Nuclear option this time around?

[JTsyo]

Remember last time we played this game, they touted the "nuclear option", eliminate the debt ceiling? Citing the 14th Amendment

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Seems it's not clear cut though. the point of the amendment seems to be to prevent previous rebel members of Congress from messing with the debt due to the Civil War. Also to void the debt accrued by the Confederacy. My take on it would be that you would be questioning the debt if you risked default. Not sure how it would be brought up in front of the Supreme Court since it's not passing a bill. Unless the bill that originally established the debt ceiling was brought into court.

 

[fskimospy]

Remember last time we played this game, they touted the "nuclear option", eliminate the debt ceiling? Citing the 14th Amendment

Seems it's not clear cut though. the point of the amendment seems to be to prevent previous rebel members of Congress from messing with the debt due to the Civil War. Also to void the debt accrued by the Confederacy. My take on it would be that you would be questioning the debt if you risked default. Not sure how it would be brought up in front of the Supreme Court since it's not passing a bill. Unless the bill that originally established the debt ceiling was brought into court.

There are all sorts of other options as well. If we breach the debt ceiling Obama will be forced to break the law no matter what. He will either be violating the law by breaching the debt ceiling or he will be violating the law by not spending money he has legally been ordered by Congress to spend.

If I were him I would just ignore the debt ceiling entirely. Then he can either force the courts to stop him, which they very well may not. (courts try not to get involved when legislatures pass two mutually exclusive laws) The only possible outcome would be to impeach Obama, and he won't be convicted by the Senate.

 

[Hugo Drax]

so either way he is impeached. Maybe this is the plan all together.

 

[nehalem256]

so either way he is impeached. Maybe this is the plan all together.

Teahadists got Obama by the balls :thumbsup:

 

[boomerang]

Or, with a volunteer...

 

[Anarchist420]

Seems it's not clear cut though.

Think about the framers of it, their Hamiltonian nationalism, and it should be clear cut... the Republican Party was all for the Executive State. In other words, the 14th Amendment absolutely did intend to give the Executive State the power to accumulate infinite debt on the backs of the people. The 14th Amendment meant Fascism and the intent of it was to abolish the Old Republic and replace it with the American State.

 

[Gonad the Barbarian]

Obama might have constitutional authority to breach the debt limit but the backing of any treasuries issued thereafter will be tied up in litigation and be questionable (ie: highly risky, ie: junk) in the market's eyes until at least Supreme Court verdict. Considerable damage will still be done.

 

[ivwshane]

Sounds like the trillion dollar coin is the option then

 

[Gonad the Barbarian]

Sounds like the trillion dollar coin is the option then

Maybe, or it might be worse since it's temporary and possibly outside of a Supreme Court's stamp of approval. There's no clean way out of this without congress doing their damn job. And given Boener dropped this little nugget at his press conference today

I didn't come down here to shut down the government," he said. "I certainly didn't come here to default on the debt.

that chance isn't looking especially good.


Edit: Well, I stand corrected. It's even worse if this is what Fox News is feeding the faithful.

"Passing that debt ceiling does not mean you default," Cavuto said. The result of not raising the debt ceiling, he said, would mean that the government would "not paying interest to U.S. bondholders. That's it."

We won't default, will just be failing to pay our debtors. Everything will be fine.

 

[brycejones]

Sounds like the trillion dollar coin is the option then

I hope no one accidentally puts it in the coke machine.

 

[Hugo Drax]

I wonder if the GOP do not really understand the implications of the us defaulting on it's debt.

They might not like the unexpected results and by then it wil be to late for them.

I sure as hell suspect that 98% of the US population have no clue regarding the implications of a debt default. They will be in for an interesting surprise.



The other 2% are already hedged against a potential default. D:

 

[fskimospy]

Again, this reminds me of the skewed polls nonsense. Every reputable source was telling them that Obama was going to win but instead of just accepting reality they tried to make their own. Remember the total shock and disbelief when Romney not only lost, but lost convincingly?

That's what I expect this time. Some sort of shock and disbelief, like a "how could we have known?" Sort of thing. There will be no real acceptance that their own denial of reality is to blame.

 

[CrackRabbit]

Maybe, or it might be worse since it's temporary and possibly outside of a Supreme Court's stamp of approval. There's no clean way out of this without congress doing their damn job. And given Boener dropped this little nugget at his press conference today that chance isn't looking especially good.


Edit: Well, I stand corrected. It's even worse if this is what Fox News is feeding the faithful.We won't default, will just be failing to pay our debtors. Everything will be fine.

Yeah, that happened once before, in 1979, and it is STILL costing us money.
http://www.ibtimes.com/debt-ceiling-2013-lessons-last-time-us-defaulted-1410778

 

[BoberFett]

I hope no one accidentally puts it in the coke machine.

Don't worry. I think we can handle a coke machine.

 

[Fern]

-snip-
Edit: Well, I stand corrected. It's even worse if this is what Fox News is feeding the faithful.

"Passing that debt ceiling does not mean you default," Cavuto said. The result of not raising the debt ceiling, he said, would mean that the government would "not paying interest to U.S. bondholders. That's it."

We won't default, will just be failing to pay our debtors. Everything will be fine.

I'm pretty sure that failure to pay interest is default. So if Cavuto said that he'd be wrong.

He's also wrong in that a failure to raise the debt ceiling does not mean that we can't pay the interest, contrary to what he supposedly said. The interest rate is quite low now and we have more than sufficient cash coming in monthly (withholding taxes etc) to make interest payments. IIRC, they represent only about 10% of our cash receipts.

I hate this issue. Not only is like watching the same bad movie over and over, but everyone who speaks about it gets it wrong.

Fern

 

[fskimospy]

I'm pretty sure that failure to pay interest is default. So if Cavuto said that he'd be wrong.

He's also wrong in that a failure to raise the debt ceiling does not mean that we can't pay the interest, contrary to what he supposedly said. The interest rate is quite low now and we have more than sufficient cash coming in monthly (withholding taxes etc) to make interest payments. IIRC, they represent only about 10% of our cash receipts.

I hate this issue. Not only is like watching the same bad movie over and over, but everyone who speaks about it gets it wrong.

Fern

Including you, unfortunately. Here, I've included some quotes from the other article that you stopped reading because it said things you didn't like:

From a 2011 Morgan Stanley report:

http://www.morganstanley.com/views/...ml#anchor4aa28a8e-8075-11e0-b72c-c51383242534

Some have argued that the Treasury can manage its cash in a way that avoids default. For example, see the Wall Street Journal op-ed's by Senator Pat Toomey and former Treasury official Emil Henry. However, the approach that they are advocating does not seem at all workable to us. The Treasury's cash flows are too lumpy to simply prioritize one form of spending over another. For example, we would expect a significant political outburst if the Treasury withheld monthly social security checks at the beginning of the month (even though there was sufficient cash on hand to make the payments) just in case they needed this cash to make debt service payments at mid-month. Such a scenario is highly impractical - and probably not even legal. Norm Carleton, a former long-time senior Treasury official, has offered a similar criticism of the Toomey/Henry strategy.

From a second, separate analysis:

Debt prioritization is not a realistic option. It is being advocated by people who simply do not understand Treasury cash flows. While it is true that the government takes in a good deal more in receipts than it pays out in interest on the debt over the course of a full year, on certain days the government takes in much less than it pays out. For example, the Treasury has an interest payment of about $30 billion due on August 15. On that day, it will take in about $15 billion in tax receipts, so it won't even have enough to make the interest payment alone. Are the proponents of prioritization suggesting that the Treasury should withhold all of the $22 billion social security payment due on August 3, so it can cover a debt service interest payment that is due a couple of weeks later? If so, what is the legal basis for Treasury to do this?

If you're going to advocate that this is a possible solution you're going to need to show that Treasury has A.) the technical capability to do this and B.) the legal authority to deliberately choose not to make payments required by law at other times in the month.

 

[Doppel]

There won't be a default. It would be absolute political suicide for the GOP, and they've fallen on their blade enough in recent times.

 

[Fern]

Unimpressive and more BS:

For example, the Treasury has an interest payment of about $30 billion due on August 15. On that day, it will take in about $15 billion in tax receipts, so it won't even have enough to make the interest payment alone.

Read the above closely. Why would interest due payable on 8/15 need to come receipts from ONLY THAT ONE DAY? Why not retain sufficient receipts from 8/1, 8/2, 8/3...., well you get my point.

I think the fed govt's lowest revenue in a month's period is about $110 billion, well in excess of what's needed for debt service.

Estimating receipts and scheduling in payments due isn't some new kind of financial wizardry. If you want to claim that they are too incompetent for such basic financial functions, well have at it.

I notice the argument is evolving from "OMGZ! we won't have enough money" into "it's too hard to write checks to the right people!"

Fern

 

[fskimospy]

Unimpressive and more BS:



Read the above closely. Why would interest due payable on 8/15 need to come receipts from ONLY THAT ONE DAY? Why not retain sufficient receipts from 8/1, 8/2, 8/3...., well you get my point.

I think the fed govt's lowest revenue in a month's period is about $110 billion, well in excess of what's needed for debt service.

Estimating receipts and scheduling in payments due isn't some new kind of financial wizardry. If you want to claim that they are too incompetent for such basic financial functions, well have at it.

I notice the argument is evolving from "OMGZ! we won't have enough money" into "it's too hard to write checks to the right people!"

Fern

Haha, I like how analysis from one of America's largest investment banks is dismissed by just saying "MORE BS". A truly salient counterpoint.

Did you not read the rest of the passage? To save up the money for that interest payment the Treasury must explicitly violate several other laws.

Additionally, Treasury systems are not set up to pay some bills and not others because there was never a concept of federal default.

Your counter argument of "BS!" has not addressed either the technical or the legal limitations on Treasury action. Additionally, this is not an 'evolving' argument, this paper was written in 2011 in the first crisis.

 

[Fern]

Haha, I like how analysis from one of America's largest investment banks is dismissed by just saying "MORE BS". A truly salient counterpoint.
-snip-

You've never met a question you wouldn't dodge.

I repeat: "Why would interest due payable on 8/15 need to come receipts from ONLY THAT ONE DAY?"

Fern

 

[fskimospy]

You've never met a question you wouldn't dodge.

I repeat: "Why would interest due payable on 8/15 need to come receipts from ONLY THAT ONE DAY?"

Fern

You've never met a contrary fact that you wouldn't ignore.

Because the US has other fiscal obligations it is not legally permitted to not pay in order to save up money for interest payments. Those two quotes were not very long and they explicitly addressed your question. Why didn't you read them?

 

[Jhhnn]

The Toomey/ Henry approach tells us all we need to know about Repub motivations & priorities- When push comes to shove, pay the Rich guys, fuck the little guys.

Oh, yeh- raise the yield on US govt securities by artificial means while they're at it.

 

[Fern]

You've never met a contrary fact that you wouldn't ignore.

Because the US has other fiscal obligations it is not legally permitted to not pay in order to save up money for interest payments. Those two quotes were not very long and they explicitly addressed your question. Why didn't you read them?

Re: Bolded part. Section 4 of the 14th mandates public debt be paid.

Others are not mentioned.

Hypothetically, should the debt ceiling not be raised many expenses must be cut, but those already incurred needn't go unpaid (if we even have much given the lack of appropriations). Delaying their payment doesn't constitute default.

And I'll note this - Payment of SS has been discussed here before. I'm pretty sure all you guys claimed we had no real legal obligation to pay it. I.e., it could be stopped (unlike payment on public debt).

Fern

 

[Anarchist420]

Because the US has other fiscal obligations it is not legally permitted to not pay in order to save up money for interest payments.

Congress may change that at any time.

 

[fskimospy]

Re: Bolded part. Section 4 of the 14th mandates public debt be paid.

Others are not mentioned.

Hypothetically, should the debt ceiling not be raised many expenses must be cut, but those already incurred needn't go unpaid (if we even have much given the lack of appropriations). Delaying their payment doesn't constitute default.

And I'll note this - Payment of SS has been discussed here before. I'm pretty sure all you guys claimed we had no real legal obligation to pay it. I.e., it could be stopped (unlike payment on public debt).

Fern

You didn't understand the social security argument. It meant that the law could be changed, not that we don't have obligations under current law.

Also, I can't believe you didn't notice the gaping hole in your logic. If you believe the 14th amendment allows the federal government to ignore laws that would prevent payment on the public debt, that means they can ignore the debt ceiling. You can drive a truck through that hole.