buy time until after the 2012 election. Help me poke holes in it.

If you are talking about the 14th amendment issue, I, for one, have a fear of expanding the president’s unilateral powers. Obama may be trustworthy but not all subsequent presidents will be.

ding, ding, ding!!!

tarheeldem, you have obviously been paying attention! …see my comment @6 ;)

(p.s. if scott fullwiler and mosler (both wicked smart) don’t see any holes in beowulf’s idea (who btw, is also as smart as hell) then i think it needs to be taken very very seriously. the only problem seems to be how to get the information more widely discussed — there seems to be some kind of weird reluctance to anything not from either the beltway or a v short list of D aligned sources)

i don’t think obama is trustworthy.

The unilateral power to make spending cuts without Congressional interference?

Well, the way to deal with that is to repeal the debt ceiling law after 94 years. Then the responsibility goes back on Congress in its appropriations and tax legislation. The current situation: the President cannot borrow money to finance expenditures already authorized by Congress when revenues from tax legislation passed by Congress does not deliver sufficient revenue to cover everything. And (post-Nixon) he cannot defer or rescind expenditures without Congress’s permission.

So he is given two contrary instructions, plus constitutionally he must obey the 14th amendment section 4. The only power he is claiming is that the 14th amendment (and thus the appropriations and tax revenues authorized by Congress) have precedence of an arbitrary debt ceiling.

Go long on platinum for the next day or so :)

Thought I wasn’t crazy.

With a rinse and repeat, it seems to me that it is possible to structure the entire debt away from private and foreign hands into the Fed and then retire the coinage when prosperity and sanity return. And make the gold bugs scream.

I heard Obama say’s if there is no deal on the debt ceiling SS retirement and disability payments will be suspended. I am trying to get a link. This is bullshit.

Right, why would they? Most don’t know what it is because it passed without fanfare many many times. And their immediate crisis is keeping their POS job so they and their kids won’t be thrown into the street.

http://tpmdc.talkingpointsmemo.com/2011/07/obama-no-social-security-guarantee-in-august-if-gop-doesnt-back-down-video.php?ref=fpa

Here is the link.

Asking Americans their opinion on an important issue like this, after significant numbers of them have been lied to and propagandized for months on end is no formula for economic success, fair taxes, or sensible government policy.

Two things I thought of in reading beowulf’s diary. (1) Using seignorage without some discipline could inflate the price of goods and services; monetary policy would also have to apply to how it is issued. (2) I’m not sure what beowulf is getting at with his comments about the budget. It seems to me that the deficit (whether paid in seignorage or debt) is dependent on tax laws and appropriations an is only a balancing term in a budget. Whereas the actual booking of transactions between the Fed and Treasury is something different altogether. And that if you are estimating these transactions as a part of the budget of the Fed AND if you are aggregating the Fed budget with the federal budget, you will make some arbitrary rules so as not to double-count those essentially internal transactions. I get that the chimeric nature of the Fed complicates this.

Of course it’s bullshit. He trying to wake up the public to the discussion–i.e. the topic of this diary. It is a possible way of dealing with blowing through August 2, but not the only way.

That poll is based on people knowing nothing about what’s being bargained in these talks. The entire thing is just shameful politics that jeopardize the fragile economic prospects of most American workers. Note that the 2% won’t suffer a bit no matter which way the cards fall.

I opposed bailouts of the 2% with Tarp, and I oppose continuing bailouts with tax cuts to the wealthy.

Politicians are the lowest form of life in the Universe. Believe it.

No, 14th Amendment issue is a defense to breaching the debt ceiling. Coin seigniorage is a way to sidestep the debt ceiling altogether because Congress has rather broadly delegated its power to coin money to the Secretary of the Treasury. Effectively, the power to mint legal tender in any quantity and denomination (platinum coins in particular; gold coins too, but there’s more red tape) is like Lincoln printing greenbacks instead of borrowing to fund the Civil War.
Bear in mind two points:
1. Congress always has power of the purse. Tsy can only spend what Congress appropriates, indeed it must do so per Secretary’s statutory duties (notice what comes right after it) :o)
31 USC 321 (a) The Secretary of the Treasury shall—
(3) issue warrants for money drawn on the Treasury consistent with appropriations;
(4) mint coins, engrave and print currency and security documents…

2. The Federal Reserve has known since World War II that the govt has no need to tax or borrow to fund govt operations. See FRBNY Chairman Beardsley Ruml’s 1945 speech to the American Bar Association:
Final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity.

Federal taxes, sadly, are unavoidable in order to maintain the value of the dollar and to regulate aggregate demand (Congress would make life much easier for itself, Tsy and taxpayers if it replaced income taxes with a bank transaction tax, but I digress).

Federal borrowing is rather more avoidable, its only function is to allow the Federal Reserve to peg a positive Fed Funds rate (the interest rate banks charge each other for overnight loans, all other interest rates are based on this). However the Fed can peg interest rates without borrowing thanks to its authority to pay interest on bank reserves. The Fed can hike interest rates by hiking the IOR rate, so covering the deficit by coinage would not be any more or less inflationary (there’s some evidence that higher rates are actually inflationary) than borrowing it– the only difference is that the debt ceiling is irrelevant if there is no debt. :o)

I suspect most on FDL understand – and that is a 100 times the number that understand in the media.

If the budget appropriations for the Dept. of Offense and Homeland Insecurity were cut appropriately, by 50% or more, wouldn’t the US be able to meet its fiscal obligations without this kabuki crap about the debt ceiling? For what nefarious ends are they using this manufactured crisis to distract us?

excellent summary-

indeed the Fed loophole was/is known to Congress because they passed a law that the Government could not issue debt directly to the Fed.

Irony is that the debt limit was a “liberalization” to allow debt issuing without getting Congress to pass a law authorizing the issuing of debt every time the Treasury wanted to have an auction.

Defense/intel including secret spending that the budget spreads into other areas is estimated at 1.5 trillion, but the on the books budget is around 800 billion. Pentagon spending doubled under GW Bush from year 2000 Clinton – so based on the on the on the books number you are talking about $400 billion if it is cut back to 2000 levels. The Bush Tax cuts are $200 billion next year growing to more than $400 billion in the 10 year budget window.

At this time the recession and non-recovery is the main driver of the deficit going forward, Corporate profits have recovered but US companies are claiming all tax is deferred as the value added is done over seas, and IRS Code Section 482 is not back to Clinton level enforcement so as to prevent these deferred tax claims. The tax code really needs to get rid of the incentives to move jobs overseas.

See my response above to greybeard about inflation.

Its a separate section of Title 31 (re: Mint Public Enterprise Fund) that states that the proceeds from all coin sales can be swept by Secretary into Tsy General Fund as miscellaneous receipts. As such, the proceeds should count as revenue on the federal budget (curiously then, a balanced budget amendment would be no problem). I wrote a rather long memo last year to Tsy Inspector General making the point that Tsy’s accounting procedures were contrary to plain language of Mint PEF law (as well as Tsy’s course of conduct with every other public enterprise fund). Tsy’s stance is that while coin seigniorage can be used to pay down debt, it isn’t spendable revenue that reduces the budget deficit.

It was letsgetitdone and wigwam who pointed out that I was fighting an unnecessary battle. Even under Tsy’s current accounting procedures, Tsy could use coinage power to pay down its debt (most easily with Fed-held debt, but with any creditor really) to create room under debt ceiling to allow for additional Tsy borrowing. The process could be repeated as often as necessary to stay under debt ceiling indefinitely.

The 1 oz $1 trillion coin is a nice mental image, but since platinum costs less than $2000 an ounce–trading around $1740 today– there’s no reason there couldn’t be a variety of denominations minted to make the “coin for debt swap” easier to process. The West Point Mint is slated to mint 15,000 platinum coins this year for collectors (with a nominal face value of $100), the Secretary can adjust that production schedule (and face value!) at any time.

I’m not sure what beowulf is getting at with his comments about the budget. It seems to me that the deficit (whether paid in seignorage or debt) is dependent on tax laws and appropriations an is only a balancing term in a budget

That’s an illusion, widely held to be sure, that costs our economy trillions in lost productivity, unemployment and human suffering. Focusing on the deficit instead of our obscenely high unemployment rate and agg demand shortfall is like designing a car to protect its hood ornament and bumpers by sacrificing the human lives it carries. Since Paris is worth a mass and all that, I simply suggested a way to eliminate the deficit (or to set a more modest goal, to nullify the debt ceiling) to allow the govt to inject as much spending (directly or via tax cuts) into the economy as necessary. As Wynne Godley explained:

“More fundamentally, the budget balance is equal to the difference between the government’s receipts and outlays, but it is also equal, by definition, to the sum of private net saving (personal and corporate combined) plus the balance of payments deficit.

“A sensible target for the budget balance cannot be set unless it is integrated into a view about what will happen to autonomous trends and propensities in private net saving and foreign trade. Moreover, as those trends and propensities change, it will never be possible to determine viable targets for the deficit that are fixed through time such as, for instance, that it should never exceed some number such as 3 per cent of GDP or that it should on average be zero.”

Too bad our current government failed to repeal or at least rework the terms of NAFTA and the other “free trade” agreements passed within the preceding twenty years that have destroyed our manufacturing base. A big thanks to Bill Clinton, the first Republican elected as a Democrat in recent history.

Thanks for the kind words. The point is this is something the President could do if he was willing to step up and take action. Obama’s far too passive to do something like this proactively (Man do I miss Richard Nixon, he and his Tsy Sec John Connolly would have LOVED this) and its only now dawning on him that he’s Sherlock Holmes and the GOP is Professor Moriarty, ready to take them both over Reichenbach Falls. Think of coin seigniorage as a simple baritsu move.

When I reached the end I stood at bay. He drew no weapon, but he rushed at me and threw his long arms around me. He knew that his own game was up, and was only anxious to revenge himself upon me. We tottered together upon the brink of the fall. I have some knowledge, however, of baritsu, or the Japanese system of wrestling, which has more than once been very useful to me.

I will NEVER vote for Obama again. EVER!

He may have the intelligence, but the sense of right and wrong? I very much doubt it.

There’s really nothing weird about the reluctance to remove the veil of obfuscation wrapped around this debt ceiling circus by allowing outside the beltway commentators to speak. They don’t want us to understand the issue, so they can use it as an excuse to further cut and weaken government in the Norquist starve the beast mode.

BTW, I really appreciate the idea Fulweiler mentions of the gov’t minting a 1 trillion dollar coin to throw into the budget. I knew the gov’t has always had the power to pay its debts by minting more dollars, but I thought that would affect the dollar’s value and monetary policy. (In the very beginning of the republic just after the Revolution, Congress minted money by the boatload to cover its debts; in time Congressional money became worthless, I believe.) But this one coin obviously would have no effect on the money supply in general.

Unfortunately, Obama is not Sherlock Holmes in any way, shape or form. He’s Professor Moriarty’s loyal henchman.