I don’t know a thing about the 14th Amendment and the debt ceiling, but this seems to make sense:
Some Democrats in Congress, including Steny Hoyer, have called for President Barack Obama to invoke the 14th Amendment to resolve the debt ceiling crisis. What they don’t realize is that Obama has already invoked it in effect.
Obama has already told bond holders that there will be no default on bonds. He plans to use existing revenues to pay off interest on the debt and other vested obligations. This is required by section 4 of the Fourteenth Amendment. But that means less money for other government services, including social safety net programs like Medicare. So we’ll see a partial government shutdown once the government runs out of other options….
This in turn will place enormous pressure on Congress to raise the debt ceiling, which it should have done in the first place. By requiring a priority rule for payment of bondholders, Section 4 of the 14th Amendment forces the President’s hand, which leads to a partial government shutdown, which leads to a political resolution of the crisis.
Cameron
Couldn’t a (convoluted) argument be made that since the money has already been budgeted it is our 14th amendment obligation to pay it?
JGabriel
Question: Since Social Security’s fund is invested entirely in treasuries, does that mean full Social Security payments will be made?
.
DBrown
But we then suffer a down grade and interest rates for the Feds and all of us are raised – great deal. Then all Mil/Gov workers don’t get paid and other fun things – as for the 14th, that can allow unlimited funds to meet obligations that congress had authorized.
Samara Morgan
All we have to do to balance the budget is leave Iraq and Afghanistan.
why not?
we are getting ABSOLUTELY NOTHING for the 4.4 trillion dollars we have spent there so far, we have no prospects of any return on investment.
Terry Chay
The facilities to send out the SS payments is not a bondholder. So while Te debt may be paid back, the checks wont be cut and mailed.
Davis X. Machina
OT — hate to do it, so early in a thread, but this reaches some kind of new height — or depth — of teahadism:
One of them is Alan West. Because Alan West is just not right-wing enough.
It’s like watching French politics ca. 1793-95, only this time with the angry mob armed with press releases.
Cris (without an H)
I’m going to agree with matoko_chan on this one, even though it’s kind of off-topic.
Comrade Mary
Careful — you can get a lethal paper cut from a press release in the wrong hands.
kay
I haven’t been looking at it like this:
As a priority rule that is in the section, so not a “decision” by the President.
fasteddie9318
MSNBC is assuring me that both sides are to blame here, so I guess I’ll be voting the Bloomburg/Friedman ticket next year.
Martin
Wut?
Iraq/Afghan is $118B this year. Deficit is $1.4T this year. Even if we turned off 100% of defense spending, we’d still have a $750B deficit.
Poopyman
@davis:
Oh my! We certainly do live in interesting times. I’m glad to see it occasionally entails hilarity.
AR
Republican gameplan: Force a default, laugh at Pell Grant and Medicare users not getting their money, then turn around and blame Obama. Claim that by prioritizing bond payments, Obama is putting the banks over the people, and that the GOP are the true populists. Sit back and watch the Democratic circular firing squad.
aimai
The Balkin piece–all the links in it as well–is very interesting. I think what I’m sensing after reading it is that, unsurprisingly, we won’t know what Obama is going to do until a minute or two into the press conference he will call on August 1st.
And as for matoko-chan don’t strain yourself in agreeing with her, Cris without an H. She’s wrong. Ending the wars a) won’t happen fast enough, b) incurs plent of costs in terms of transporting, rehousing, and caring for the returned troops and c) dumps hundreds of thousands of veterans onto an allready weak job market. Its going to be good for somethings, and very bad for others, economically and socially speaking. At this point the wars are a massive jobs program and the only form of stimulus we’ve got going for us.
aimai
kdaug
@kay: Precisely. Ball is in Congress’s court again. Pick who you don’t want to pay.
“Shall not be questioned” is there in ink and parchment.
Catsy
I wish people would stop issuing sanguine predictions like this. They are based entirely on the premise that Tea Party Republicans 1) give a shit about what happens to the rest of the country and 2) acknowledge facts and reality.
kay
Oh, yeah. That will happen. They’ll love that :)
They’ll say it while screaming RULE OF LAW! CONSTITUTION!
Bender
Same old, disproved, fourth-grade math bullshit. There’s enough money in incoming tax revenue to cover the interest (so there was never a chance of bond default, proving it was/is just a political scare tactic), SS checks, Medicare, and military pay with several billion left over.
How can so many feel so qualified to waste so many column inches discussing something about which they know so little? How can they get the basics wrong about how we fund the government and how much money is rolling in every day?
Why do you insist on letting C+ journalism students who couldn’t hack it in a college math course tell you why the government would sit on $1T worth of revenues and fucking printing presses which make actual money and not use any of it to pay the interest on the debt?
Answer: No Democrats or journalists (but I repeat myself) in Washington care about debt ceiling. No Democrats or journalists really care about the debt. They don’t really care about the fundamentals of Medicare or about military pay.
What they care about is how many votes they can swing in the next election by scaring Grandma and bribing people with handouts.
MazeDancer
Something’s going on. Possibly at corporate level. On MSNBC Chuck Todd continues to tell the truth. No kidding, he started yesterday. Just mentioned, again, that one small ideological faction is holding ransom. Visibly almost laughing at the preposterousness of the BBA idea of having to send a constitutional amendment to states in 6 months. Calling it “nuclear bomb, not poison pill”.
And David Gregory – David Gregory! – is not defending the Republicans. And only guest he mentioned for MTP is hope for Plouffe. No one firmly booked.
Corporate America may decide to make the “reasonable” Republican Senators and House Republicans – if there are any – into heroes. Because they compromised. (No one – except Democratic officials – is mentioning how much Democrats have given in already.)
JGabriel
Pseudomonas aeruginosa wins Metaphor of the Day Award — Suicide Bomber Bacterial Spite:
Hello, Republicans!
.
Roger Moore
@Davis X. Machina:
I think “An angry mob armed with press releases” is going to have to become a new category title. It’s too good not to reuse.
trollhattan
Me don’t understand why there were any amendments after #2. Doesn’t is solve everything?
TooManyJens
@fasteddie9318:
Dear people who say MSNBC is just as far to the left as FOX is to the right:
STFU forever.
No love,
Me.
PurpleGirl
Davis X. Machina: They are bat guano psychotic. Considering that West was elected as a teapartier to begin with, this just shows how crazy (stupid, non-thinking, ignorant, etc.) they are. I know it means they will try to find someone crazier.
It is like watching French politics ca. 1793-95. We want our way [sic] and we want it NOW.
Davis X. Machina
@Martin: “This is the Left. When the legend becomes fact, print the legend.”
Liberty/Valance 2012!
Karounie
I think when the Dems say “invoke the 14th amendment” they mean use it as justification for generating new debt to keep the whole government running – not what Balkin is saying here.
kay
I didn’t read it as a political prediction. I read it as how the thing is designed to work. Ya know, given sane people.
Thoughtcrime
You’d think that Obama was a Constitutional Law expert or something.
grandpajohn
I have a feeling that they better be digging a moat and establishing a defense perimeter around their own people instead.
kdaug
@AR:
That’ll earn a “Nice try. Read the 14th and get back to us.”
kay
Bender, show me where Obama threatened bond default. Give me a link. Bond default.
Bender
Weapons-grade stupid.
trollhattan
DougJ bait:
http://www.tnr.com/blog/jonathan-chait/92914/suspicious-coincidence-the-day
PurpleGirl
Aimai: Agree. Getting out of the wars saves money in the long run but not immediately. (Besides, there will be people who want to replace all the lost hardware and bombs and that costs money…)
We need to enhance revenue. We need to return to the tax rates of the 1990s.
AR
@kdaug
Reality has, at best, a tangental relationship to the effectiveness of political arguments.
jl
Don’t have time to read all through all of the maze of links in the Balinization post. Bur from what I have read, it sounds sensible to me.
If the president is to take extraordinary powers, to survive politically he has to have public opinion on his side. And part of that is only taking extraordinary powers when a very strong case can be made that there is an extraordinary situation.
And I think that the Executive has more tools than the fourteenth amendment. There is also the conflict of laws aspect (last budget was passed after the last time the debt ceiling was raised), and a dizzying array of treasury/fed tricks. It is true that some of these tricks are rely on implausible legal theories, but the important thing is that they can be tried out to see if they work with U.S. creditors, and if any one has standing to bring it to court, that can be sorted out later.
But with any of these remedies it is important that the President make a good faith effort to enforce all the laws to the best of his ability, and that a majority of the country support his decisions.
I think a partial government shutdown would be first step, with a good part of the payment priorities aimed at springing some GOP votes due to pressure from interest groups after they get letters saying that payments are suspended. Probably not a good idea to even talk about IOUs, since that could interpreted as President unilaterally incurring more debt. Just letters saying payments are suspended until further notice because of a little mixup confusion and delay (of unknowable duration) in congress about how to finance expenditures already incurred by the legislative process.
Edit: And forgot to add, given the vicious and idiotic goofballery we see from the GOP, and (as of this morning) the idiotic senseless babbling on corporate media, Obama would be nuts to even give the slightest tip about what he intends to do if the federal government runs out of cash.
Better to let events make his case. And Boehner and the House GOP FAIL last night is exactly what he needs.
Redshirt
I wish some Democrat(s) – Not Obama though – would get out in front of every camera and mic and start asking why these Repuglicans want to threaten America during a TIME OF WAR, why they hate this country, and maybe they should move to South America if they hate this country so much.
Worked like a charm when the Repugs did it from 2001-2006. Yeah, yeah, IOKIYAR, but someone should try.
Make these traitors defend themselves.
JGabriel
@Bender:
Which we’ve been doing for two over months, Bender. You seem to forget that we hit the debt limit back in May.
August 2 is not the day we hit the debt limit. August 2 is the projected day our ability to cover everything from incoming revenue runs out, the day we can no longer run on fumes.
Maybe we’ll get a couple more days out of it, depending on July’s tax revenue, but maybe not. Definitely not enough to carry the country through the month though.
.
Dennis SGMM
The Republicans have strung the rubes along for decades by telling them that the check is in the mail. Now the rubes are in the living room with a gas can and a book of matches. They’re demanding to be paid in full on the spot or they’ll burn the place down. How do you reach a political solution with people like that?
Elie
The Tea Party seems to behave as though they are on some punky reality show where they can use any extreme rhetoric or actions, the media laps it up and there is no consequence except higher “ratings”. I think that these folks are reality challenged and of course, I am saying nothing everyone doesn’t agree to already…
They are self imolating. The goal for Obama and the remaining sane Republicans, (if they exist), is to try to let the “system” work within the current parameters as long as possible, even if it looks terrible. The biggest mistake would be to get into a solution that goes outside what is already accepted precedent. You think its bad now, you just can’t let these folks who are so overtly crazy, further latitude in a world where there are NO rules or perceived legal structure.
The administration has to be extremely careful not to be forced off the rails by its own hand. That is why we are going to have to be exposed to crazy republican shit perhaps all through the weekend… They will be doing their best to entice the admnistration into an unforced error.
Bender
That’s silly. First, did I mention Obama? Give me a link where I mentioned Obama. Go. Source it. Now.
And stop being coy. You know and I know that every time he (or his Democrat surrogates and the media — but I repeat myself) even mentions default, and how default would be terrible, and how Republicans are driving us to a position of default we need to come to a deal to avoid default, that it’s giving credence to the insane notion that it is a possibility. Or else he wouldn’t say “default.” Duh.
So why isn’t the President up-front about the impossibility of default? Why the deception?
PeakVT
I think SS payments could be made if the incoming money doesn’t flow through the Treasury’s standard accounts. Does anyone know how the payroll tax revenue flows through the system?
But really, even if SS checks and interest payments and military pay flow out on schedule, that still leaves almost everything else government does shut down. Courts, jails, immigration, the Secret Service, the FBI, the EPA, the state department, tsunami monitoring – everything that a modern society needs to function properly will grind to a halt.
Too bad the FAA has enough cash in a fund to keep operating this week. Shutting down air traffic control would have been a nice little reminder of what happens when government stops. And it would have impacted elites disproportionately.
Rich Webb
There are reasonable arguments on either side of the question as to whether or not the President invoking the Fourteenth Amendment is constitutional.
Making the 11th-dimensional chess argument, that could also mean that there are equally valid arguments on either side of the question as to whether not invoking the Fourteenth Amendment is constitutional.
Is it too paranoid to imagine that, post default, whichever decision that President Obama makes there will be a Bill of Impeachment introduced into the House on Wednesday?
Government shutdowns and impeachment hearings do seem to be in the Republican playbook and this time it would be over a “real Constitutional crisis,” not a blow job…
kay
I’m already moving on to impeachment. When conservatives lose a presidential election, voters must be punished, so it goes 1. government shutdown, 2. impeachment.
Last time we were caught off guard, right? NOT this time:)
Bender
Absolutely untrue. The $1T we are expected to take in is unspent. It can’t cover ALL of our existing appropriations, but it can be used to fund the debt, Medicare, etc.
Juicetard (FKA Liberty60)
@Davis X. Machina
It’s like watching
FrenchKhmer Rouge politics ca.1793-951975-79, only this time with the angry mob armed with press releases.Elie
Redshirt @ 38 —
They ARE going to be forced to defend themselves… they are looking like bigger and bigger crazy fools every minute. The further they push it, the more everyone including the media, will be unable to deny it. We have to be patient as painful as this is and as much as we would like to just crush them like maggots. They have to fall victim to their own trap. Like the wiley hunter, Obama has to wait patiently.
grandpajohn
It is like watching French politics ca. 1793-95. We want our way [sic] and we want it NOW.
What I’m waiting to see is the next part when the revolution starts ,the tumbrels begin to roll , madame guillotine is brought out of retirement and the rabble are shouting “Off with their Heads”
Yutsano
@Bender: There are easier ways of saying you got nothin’, dude.
@PeakVT:
Payroll tax is collected by the IRS and deposited directly into the SSA instead of FMS. Similar story with Medicare taxes and HHS. So yes and no.
Montysano
A month ago I would have thought this was crazy, but since several wingnuts (Bachmann included) have given voice to it: does the GOP hope to force Obama to use a 14th Amendment solution, and then proceed directly to impeachment?
Edit: @Rich Webb: I see I’m not alone.
Juicetard (FKA Liberty60)
I am waiting to see Alan West with a placard hung about his neck, standing up and confessing to his counter-revolutionary crimes.
Elie
What jl says.
Paul in KY
Davis X. Machina, you summed it up.
I don’t know if Ms. Bachmann is Marat, but I wouldn’t mind her getting his afflictions, or his end for that matter.
kay
Bender, just say you can’t quote the President saying that. You’ve heard him threaten missing payments to beneficiaries, which worries you politically, on behalf of Republicans, but that doesn’t make what he’s saying untrue. You wish he’d stop because it’s politically damaging to conservatives. Tough shit. Conservatives made the decision to use this politically. That involves risk.
Redshirt
Elie @48
You have more faith in the media than I do. Without someone pushing, pushing, pushing, I suspect all of this will be Obama’s fault – as per the media – soon enough. Repugs won’t answer for shit, as is the norm.
Chris
@JGabriel: No, because the T-bonds in the Social Security Trust Fund (1) don’t mature very fast and (2) interest alone does not cover all SS expenses.
It’s basically the same problem us rich folks have when someone kidnaps the kid and demands millions of dollars by 5 PM: sure, we have that much in assets, but it takes months to liquidate them. The bigger the pile of assets, the longer it takes to liquidate.
gex
Good God. Is this how they push for a repeal of the 14th? They’ve wanted that in a bad way for forever.
Paul in KY
Redshirt, I want the Pres. to go on TV & state because he is the Commander in Chief of the Unitary Executive blah blah blah, he is unilateraly raising/suspending the limit as the refusal to increase it is a national security concern.
That would make their heads explode.
wrb
An optimist.
A lot of the things for which there will be no money are things Republicans want to get rid of. They might favor a demonstration of life with smaller government, which they imagine will be wonderful.
They could also propose alternate means of raising revenues, like selling public property into private hands, and insist that Obama’s blocking them from raising the needed revenue.
trollhattan
Benen’s at work on a Friday.
http://www.washingtonmonthly.com/political-animal/2011_07/a_stroll_down_memory_lane031179.php
Serious governin’ by serious people.
[blockquote fail FYWP]
JC
I’m often on the fence about the ‘Obama pre-compromises’ thought, as so well encapsulated in that Tom Tomorrow Middle Man, and no more so than now, when it seems that John Boehner, head of the House Republicans, can’t seem to move his crazy members into any sort of compromise.
There is always this ‘the President should have insisted’, meme to a strain of a lot of good moderate and liberal thinkers – Krugman, Digby, even Bruce Bartlett, no liberal he. Just a moderate.
You could make the case though, that the Rethugs behavior during this deal ceiling fiasco, is that “Obama insisting” simply meant that nothing would get done. and Obama knew that.
And, Obama knew that there would ‘need to be a reckoning’, once and for all, to expose the Teahadists, and given the press’s blinkered ‘both sides do it’, is there ANY PLACE better to have this showdown, THAN the debt ceiling talks?
I may be overanalyzing though.
I would have to say, IF there is a time and a place to have the confrontation with the Teahadists, who refuse to budge, THIS fight – and then the continuing to act reasonable by Obama, so that the press is forced to abandon their ‘both sides do it’ fixation – is the best place to have it.
However – these guys keep getting what they want, and the Reid plan IS AN AUSTERITY PLAN. So results matter, and if the Reid plan is gone with, where is the growth that is SO NEEDED for the country? And that is hurting Obama’s chances for re-election?
If Obama could pull off a clean debt ceiling hike, and push it off for two years, that would be the best, of course. And would give lots of evidence for the 11 dimensional chess master theory.
JGabriel
@Bender:
So your argument is:
Strangely, I’m not finding that to be a winning argument. Nor a comforting scenario.
But, hey, I’m the sure the GOP thinks it works for them. However, I doubt the rest of the country will follow that logic.
.
goblue72
This is what happens when Democratic voters sit out off-year elections because of butt-hurt.
Trollenschlongen
Obama: “Screw Medicare, Medicaid, and SS recipients.”
So why not, as suggested by Prez Cleenis, simply use the 14th to raise the debt ceiling and avoid all this unnecessary suffering and bullshit?
Obama is the most disgusting person to me in this entire fake debt kerfuffle, because he pretends to be on the side of right while doing everything wrong. His participation and negotiation with the insane has legitimized their arguments and allowed this to drag on for months. At least the asshole repubs are mostly upfront about their assholism.
At best, he’s an enabler. At worst, a co conspirator.
But: HE’S GOT THIS!
jl
Below is a link to Econbrowser blog
In the post is a link to a report containing a detailed analysis of federal cash flow. and you can see a summary chart of the predicted cash balance at the treasury. The graph shows the Treasury will be out of cash between Aug 2 and Aug 10. I have seen another analaysis (will try to find link) that is more optimistic (says out of cash between Aug 2 and Aug 12! Oh boy!).
http://www.econbrowser.com/archives/2011/06/slouching_to_de.html
If any commenters care to critique the report’s analysis, or can offer their own with supporting data and show their work, I would be interested.
Elie
Redshirt:
There is no denying that for some, it is all Obama’s fault, but that is shifting every day. The crazier the republicans behave, the more it helps obama. Is it a slam/dunk? Heck no! It will always be uphill and difficult and horribly, miserably unnecessary. But it is necessary for him to do exactly as jl outlines upstring — make every effort to follow the law first and exhaustively.
cleek
i don’t see how this reading of the 14th A gets me my progressive pony.
Davis X. Machina
@trollhattan: That 2003 ceiling vote did not, in the House, receive a majority of GOP votes — none of the four Bush/Hastert era increases did.
Democrats — doing their civic duty since (at least) 2001….
jl
I’m not saying we wouldn’t get our hair mussed
http://www.youtube.com/watch?v=wFEiSNMcARU
PreservedKillick
What’s truly scary here is that there seems to be an assumption on the part of the Republicans that Obama will simply fold.
And yet, Obama can see nothing but this same circus again and again and again if he does (we’ll have the budget, then the second debt ceiling vote, etc etc.) If Obama folds, it’s equivalent to negotiating with terrorists. So Obama is likely to look at the damage done to the people and compare it to the potential damage done to constitution and the country and stand firm.
This is not going to be fun.
But I do expect the Boehner bill to include personal flying unicorns for the teahadists when it finally struggles back to the floor. It already has everything else they could ask for.
Trollenschlongen
Now THIS would be some smash mouth, in your face, no prisoners, creative leadership; which is the only way to fight the pukes. With the added benefit of being true.
Which is why Obama won’t do it. His spine is kept in a safety deposit box at Goldman Sachs.
kay
I actually disagree with this.
I think Republicans are wholly dependent on federal spending for political survival, and they know it, which is why they’re busy setting up accountability-free “triggers” and “12 member commissions” and ” we want a constitutional amendment in two years!” and any goddamned thing they can think of to avoid the political cost to individual Republicans in Congress of their fiscal conservative rhetoric. Because that’s all it is: rhetoric.
They’re not stupid. They can read that red state blue state federal contribution/outlay map as easily as anyone else. They know where the money comes from, and where it goes.
PreservedKillick
So can Obama. And that money map tells you exactly where the pain will be felt first and hardest if we do default.
The republicans are holding a gun to their own heads and saying “Dare Me.”
Davis X. Machina
With any luck, some hothead crewing a mortar at Fort Johnson in Charleston Harbor will fire the first shot. Sometimes that matters — who fired first.
Redshirt
I think many Repuglicans ARE actually stupid. Not all, but a good chunk. We overestimate them to our detriment.
jl
Looking at all the informative posts, many with handy dandy charts, and links to reports and other good economic blog posts, I highly recommend reading Econbrowser blog posts over the last month.
Search the blog for ‘debt’ or ‘debt ceiling’ and just click through them.
http://www.econbrowser.com/
And also too:
http://youtu.be/ww7WlSPi9gc
Elie
Yes, our hair will be mussed and it is truly scary to watch the circus and its gargoyles running around spitting bile. Nothing will make this happy times. Those wanting to get their dominance-king/queen-of-the world, fix — well, this is not that time. This is sweating and grinding your teeth.
Contrary to the opinions of the PUMA and other anti-Obama shills commenting today, Obama has huge balls and huge nerve to do what he is doing. Alls I can say is Thank God none of you will ever get near that office. I’m surprised that some of you can find your mouths with a spoon. No cure for won’t see. Witness the Tea Party Republicans. Y’all aren’t one whit different.
MikeBoyScout
“[…] it is far safer to be feared than loved if you cannot be both.”
If Obama is going to go down the prioritization path wouldn’t it be swell if he grew a pair and targeted the suspension of payments in the districts of the Republican house members who are most teabaggingly vocal? After all, one could argue that these are the districts most wanting spending to slow down and Obama is just meeting their best and most sincerely patriotic wishes.
A guy can dream, can’t he?
Montysano
@jl:
“10 to 20 million, tops!”
What an amazing performance.
TenguPhule
This has been another edition of Bender Flunks 4th grade math.
MazeDancer
Doesn’t the White House and Reid/McConnell have to have a list of the 30 or so House Repubs who will vote for the Senate compromise?
Isn’t Reid writing his bill just for them?
These 30 people will be primaried. Their names will be Tweeted by wingers as traitors.
But they’re the hope of the nation now.
Don’t they have to be identified and being consulted by Reid/McConnell right now?
And if these 30 don’t exist, doesn’t the President have to invoke the 14th early? As last ditch attempt to get public to scream “Clean bill, clean bill”?
Certain irony/agony to fact that paying only bondholders and not SS or Medicare or any other programs is wingers dream come true. And they’ll try to impeach the President for it.
chopper
given that the treasury already shot down as wholesale illegal the idea of prioritizing payments by politics, race, age, etc, no. the answer is no.
wrb
@kay:
I should have been more precise. I think some, and quite possibly enough, are such ideologues that they will act in ways that we would think stupid, in light of their rational best interest.
kay
Send the balanced budget amendment to the states! That will buy us years to continue to pretend we’re budget hawks, and we can wear tri-corner hats while we’re doing it!
What happened to the Ryan Plan for Destroying Medicare, by the way? Any progress on that? How’s that going?
This time, they’re going to keep their fingerprints off the budget slashing. Ouch! Don’t try that again, boys.
Montysano
@Trollenschlongen:
You might want to check with John Boenher about the quality of Obama’s spine. You can contact The Speaker in the corner of the room, with paint lapping at his loafers.
jl
@72 PreservedKillick
Of course, if the House GOP can write a bill that delivers endless candy, milkshakes and Sunday picanics with Yogi and Booboo, with rides on unicorns and magic iridescent butterflies through rainbows and perfumed puffy friendly dragon vapor clouds forever in magic gumdrop land, then, well, dammit, I for one am willing to put bitter partisanship aside and will write my CommieDem congresscritter to vote for it.
PreservedKillick
Why bother? Those districts are more dependent on the federal teat; he just follows the law and distributes the remaining funds equally and the pain will go straight to the people who’s representatives who are causing it.
There is, at least, that tiny shred of justice in this entire goddamn disaster.
lldoyle
Even if you gave these people the fantastically stupid Balanced Budget Amendment and whatever other crackpot thing they’re going to insist be added on before sundown, they’d just turn to their two page, single spaced list of cultural demands and advance to the next thing.
Abortion, creationism as an upper level science course, white male suffrage, the list goes on and on.
They don’t care if the hostage dies. They don’t even understand the concept of death. They’re not rational in a “governing an advanced nation” sense.
And worst of all, nothing will be learned from this, thanks to our vigorous, watchdog media, who will find a way to turn “nihilists blow everything up” into “failure of bipartisanship on both sides of the aisle harms nation.”
goblue72
@JC – What a lot of folks on the left seem to fail to have internalized when it comes to questions of “why ain’t Obama hangin’ tough?” is that the Democrats LOST in 2010. Big time.
The GOP sweep of the House was not an ordinary switch in control – its was a shift in terms of House seats lost in a single election of historically epic proportions. 68 Democrats were replaced with 68 Republicans, a large number of whom were far-right Teahadists lunatics. It was the largest mid-term loss by a party since 1938. (hmmm…I wonder what was going on in 1938…)
Over on the Senate side, the GOP took 4 open seats and defeated 2 Dem incumbents. Not as large proportionally a loss, but it squeezed the margin by a bit. Add to that many of the incoming GOP Senators were completely bought and paid for corporate stooges as well as some anti-government teahadists (Rand Paul, Pat Toomey).
The President never had a strong liberal delegation to work with. Nancy Pelosi & the Progressive caucus did great work, but a goodly part of her caucus from 2006-2010 were Blue Dogs. And over in the Senate it was even worse. Add to that DC is wired for corporate control.
This isn’t 11th dimensional chess. This is dealing with a crap sandwich and seeing if there is some way to hold the line until 2012, win re-election and see if their is a way to either take back the House or at least reduce the GOP’s margin.
Kathy in St. Louis
Davis X Machina @7. It may not be good news today, but what you wrote is the reason that the Tea Party won’t last. It’s too factionalized and it’s standards of ‘purity’ are too high. Since there are so many various groups of crackpots united under the umbrella of the TeaParty, one group’s purity is another faction’s treason. This is what happened to the Ross Perot group way back in the early 90s. Infighting, lack of central leadership, power struggles and purity did them in.
This could be one of their biggest and last hurrahs.
Nemesis
Drop it. The 14th wont be used. It doesnt need to be used.
The gop is stunned, staggering and looking for cover.
If the WH wants a clean bill, they can have it.
If the WH compromises and inflicts further economic pain on working folk, then the WH wanted to do so all along.
It will be fascinating to watch this theatre unfold over the next few days. If Obama is truly an 11th dimension chess guy, then he will get a clean bill. If he accepts anything less, then his words can be taken at face value because he has been talking compromise for a while. He should talk compromise. Just talk it. But he should gut the gop now while the time is right.
cleek
@kay:
didn’t you hear? Obama signed it! because he’s all about giving-in and pre-emptive capitulation and would never stand up to the GOP and refuses to fight for progressive values, obviously. so, Paul Ryan’s budget is the law of the land!
damn you Obama. you’re no better than a Republican.
Martin
@JGabriel:
Probably, but SS’s bonds all mature on the 15th of the month, so we’ve got to get to that day, and once we do, we’re somewhat okay.
The policies were set up assuming Treasury could generate liquidity, which is a reasonable assumption. They can’t now, and that’s the real problem. If SS could redeem their bonds weekly, much of this problem would be reduced, but that’s normally unnecessary and wastes taxpayer money.
But I suspect Obama will treat SS/Medicare as obligated spending and pay them out. But the money vanishes VERY fast once you start paying them near the front of the line. Not sure we’ll make it to the 15th, in fact. Everyone is talking about this as though the same amount of money comes in each day and goes out each day, which is totally not correct. We pay a huge number of bills on the first of the month, another huge pile each wednesday, and bring in a huge pile of money on the 15th. That’s what they mean when they say our cashflow is ‘lumpy’. For a nation, a month to smooth all the lumps out should be sufficient, assuming it’s not being legislated by anarchists.
Kilgore Trout
Bender wrote:
Great. And when the first maturity of bonds comes due ($30 billion on August 4th) what then? Maybe we manage to cover that one, what about the next one? There are about $500 billion in maturities coming in the month of August.
This isn’t just about covering the interest, we also have to pay these suckers off when they come due. Do we know that the Treasury can do that if the limit isn’t increased?
Punchy
Does Boner even attempt a vote on Reid’s plan, or does he just declare “uncle” and hit the sauce as hard as he can?
Woodrow/asim Jarvis Hill
@PreservedKillick:
I was reading previous comments here, and elsewhere, and wanted to say something like this to them.
The issue is that so many of us — including the entire GOP leadership except for McConnell — just see what’s in front of us. So, to them, it looks like capitulation to do this deal, to dive for more austerity.
That’s part of why McConnell wanted a deal that would keep re-litigating this until after the election; it shows a strong hand for the GOP (not a very strong hand, but…), and they depend on an ongoing sense of anger and resentment in their supporters.
Obama sees no way forward but to defuse as much of that as possible. Won’t be all, but it’s harder to make future cases for no stimulus, more cuts, less tax revenue — for continuing the Bush tax cuts! — if he’d got a plan signed and delivered for cutting the budget. A plan the GOP signed onto.
If the TP fights it, and keeps fighting it, that’s just more in-fighting for them, and we’ve already seen and see again with the announcement in this very thread, how willing they are to consume their own, and open up avenues for 3-way races. The risk to the economy for 2 years is, if the cuts are well-managed, a price for causing such in-fighting, and for taking the worst GOP weapon off the table, so they can’t, for example, tie raising the debt ceiling to the aforementioned Bush tax cuts.
It really is, by American governmental standards, 11-dimensional chess. It’s not to say it’s prefect, and it sure as hell isn’t worthy of the people who will be hurt by Obama pulling this. But the bet is that doing it this way now pulls the GOPs teeth for the future, and opens up for Obama to re-assert his agenda in time to start moving whatever stimulus he can through for the election season. And that, folks, is what the GOP wants to stop with a vengeance, and is why some of them are allied with folks who really just think austerity is the only way to go. If a deal wasn’t so key to opening up the chessboard for Obama, I assure you they wouldn’t fight so damned hard.
jl
@94 martin: Anyone want to see cool pics of the lumpiness martin is talking about, click through to the report I discussed above @66 (ore there abouts). The linked report has a daily cash flow analysis for first half of August.
It is difficult to predict some of the flows exactly, so that is why the chart has a range of Aug 2 to Aug 10 for the out of cash at Treasury day.
I have not seen an estimate that gets the Treasury to the 15th.
eemom
that can’t be said often enough, except I would expand it to include anyone who doesn’t vote for any reason other than physical/mental incapacity.
There is no bottom to the depth of my contempt for such people.
Cain
When the press says a “small fraction” are holding up things.. I think that’s wrong. I think pretty much most of the house republicans are culpable. Really.. this is stupid.
Republicans are causing a meltdown.. they are also causing a meltdown in states. They are committed to voter fraud..
We really need to get our act together.. let’s not repeat Nazi Germany’s mistake.
kay
I looked at cut, cap and balance and it’s impossible to determine what would be cut capped and balanced, or in what ways!
Unlike the Ryan Plan, which was filled with nonsensical libertarian rhetoric and Obama-bashing , but could actually be read and applied to normal people,and that happened , it was read and people understood the implications, and hated it.
They’re not going to make that mistake again. Cut cap ‘n balance has all of the political gain of “fiscal conservatism”, but none of the political risk.
Now we’re on to the constitutional amendment. Another risk-free “cost-cutting” purely rhetorical device for conservatives.
Martin
That’s okay. It’s clear from the Treasury’s statements that the only thing that matters is that the books balance at the end of the day, so Treasury can auction ~$30Bish of bonds on that day to replace and pay off the ones that mature.
Savage Henry
The first payments that Obama should cut are salaries and benefits to congress.
Emma
If the WH wants a clean bill, they can have it. Really? how? Because Boehner can barely hold on with a bill that looks like a dog’s regurgitated breakfast. How is he going to convince REPUBLICANS to vote for the one thing they see as a triumph for Obama?
Martin
Not paying all bills, no.
A big question for Treasury is how do they handle the day fluctuations. If they take a daily view, then they will hit that ‘default point’ very, very quickly. That is, if they pay all bills that daily revenue covers until there’s nothing left and then repeat that each day, it won’t take but a week before we have a day that some critical spending can’t be met, and then he declares something unconstitutional.
If Treasury takes a longer view, and allows some excess revenue from one day to carry over to the next because they deliberately didn’t pay bills that they technically could have, but are trying to smooth out the money flow as best they can for mandatory spending, then this could go on for another month.
They’re both valid, both risky in different ways. If Obama wants Congress to solve this, he’ll go with the latter. If he wants to solve it, he’ll go with the former.
Catsy
@Trollenschlongen:
There are not enough drugs in the world for me to wrap my head around the level of unhinged delusion–or staggering ignorance–necessary for people to say things this stupid and actually believe them.
catclub
“Good God. Is this how they push for a repeal of the 14th? They’ve wanted that in a bad way for forever.”
It is the reparations to slaveowners for emancipated slaves
in there that they want. Sons of Confederate veterans, league of the south, you betcha.
Ron
@Kilgore Trout: Bender apparently thinks if we just pay the interest and SS payments, then everything will be fine. IIRC there is a WaPo article which showed that we were about $170B short for August based on what we have and what we’re supposed to pay out. I have to actually agree that it doesn’t seem like the 14th amendment allows Obama to incur new debt, but to pay off existing debt. The only question comes if somehow we got to the point where we didn’t have enough to cover existing debt.
Ron
The whole “MSNBC is commie” is so ridiculous. Andrea Mitchell was on earlier saying how bad it was for Obama to tell people to contact their representatives because it would look “partisan”. Fuck her.
JC
GoBlue,
You know, this – along with Obama positioning for the next election – seems to make the most sense to me. Three elements have ‘some’ truth in them – because reality is complex. I think the argument is which of the three are MOST IN PLAY, as I don’t believe in FAUX balance.
a. Dealing with a shit sandwich. Huge wave elections, dealing with Teahadists, capitol wired for corporate control, blinkered press. – 60% of the truth
b. Re-election worries – positioning, grabbing any form of stimulus, appeasing the rich Banksters that back Obama. Opportunity costs there are things like the failed HAMP program, and Obama seen as just another Washington insider. 25%
c. “Middleman Obama”. I think there is truth in this, in the sense that he assumed too much from Republicans (or seemed to). This bipartisan fetish, has opportunity costs, as well elucidated by Krugman and others. 15%.
People like Krugman, who point to that 15%, which is true, don’t engage in the political arguments, and ignore all that Obama HAS achieved. and how it’s hard to do something when a crazy person has power to blow things up.
In the face of ALL THAT IS AGAINST OBAMA, we’ve had some amazing things in the first two years.
But, it’s important to keep banging the drum how austerity is a failure.
Yevgraf
My gut says pay everything out pro rata. Let everybody have some skin in this game – defense contractors, road contractors, corrections folks, soldiers, sailors, FBI agents.
Let the howls begin from all quarters.
Catsy
@kay:
This might be true of some, but all evidence so far suggests that many of them really are that stupid–enough to take the rest of us down with them. It’s well and good to talk about red/blue state federal outlay maps, but for fuck’s sake we’re talking about a bunch of innumerate twats who can’t even grasp the difference between voting to spend money and voting to pay the bills this incurs.
This is a real problem with those of us in the “reality-based community”–and for that matter, with most adults trying to grasp the motivations of others by analyzing them from a standpoint of rational self-interest. The truth is that most people–and I use that term loosely when speaking of elected Republicans–simply do not reason their decisions through on an intellectual level, taking into account all the available facts and weighing their priorities rationally. They make emotionally-driven gut decisions that fall within their mental and ideological comfort zones, and if they rationalize them at all they do it after the fact.
These are fanatics behaving with the emotional maturity of children, not responsible adults making reasoned decisions.
PK
You know, that may not be true. They may be acting that way to try to scare us and Obama.
Doubt they’ll scare Obama.
RareSanity
@Bender:
What about the principle on the bonds that are due to mature? You do realize that “the debt” is not just interest payments, right? You do realize that a default can happen whether you miss interest payments OR do not pay back the principle, in full, on the due date?
If the Treasury can’t issue new bonds to cover the principle due on maturing bonds, that’s what? Say it with me now, a default.
So, the priority of any daily revenue collected would be servicing the government’s debt, which includes both interest and principle payments. There is not going to be enough money to make interest, principle, SS, Medicare, military salary…etc payments if the Treasury can not issue new bonds.
liberal
@18 Bender wrote,
Fed controls the printing press, not Treasury, with some caveats (like the platinum coin thing).
wrb
@RareSanity:
They can. There is nothing to prevent them from issuing new bonds to replace old bonds as long as they don’t exceed the cap.
So maturing bonds aren’t an issue.
wrb
@RareSanity:
They can. There is nothing to prevent them from issuing new bonds to replace old bonds as long as they don’t exceed the cap.
So maturing bonds aren’t an issue.
liberal
@112 RareSanity wrote,
Yeah, but while you have to create new debt to rollover the old, you’re retiring the old debt, not just creating the new. So if restrict ourselves to first order issues, this line of reasoning fails.
Ding
Cost of Iraq / Afghanistan Wars since 2001 = 1.2T
Cost of Deficit = 1.4T
liberal
@111 Catsy wrote,
Agreed. I think the better argument is that, even if there’s not an immediate disaster (I myself don’t think there will be an immediate disaster), bad stuff is going to happen at a rapid enough rate that there’s going to be enormous political pressure to do something. The difficult question is, where is that pressure going to be directed. Logically speaking, it could help the Teahadists and hurt Obama/Congressional Dems.
I doubt it, though—I’d wager it hurts the Teahadists and the other Republicans the most, and in ways that will make enough of them bend quickly enough to resolve the crisis.
Not that I think this kind of roulette is a fun game to play, even if I think the deck is stacked against our opponents, given the possibility of unforseen outcomes.
Martin
@Yevgraf:
Mine too. I don’t think we last a week until we default on something though.
Tonal Crow
What’s the possibility that enough congressmembers get annoyed enough at and tired enough of this process to pass a clean debt-ceiling bill lasting through the elections?
Ken
Savage Henry @102: The first payments that Obama should cut are salaries and benefits to congress.
And Capitol Hill security…
Tonal Crow
@wrb:
I think this is wrong, because they need the cash in hand to pay the maturing bond before they get the proceeds from issuing the new bond. But they don’t have the cash (unless, say, they work out some liquidity facility with the Fed), and they can’t get it by issuing the new bond first because that’d break the limit. There might be some magic to work with settlement dates, but I don’t see it right off the bat.
RareSanity
@wrb:
@liberal:
Both of you say that like the instant money goes out to pay principle on a maturing bond, the Treasury has instant access to additional funds in the equivalent amount. As the bonds mature, there will be a delay on any new bonds, due to the fact that they can only be “issued” at auction. At some point, there will not be enough daily tax revenue to cover the amount of time between when one bond matures, and a bond of equal value can be auctioned.
I’m not saying that this is inevitable, what I’m saying is, to think that it is not a problem is incorrect. More specifically, Bender’s assertion that default is “impossible” is ridiculous.
ETA: Tonal Crow beat me to it…
PeakVT
@Yutsano: Thanks.
@Tonal Crow: Perhaps the Treasury could fudge by only calculating the debt at the end of the day. That would allow for an intra-day “excursion” over the limit if there is a tranche coming due and an auction on the same day.
That wouldn’t get them all that far, however, even if it could be done.
cleek
@Tonal Crow:
that would be an impossibility.
the threat of primary teabagging will keep the GOP in line.
KCinDC
Interesting that people are talking about the “I’m not saying we wouldn’t get our hair mussed” line. James Pethokoukis used the line this week in defending his contention that having US Treasury bonds downgraded from AAA wouldn’t really be a big deal. Obviously he must know the source, so I don’t understand why he was undermining his own argument.
Tonal Crow
@cleek (124): What if Nancy Smash offered to mint new Blue Dogs in the least-crazy districts?
grandpajohn
This. While it is true that this is a manufactured crises by the wingnuts, We should also realize that it is also a self inflicted wound that should never have happened. All we had to do as democrats was to get off our asses and go vote instead of staying home to teach someone a lesson. Some lesson huh? and guess who got taught the lesson that the lesser of two evils is always better than the greater of two evils.
RP
What an amazingly revealing comment…
Carl Nyberg
If Obama simply ignores the debt ceiling and borrows more money to fulfill the instructions Congress has already given the executive branch, what happens?
Republicans howl.
And…?
catclub
Kcin DC
I have to agree with pethok. on little effect of a downgrade.
Japan has a sub AAA credit rating, yet their ten year bonds are paying even less than ours. Millions of people are still lining up to loan Uncle Sam money at negative real interest rates, because they are the best of bad choices.
Bond interest rates are showing virtually no signs of panic.
ON the other hand state and local bond ratings will definitely fall, because they depend on the FED for support.
Just Some Fuckhead
@goblue72:
There’s no evidence butthurt Democrats sat out the 2010 elections.
darkmatter
@TenguPhule:
Fixed for better accuracy.
HyperIon
@JSF (damn you, absent reply thingy) wrote:
Yeah, i thought it was (braindead) 20 somethings.
priscianusjr
@Cameron
NobodySpecial
Budget deficit is 1.4T dollars, huh?
300 million Americans, that’s less than a fiver each.
For the top 1% of 3 million Americans, that’s less than $500 each.
For the price of a single fucking meal out at a fancy restaurant for the richest 1%, there IS no budget crisis AND we run a surplus.
THAT’S how this should be framed.
NobodySpecial
@HyperIon: It was those ‘swing independents’ that everyone is so fond of. Democrats came out and voted strong, but the ‘Blame The Left’ crowd needs their narrative.
OzoneR
I think “Obama needs to insist” people know that. They never intended on getting anything done. They just needed something else to complain about. “Obama never intended to get that passed, he was just pandering to us!”
DS
So the 14th amendment would be used to pay bond holders but it would mean people on Social Security and Medicare would start to loose access? This is the stupidest thing I have ever heard. I’m not an Obama hater at all, but if this actually happens, it confirms my belief that he is the most politically retarded national politician in contemporary history. Can you imagine the press and public reaction? “Obama paying Chinese and Japanese while seniors loose social security coverage”.
pluege
obama doesn’t need the 14th Amendment to not default. The so-called crisis is completely a crisis of Congress being in conflict without itself, i.e., the debt ceiling law is in conflict with all the other laws Congress has passed that cause the US government to owe more than it takes in.
Inasmuch as their isn’t a priority of laws passed by Congress clause in the Constitution, and Congress hasn’t designated one, clearly obama has the choice as to what laws he enforces when laws are in conflict with each other, i.e., obama can either enforce the laws requiring the government to make expenditures beyond its revenue OR he can choose to enforce the debt ceiling law if Congress doesn’t raise it.
The debt ceiling Kabuki is obama’s.
ThatLeftTurnInABQ
@Nobody Special #137:
There is a x1000 mistake in your math because you’ve confused billions and trillions. 1.4T divided by roughly 300 million is 5 grand, not a 5 spot.
Doug1959
@Bender
Dude, that 1 Trillion is already spent. It pays for our obligations to which we’ve already committed. You might not understand this, if you always pay your bills with the next paycheck rather than the last. It also means that you might get late fees or higher interest rates. Government is no different.
Porllock Junior
@PreservedKillick:
The Republicans are near!
Funny, I thought that one was Obama.