I think a big problem with the politics of this debt ceiling fight is that the American people don’t know how incredibly stupid the concept of the debt ceiling really is. This is why the only real highlight from President Obama’s rather bizarre public address yesterday was, for me, that he finally started trying to explain to the American people that the debt ceiling isn’t about deciding whether or not to allow the country to spend more money. From Obama’s Speech:
Understand –- raising the debt ceiling does not allow Congress to spend more money. It simply gives our country the ability to pay the bills that Congress has already racked up. In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every President has signed it. President Reagan did it 18 times. George W. Bush did it seven times. And we have to do it by next Tuesday, August 2nd, or else we won’t be able to pay all of our bills.
It is nice but sadly, too little, too late.
Congress already wrote the checks, spending the money and/or legally promising to fulfill the contracts through previous legislation. Not raising the debt ceiling means these existing laws will need to be broken. Refusing to borrow or raise taxes to fulfill these existing legal obligations will bring into question whether or not anyone can trust the United States Government to follow its own basic law, which could in itself be a violation of the 14th amendment of the Constitution.
A simply analogy is that Government has gone to a restaurant, has already ordered, received its meal and eaten half of it. Not raising the debt ceiling would be as if Congress, after eating most of the meal, decided to run out of the restaurant without paying the tab.
I think if people were to understand how completely stupid the debt ceiling is they would be even angrier about this to-do. The President could have used his bully pulpit to tell the people almost no other country has a debt ceiling.
When their legislatures approve a law requiring new spending they also inherently approve the borrowing needed to fulfill that law. It is only here in United States where it is possible for Congress to force the President into a criminal act. They can, in theory, pass a law legally requiring the executive to pay for something but once the check comes due, they can refuse to let him borrow the money needed to pay for it.
Obama could have told the American people it didn’t used to be this way and doesn’t need to be this way now. In the past, Congress raised the debt limit in the same bill that created the need to borrow more. So there is no need to have a debt ceiling at all. It could just be set once and for all.
Whether or not this would have made a difference is impossible to know, because Obama chose instead to try to use the debt ceiling nonsense to get the “Grand Bargain” on the deficit he has wanted for years.
It is unfortunate that as our whole political system comes unhinged due to this current fight, so little has been done to explain to regular people what a preposterous and unnecessary debate this really is.




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Didn’t Dick Gephardt have a rule that any appropriations bills – even CRs — had to have accompanying borrowing authority built into them, back when he ran the House spending bill side of things? And didn’t the Gingrich revolutionaries split out the debt ceiling into a separate (illegal) bill for purposes of showing President Clinton to be such a big tax-spend-and-borrower?
On its face, the concept of a debt ceiling seems to me (IANAL) to fundamentally question America’s already undertaken spending and debt, therefore violate the XIVth Amendment.
But yes, whether the debt ceiling violates the XIVth or not, Obama missed (among others missed) a grand opportunity last night to explain how stupid it is. He’s being mocked by opponents anyway for being condescending (“what is this thing the debt ceiling, anyway?”) and elementary in his speech; why not go the whole way and explain that they are arguing over something illegal and stupid, with the great risk of destroying the world economy to boot?
Presumably he came on tv last night to explain at least Republican strategery in hyping a not-to-be-hyped function of Congress. But then he was hoist on his own petard because he had pushed the hype himself with his $4 trillion Grand Bargain, which he still seemed to be pushing last night at the same time as he was advising the Reid ‘solution’ was the way to go. Impossible to follow the logic of that.
Simpleminded me would have preferred him to say, ‘Sorry folks, I shouldn’t have taken the bait and pushed my deal for cutting the social programs and scared you half to death. That was stupid. We just need to do the timehonored thing, leave everything else for another time. And by the way, social programs are not going to be cut or limited by sleight of hand in any such negotiations because the Social Security program is paid for out of payroll taxes and it is not part of the budget, never has been.’
Now, if the Republicans still wanted to obstruct after that, we would certainly know who to blame.
And in tranquil times we could debate whether or not there should be a debt ceiling since other countries do not have one. I’m not sure yet what the arguments pro and con would be.
I understand that assumes a government not totally in the hands of the corporatocracy, which is not what we have. We gotta change that.
http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.theonion.com%2Fvideo%2Fsocial-security-reform-bill-encourages-americans-t%2C21006%2F&h=iAQAy3-8U
The Onion
I said I was taking the day off from debt cieling/decficit stuff. And here I am. It’s like a car wreck.
amen. here are a few more:
the american people should know just how stupid deficit reduction plans are.
the american people should know just how stupid it is to say tax cuts are all bad.
train wreck.airplane crashok, i don’t know… but it’s bad.
This time around, the borrowing limit brouhaha is mainly about Medicare, Medicaid and Social Security. Obama is the last best chance the financial powers that be have to get their hands on the SS money. A Republican president, with or without a Republican controlled congress, couldn’t do it. Obama was selected because he is the best shot the financial industry has to get a hold of that pile of money.
A lot of people wondered why Obama did not heavily publicize the cut in payroll tax he was able to pass. That is because it was a cut in the FICA: the money used for Social Security. He was afraid too many people would notice.
Now, to “fix” SS, he wants to reduce the amount SS recipients receive, possibly by changing the formula used to calculate the cost of living increase for SS recipients and raising the age people can start collecting. Social Security is not even a budget item, and has never contributed to the debt or deficit. Except that the extra money collected for SS over the past two decades, or so, has been borrowed by congress to pay current bills. Now that this borrowing has come due, a few years sooner than expected (mainly because of the recession and Obama’s payroll tax deduction), SS has become part of the budget, in a criminally intentional way.
Obama is the most cynical president we’ve ever elected. No other president would have the audacity to do this. But remember this: he will be one of the richest ex-presidents in US history (not counting those like the Bushes, who already had more money than God). Obama was chosen very skillfully by the financial industry and it, not those $5 and $10 contributions from the “little people,” made him president.
None of the big holders of US debt is worried about not being paid; at worst any lowering of America’s credit rating only means they will get a higher interest rate a short time after whatever new date (it has been pushed back several times this year already) the administration decides it can get away with. The only people who have to worry about getting their money are SS recipients, government employees and others too small for our president and congress to care about.
Those old folks who stood up at the town meetings two summers ago and told their congressional representatives “to keep their hands off of my Medicare” understood, far better than the commentators who made these old folks out to be stupid, what was at stake. The problem is that which group of bums do we vote out of office: the Dems or the Repubs? At least our social programs seemed safer under a Repub president.
Liberal Dems are now reaping the results of many years of holding our noses and voting for the least bad alternative. This time, the Dems made the worst possible choice, and unless they can come up with an alternative very quickly, they, and all of America, are stuck with that choice.
I kindo disagree. I think many people knew/know what the debt ceiling is. Any confusion comes from the prez and repubs adding cuts and taxes and what not and debating unrelated issues for months. its the pointless negotiating that has twisted the issue.
I prefer circus clown car demolition derby
like those little Shriners cars
yes… but they eject one red nosed clown after another from the vehicle
who listens to Obama anymore?
If you want to hear “just how stupid the debt ceiling is”
find the speech of Minnesota Senator Al Franken from the senate floor. Sorry don’t have link, about 40 mins speech and everyone should watch/listen. Maybe from Monday 7/25 CSPAN ?
Let’s say it again. The debt ceiling law is stoopid. It takes away our sovereignty and gives it to S&P and Wall Street. Yes, it does bc it prevents us from exercising our sovereign right to pay our bills. It allows someone else to tell us what our spending policies will be and those someones are NOT our elected officials. It makes us like greece and beholding to someone else.
And guess what, the someones are now looking to pass a balanced budget amendment which will also prevent us from exercising our rights at the most critical time, when we need to spend money to stimulate the economy or when we have incurred a debt. Someone should tell MR Obama about this. He could use it.
Most people have no idea why that is. Too bad they can only find out when it is too late.
Found the link for speech of Minnesota Senator Al Franken from the senate floor uploaded on July 7
http://www.youtube.com/watch?v=hHUDPU7_2qA&feature=player_embedded
This is a fine explanation (at least as far as I can tell) as to the idiocy of the “debt ceiling debate” but I don’t think it goes far enough. The deeper issue is that Washington, DC politicians in both political factions there are utterly beholden to wealthy interests. In turn, these wealthy interests are so powerful, so indulgent, and so economically comfortable that they can drive their politician lackeys to play pointless games like the “debt ceiling debate” while the country itself descends further into socioeconomic decline. Really, what we are seeing is a bunch of Neros fiddling while Rome burns.
It’s not unlikely that many Americans are opposed to raising the debt ceiling fearing that it will then be too hard to paint.
It’s the new Gilded Age. I’m surprised Obama hasn’t put on an extra 200 pounds.
Yes, so true. We need to get enough power to repeal the stupid law so we can get the Limbaughs and Kochs out of setting policy. This all worked as long as the thugs were in power and their masters allowed it. Now we have a political crisis and it is crystal clear this law is dysfunctional on many levels. Please send a message to Mr Obama. He is looking in the wrong place to fix the economy.
There absolutely is no pro for a law that prevents you from paying your debts unless you want to change America forever.
Is this the operative federal debt ceiling statute?
http://uscode.house.gov/download/pls/31C31.txt
In particular “TREATMENT OF CERTAIN OBLIGATIONS OF UNITED STATES” and what follows.
Also, I find this pretty interesting:
http://www.dorfonlaw.org/2011/07/guest-post-on-debt-ceiling-by-laurence.html
I tire of this weak analogy.
The situation is more like a tenant who has run up a year’s worth of utility bills but decides he’d rather burn down the house than pay up.
Has anyone ever said tax cuts are all bad??
I dunno. That would be just as stupid as saying all tax cuts creates jobs IMO.
BTW, calling bullshit on the claim that tax cuts create jobs does not equal saying tax cuts are all bad.
I’m sorry for being here, know I shouldn’t be here, and actually did quite well for a number of weeks by not reading anything here. But then my thirst for real news (I once again learned the cable “news” channels are anything but news) brought me back to reading, and my lack of self discipline has me commenting again. Sorry for that lack of discipline on my part.
A week ago he sounded tough, like he finally woke up to the Repug game. But no, now it looks like he is caving in again. He needs to insist on raising the debt ceiling, period, no add-ons, and for the next two years. “The (long suffering) American People” would be totally with him on it. And totally with him on protecting Social Security, Medicare and Medicaid, and then going for the full Monty, that is, letting Bush tax cuts expire. Better yet, raise taxes on rich people. Put the rates back to where they were in the 1950s. He can’t see that the American People don’t care about being “Bipartisan”. We elected a Democrat, he needs to stand up and be one. No matter what he does to please the Repugs, they will never accept him, they will never let him in to the club, and if the economy tanks (which is what they want) they will say, “See, what else could you expect from a Democratic, affirmative action president?”
Jon, You’re way too smart to believe this just happened. It’s classic misdirection. Glenn Greenwald’s on point in reminding us That Obama would like to turn 2012 (in your words), into a tribal vote, rather than a referendum on his Presidency. Can’t say I blame him.
this is a very thought-provoking comment.
+ i like that it is stated matter-of-factly, without excessive emotional rhetoric.
i hope you will comment further – there’s a need, because there’s a great deal of chaff in the wind right now.
I do not think they do. The correct model for a sovereign economy with its own currency is the modern monetary theory (as in kinetic theory) described by
http://pragcap.com/resources/understanding-modern-monetary-system
http://my.firedoglake.com/selise/2011/07/17/warren-mosler-mmt-to-president-obama-and-members-of-congress/
http://bilbo.economicoutlook.net/blog/?p=2943
and many more.
pshakkottai
Where are those nice lawyers who told Obama he didn’t need to get Congressional approval to bomb Libya? Couldn’t they get him out of this by declaring the debt limit law unconstitutional? Oh, you mean he doesn’t want to get out of it? Chess again.