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Tag Archives: Debt Ceiling

Wise Legal Advice Biden May Not Be Getting and Possibly Good News About Russia

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As is often the case, there is a golden mean between paying no attention to politics and paying too much. Since I don’t have President’s Biden ear, I’m guilty of the latter (I’m pretty sure the messages I’ve sent him didn’t made it to his desk).

Nevertheless, here is some brief discussion of the debt ceiling I read today that I want to share:

From Josh Marshall of Talking Points Memo:

Even though this won’t come as new news to many of you, the following is still a clarifying prism. A negotiation is usually two sides haggling to get things they want. Leverage is often unequal…. But in this negotiation, Republicans are getting various policy priorities and Democrats are “getting” Republican agreement not to create a global financial crisis. That’s extortion, not negotiation. A government can’t operate in any consistent or sustainable way when policy deliverables go to the party willing to credibly threaten the most damage to the country.

And from two law professors with fancy titles who work at respected universities:

Our advice has always amounted to a version of the now-overused mantra: “Keep calm and carry on.” The best thing to do in a debt ceiling crisis is to continue to raise the money necessary to pay the government’s bills. If Republicans block action on the debt ceiling, the President would indeed break the law by issuing new debt. But among his options at that point, all of which would be bad, that would be the closest thing to a plain-vanilla response. We would not see the government stiff its creditors.

Instead, the Treasury Department would do what it always does: go into the financial markets and raise funds from willing lenders. Those lenders would almost certainly demand higher interest payments than otherwise, which would offer the irony that the Republicans’ vows to “do something about the debt” will result in more debt, not less. But in a world of their making, borrowing money as it is needed, in as close to the normal way as possible, will be President Biden’s best (and least unconstitutional) option.

Elsewhere, there’s evidence that some Russian soldiers are switching sides and actually taking back territory from the Russian army. It isn’t a surprise that some of the troops don’t care for Putin at all. This is a good sign, combined with the fact that Ukraine is offering special treatment for soldiers who surrender, including care overseen by the Red Cross and no requirement to ever return to Russia. We used to think high-level officials might be the ones to do something about Putin. Maybe the uprising will start in the lower ranks. After all, the Russian Revolution began with mutiny in the army.

Six Legal Reasons the President Should Ignore the Debt Ceiling

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Republicans threatening to cause a financial crisis by refusing to raise the debt ceiling unless their agenda is enacted are practicing extortion, plain and simple (“extortion”: the act or practice of wresting anything from a person [or persons] by force, by threats, or by any undue exercise of power). It is not negotiation.

Any advisors or other members of his administration who are telling the president that he shouldn’t issue an executive order for the Secretary of the Treasury to ignore the debt ceiling and keep paying the government’s bills (if that becomes necessary) are deeply mistaken.

Concerns that the Supreme Court would somehow intervene and create a financial crisis are overblown. The President doesn’t need the court’s permission. If it becomes necessary, he should demonstrate leadership and present the court with a fair accompli.

Concerns that the President taking unilateral action to avoid a financial crisis would somehow create a comparable financial crisis are simply stupid.

Robert Hockett, is the Edward Cornell Professor of Law and a Professor of Public Policy at Cornell University; Senior Counsel at Westwood Capital, a socially responsible investment bank; and a Fellow of the Century Foundation think tank. He has worked at the International Monetary Fund and the Federal Reserve Bank of New York and serves in a consultative capacity for a number of U.S. federal, state, and local legislators and regulators.

Writing for Forbes magazine, he provides six legal reasons why adhering to the federal budget takes precedence over the debt ceiling law. You might not care to read so much on this subject. I just wish the damn president, his new chief of staff, the Secretary of the Treasury and the Attorney General would:

Writing in outrage for over a decade about the illegality of the putative ‘debt ceiling as I, along with several distinguished colleagues, have been doing, I am not a little relieved to see some of our longstanding arguments gaining traction. I am a little bit troubled, however, by how attention has centered almost solely upon the 14th Amendment to the U.S. Constitution.

The 14th Amendment is, to be sure, one of the grounds upon which the ‘debt ceiling’ must be declared null and void – for reasons even beyond those we’re hearing right now, as I’ll indicate. But there are at least five additional such grounds. It might then be helpful to elaborate them, along with their mutual complementarities, in summary fashion.

Let’s start with the constitutional and legislative backdrop …

Articles I and II of the Constitution vest both Congress and the President with budgetary roles. All spending and revenue-raising must be legislated, and valid legislation must be passed by both chambers of Congress and signed into law by the President. Final budgets, such as they are, are accordingly joint Congressional and Presidential products – save in such rare circumstances as those in which Congress overrides a Presidential veto with a supermajority vote.

The Constitutional provisions that I have just channeled are broadly worded and prescribe very little as to the details of federal budget processes. These are determined, instead, by more legislation. In 1921, through the Budget & Accounting Act, Congress vested primary budget formulation responsibility with the President, establishing both detailed timetables and the predecessor of today’s Office of Management and Budget (OMB) to help shepherd the process along.

The ‘debt ceiling’ is rooted in this era, during which Congress relinquished its previous role as legislator of every distinct federal bond-issuance. Congress did this to afford the President – by their own law our primary budget-formulator – more flexibility in determining revenue sources for funding the growing variety of legislated programs. That’s right, the original ‘ceiling’ was about affording the President more discretion, not less.

It is no accident that the Liberty Bond Act of 1917 (original source of the ‘ceiling’), the 1913 vintage 16th Amendment to the Constitution authorizing the federal income tax, the thereby enabled Revenue Act of 1913, the Federal Reserve Act of 1913, and the aforementioned Budget & Accounting Act of 1921 all came in rapid succession. In effect, these enactments, all passed by Congress and signed into law by the President, constituted one coherent federal budget regime.

All of this changed, however, in 1974. The ‘crisis’ that occasioned the change was brought on, like so many others of the era, by President Richard Nixon. Nixon had an unfortunate tendency to think himself more ‘imperial’ than the Constitution allowed, and took it upon himself to decide with unprecedented frequency what Congressionally legislated and funded programs, even though he had signed them into law in the first place, were worthy of actual execution and funding.

The practice in which he manifested this proclivity was known as ‘impoundment.’ The idea was that instead of spending what Congress had instructed him to spend and what he had agreed, by signing their legislation, to spend, Nixon was routinely spending only what he wished to spend, while ‘impounding’ the rest – in effect, holding it hostage.

Congress put an end to this chicanery by passing the Congressional Budget and Impoundment Control Act of 1974, pursuant to which both Congress and the President go through detailed procedural steps in formulating their own budgets, which budgets are then ‘reconciled’ and collated before being legislated into law piecemeal through sundry program authorization and appropriations acts passed by Congress and signed by the President. (The Supreme Court closed all plausible loopholes in the Act in Train v. City of New York one year later.)

This is also the origin of the Congressional Budget Office (CBO), designed as a counterpart to the President’s OMB. In effect, then, what we have had for the past 50 years is an altogether new budget regime superseding the regime put in place 50 years before then. The earlier regime, in other words – including its ‘debt ceiling’ component – was implicitly repealed by the later regime.

You can see this by noting the logic – or shall we say the arithmetic – of the post-1974 regime. Pursuant to that regime the duly legislated federal budget first determines both revenue and spending, then assigns the President and his Treasury Department the task of filling any gaps between the former and the latter through debt issuance. And, since the President is prohibited under this regime from not spending what the budget mandates he spend, the regime effectively mandates that he borrow any time mandated spending exceeds mandated revenue.

We are now situated to see why the 1917 ‘debt ceiling’ as presently wielded like an AR-15 by a rump faction of the House Republican Caucus is actually no more than a leaky water pistol. For there is literally no way for the President to comply with the putative ‘ceiling’ … that does not entail his violating the federal budget itself — as formulated pursuant to the 1974 regime that superseded the early 20th century regime. Here are the six reasons why


Reason 1. The ‘Take Care’ Clause: Article II, Section 3 of our Constitution requires that the President ‘take care that the Laws be faithfully executed.’ President Nixon effectively violated this provision by not spending as Congress, through that law which is the federal budget, mandated that he spend. President Biden would be doing the same were he not to spend as the last federal budget requires that he spend, and were he not to borrow in so doing as that budget arithmetically mandates that he borrow.

Reason 2. The ‘Presentment’ Clause, a.k.a. ‘Line-Item-Veto’ prohibition: Article I, Section 7 of our Constitution requires that bills passed by both chambers of Congress be ‘presented’ as wholes to the President, which the latter then signs into law or vetoes. In Clinton v. City of New York (1998), our Supreme Court held that the Line Item Veto Act of 1996 violated this clause by purporting to permit the President to ‘cherry-pick’ which budget items would become law and which ones would be left on the cutting room floor.

Were President Biden to ‘prioritize’ payments mandated by the current federal budget as the aforementioned rump faction of the House Republican Caucus suggests, he would be doing precisely what the Court held that President Clinton couldn’t do and that Congress could not authorize.

Reason 3. The 14th Amendment: Article XIV, Section 4 of our Constitution provides that ‘[t]he validity of the public debt of the United States, authorized by law… shall not be questioned.’ The framers’ intention in enacting this Constitutional provision is of particular interest right now. The self-styled ‘Confederate States of America,’ controlled by slave owners, had pulled their members from Congress and endeavored to destroy our federal union ‘from without’ by launching military attacks … in 1861. President Lincoln and Congress incurred unprecedented federal debt (multiplying it 80-fold, from a bit over 64 million to 5.2 billion), in the form of Treasury securities sold to millions of Americans, in financing the successful effort to end that rebellion.

As the nation began healing at the Civil War’s end, concerns grew that Southern legislators readmitted to Congress would continue their effort to destroy our federal union, save now from within, by repudiating the war-occasioned federal debt that American statespersons since Alexander Hamilton had recognized as the essential financial binding agent holding our union together. Indeed, Southern legislators were quite open about their intentions on this score, which is precisely what occasioned the requirement that Southern states ratify the 14th Amendment as a condition of rejoining the Union rather than remaining militarily occupied conquered territories.

The applicability of the 14th Amendment to the present ‘debt ceiling’ insanity grows quite clear when we recall this history. It is a striking fact both that the aforementioned rump faction of the House Republican Caucus nearly all hail from former Confederate or Confederate-border states, and that many of them have called for a ‘national divorce’ …. It is equally striking that most of these … Republicans have been transparent about their aims … to sow chaos and thereby pave the way for a Weimar style anti-constitutional putsch by their criminal ringleader and serial bankrupt in Mar-a-Lago, Florida – who has himself now explicitly called for default on the national debt.

Reason 4. The ‘Later in Time’ Rule: It is a well established judicial canon of statutory construction that when an old law appears to conflict with a newer law or treaty, the older law must either be interpreted in a manner that does not conflict with the newer law, or be treated as having been implicitly repealed by the newer law. There are two ways in which this canon is applicable to our present ‘debt ceiling’ imbroglio.

First, the 1974 budget regime clearly displaces the earlier regime, including its ‘debt ceiling.’ This is made dramatically clear in the 1974 regime’s requiring both that the President execute the budget in full (no impoundments), and that s/he issue debt in so doing to fill any gap between spending and revenue. And second, any current budget enacted later in time than the last ‘debt ceiling’ hike of course supersedes the latter.

It is for this reason that I’ve often written that ‘the budget is its own “debt ceiling.”’ Indeed, in light of the anti-impoundment content of the 1974 Act, it is clear that the budget is both its own floor and its own ceiling. It is self-contained. It is the be all and end all of federal budgeting. It is the entirety of the law governing spending, taxing, and borrowing, with no role left to be played by the old 1917 Liberty Bond Act ‘ceiling.’

Reason 5. The ‘Absurd Result’ Canon: It is also a well established canon of statutory construction that, when a legal provision – either as written or as it would be applied – can be construed in more than one way and one such way would yield a result so absurd that the legislature cannot plausibly be taken to have intended it, the interpretation yielding that result must be considered mistaken.

In the present context, it is clear that the interpretation of the ‘debt ceiling’ proffered by the aforementioned rump faction of the Republican House Caucus would yield multiple absurdities of the relevant sort. It would require the President to violate contract obligations (which US borrowings assuredly are), the last-legislated federal budget of 2022, the 1974 Congressional Budget and Impoundment Control Act, and one or more of the three Constitutional provisions assayed above.

And that is to say nothing of the cataclysm that default on our national debt, which we’ve never reneged on before, would bring to the US dollar, to US debt servicing costs, to the US banking and financial sectors, to the nation’s pension and mutual fund holders, to the nation’s inflation rate and its broader economy, and indeed to the world’s capital markets and trading economy.

It is simply impossible to imagine the framers of the Liberty Bond Act of 1917 – who were seeking to facilitate the financing of the First World War effort – or indeed any member of Congress prior to the aforementioned rump faction of the House Republican Caucus, ever having intended even one of these outcomes, let alone all of them.

Reason 6. The ‘Constitutional Avoidance’ Doctrine: Finally, it is also a well established canon of statutory construction that, when a legal provision – either as written or as it would be applied – can be construed in more than one way and one such way would raise a Constitutional issue, the interpretation yielding that result should if possible be considered mistaken.

The applicability of this doctrine to the present imbroglio is, like those of the previous legal doctrines, quite clear as well. The ‘debt ceiling’ as interpreted by today’s [MAGA] Republicans would squarely conflict with the 14th Amendment as noted above. Either the interpretation, then, or the ‘ceiling’ itself must be deemed without legal force.

I hope that the point is now made. Neither the President, nor the Treasury Secretary, nor any responsible member of Congress need worry that there would be anything ‘legally questionable’ about either or both Congress’s and the President’s simply disregarding the ‘debt ceiling’ and continuing to make good on the nation’s legal obligations as always. No court would find otherwise.

There simply is no uncertainty here. Indeed, the law quite clearly, quite certainly and quite squarely requires one thing. It requires that Congress and the President alike recognize that the old 1917 relic known as the ‘debt ceiling’ as presently applied is null and void, and has been so both since its inception and especially since Congress smacked down the would-be ‘imperial’ President Nixon a half-century ago.

Biden Needs To Be Ready To Act

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“extort”: to obtain from a person by force, intimidation, or undue or illegal power.

In other words, if you don’t give me what I want, something very bad will happen to you. This is not the same as negotiation.

 “negotiate”: to confer with another so as to arrive at the settlement of some matter.

You’ll get something you want, I’ll get something I want, and neither of us will be too worse off.

Which brings us to the debt limit or debt ceiling:

Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government’s ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government’s ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years.

Prior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.

Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.

In 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. [Wikipedia]

The story of the debt limit “crises, especially in recent years” begins in 2011. From Brian Beutler of Crooked Media:

Just as clear-eyed political analysts knew well before President Obama that Republicans would abuse the filibuster rule in an unprecedented way to stymie his agenda, they also recognized before the Democratic leadership that, after crushing Democrats in the 2010 midterms, Republicans would take the further unprecedented step of extorting Obama under threat of default. That’s why reporters asked then-Senate Majority Leader Harry Reid why Democrats, with their huge 2009-2010 majorities, wouldn’t neutralize the threat before Republicans took power. 

“Let the Republicans have some buy-in on the debt,” Reid said. 

This was the beginning of a fateful error that culminated in a significant shock to the economy, still hobbling out of the great recession, followed by years of indiscriminate, across-the-board discretionary-spending cuts, which Obama paid the Republicans in ransom.

This was supposed to be Obama-era Democrats’ biggest regret, one that they were committed never to relive. For the rest of Obama’s presidency he rightly refused to make unreciprocated concessions for further debt limit increases, and each time Republicans eventually caved. 

But it isn’t foreordained that Republicans will always cave, every time a Democratic president refuses to be extorted, from now through eternity. Republicans never forswore weaponizing the debt limit. Neither was their lurch further into extremism a piece of forbidden knowledge. Right out in the open, through the Obama and Txxxx years, Republicans have become significantly more aggrieved and vandalous, and because of that, permanently disarming the debt limit has become a matter of greater and greater urgency….

If Democrats were like Republicans, they would’ve treated turnabout as fair play, and held the debt limit hostage for ideological policy concessions after Txxxx took office. Of course, the parties aren’t similar, and Democrats never considered this, nor should they have: Extortion is extortion, and every bit as anti-democratic as stealing court seats, or elected offices. 

But I did think that when Republicans came to Democrats for help increasing the debt limit, Democrats should have made one demand: that in exchange for their votes, Republicans would have to relinquish the debt limit as a tool of extortion forever. This could have taken many forms: Outright debt-limit abolition, indefinite debt-limit suspension, a debt-limit increase of effectively infinite size, or the permanent delegation of authority to increase the debt limit to the executive branch. Either way, the idea was that Democrats should have had enough dignity to insist the parties be bound by a single set of rules, and make it the price of bailing Republicans out of a jam. 

Democrats instead gave their votes away for free….

By the end of the last Congress, with Republicans poised once again to control the House under a Democratic president, the idea that Democrats should use their narrow, lame-duck majorities to moot the debt limit grew into something like a clamor…. Democrats thus had to respond to it, and their response was: sorry, no. This time, they seemingly just didn’t have the votes. But Democratic leaders expended almost no public effort trying to whip them up. Instead they and their loyalists treated supporters to excuses ranging from ‘we don’t have enough time’ to ‘we are leaving the doomsday device armed and ticking on purpose!’ How better to force Republicans to produce a budget, which will contain unpopular policies, the better to run against?

So House Republicans have produced a budget. It’s filled with unpopular proposals they could never get implemented through the normal budget negotiations with the president and Senate that take place every year.

Their position is: give us all or much of what we want or we’ll create a financial crisis as bad or worse than the one in 2008. The government won’t have enough money to function and all hell will break loose. Extortion.

Biden’s position is: raise the debt limit, as Congress has always done before, and then we’ll negotiate the budget like we always do. Negotiation.

You might think it’s fine for Republicans to finally force Democrats to cut the spending Republicans want to cut and leave alone the spending Republicans want to leave alone. Do you think it would be fine for Democrats to do the same thing when there’s a Republican president? Regardless, letting a minority compel the government to meet its demands is not how a representative democracy is supposed to work. Democrats gave in to extortion before and they shouldn’t do it again.

Back to Mr, Beutler:

Democrats find themselves at a choosing moment once again, only this time, they lack the means to disarm the debt limit with new law. Their choice is between caving to Republicans and maneuvering aggressively to disempower them….

Biden should be prepared to leave Tuesday’s meeting with Congressional leaders and announce that if Republicans attempt to default on the national debt, his administration will protect the country.


 He can instruct the Treasury to continue auctioning bonds, and if Republicans then choose to sue the country into default, and the Republican-controlled courts choose to order the country into default, it will be on them. Biden could further justify this decision by referencing the 14th amendment, which holds the sovereign debt inviolable. [Other options have been proposed and are supposedly being considered.]


 We need Democrats who will stop treating the Republicans’ serial default threat as a prompt to outmaneuver them, and instead simply overturn the game board… Republicans are the minority, trying to impose their will on the whole country by threat of mass harm, and that isn’t compatible with freedom or self-government. It isn’t hard bargaining, it’s terrorism.

Anything less than continued, complete refusal to negotiate would, in a profound and troubling sense, represent a violation of the oath of office. In a more partisan sense, it would breach the trust of millions of voters who view the Democratic Party as the last line of defense against extremist depredations. It’s hard to imagine a clearer way to signal that, when push comes to shove, they’ll appease bullies, instead of standing up for us—and they’ll do it by handing over our lunch money.  

The country can’t survive in the long run if one shameless faction wields power in a consequence-free realm, while the other quietly acclimates itself to the mounting extremism. Eventually the trespasses will be incompatible with self-rule, and it will bring the whole republic down. 

Note: In a TV interview, when asked if he might cite the 14th Amendment in order to bypass the debt limit (the amendment says the nation’s debt should not be “questioned”), Biden said he’s “not there yet”.

Understanding the Coming Arguments About the Federal Budget

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Paul Krugman’s new column sets the scene for this year’s dispute regarding the federal budget. It will be in the news a lot so it’s good to know what’s going on:

[Today], the White House released its budget [proposal]; Republicans haven’t offered a specific counterproposal, but they seem to be coalescing around a plan released by Russell Vought, [the former president’s] last budget director. Neither plan will become law. Instead, they’re intended to position the two sides for the looming confrontation over the federal debt ceiling.

But let’s not engage in false equivalence. The Biden budget may be political theater, but its numbers make sense. The Republican numbers don’t.

In some ways we’ve been here before. A decade ago President Barack Obama also confronted a Republican-controlled House, which sought to use blackmail over the debt ceiling to extract policy changes it couldn’t have enacted through the normal budget process. And Vought’s plan bears a strong family resemblance to the plan advanced back then by Paul Ryan, who would become speaker of the House in 2015.

But the political and intellectual environment is different this time. In 2013 Washington was full of Very Serious People who were obsessed with the budget deficit and believed Republicans who claimed to be deficit hawks. Ryan, in particular, was the subject of much media swooning, although anyone who looked at the details of his proposal realized that it was flimflam.

These days the deficit scolds are much less influential than they were. The news media is, by and large, treating Republican claims that they have a plan to balance the budget with the ridicule they deserve. And the parties themselves have changed: Democrats have become more unapologetically progressive, while the [Republicans seem] far less interested in fiscal policy, or policy in general, than in the past.

So, about President Biden’s budget: The starting point for this budget is that Biden’s people evidently view deficits as a source of concern, but not a crisis. Overall, Biden’s budget proposes increasing social benefits on a number of fronts even in the face of rising debt. It nonetheless proposes to reduce the budget deficit, but only modestly — it claims to shrink the deficit over the next decade by almost $3 trillion, but that’s less than 1 percent of G.D.P.

How can Biden reduce deficits while expanding social programs? Mainly by raising taxes on corporations and wealthy individuals, with an assist from cost-cutting measures in health care, especially using Medicare’s bargaining power to reduce spending on prescription drugs.

Are Biden’s numbers plausible? Yes. Notably, the economic projections underlying the budget are reasonable, not very different from those of the Congressional Budget Office. The projections even assume a substantial but temporary rise in unemployment over the next year or so [as the Federal Reserve raises interest rates].

Now, even economists like yours truly, who have been fairly relaxed about budget deficits, generally believe that at some point we’ll have to do more than this. We’ll need a much broader effort to bring down health care costs, and we’re also going to need more revenue than you can raise solely by taxing Americans with very high incomes. But Biden’s plan is a step in the right direction.

What about the Republicans? They claim to believe that rising federal debt is a major crisis. But if they really believed that, they’d be willing to accept at least some pain — accept some policies they dislike, take on popular spending programs — in the name of deficit reduction. They aren’t. The Vought proposal calls for preserving the [Orange Menace’s] 2017 tax cuts in full, while also avoiding any politically risky cuts in defense, Social Security or Medicare.

Yet it also claims to balance the budget, which is basically impossible under these constraints. In fact, even with savage cuts to Medicaid and drastically reduced funding for the basic functions of government, Vought is able to claim an eventually balanced budget only by promising that tax cuts and deregulation will cause a big rise in the economy’s growth rate. Tax cutters often make such claims; they never, and I mean never, deliver on their promises.

What I find a bit puzzling is why Republicans are still rallying around this stuff. The modern Republican Party gets its energy from culture war and racial hostility, not faith in the miraculous power of tax cuts and small government. So why not give up on the ghost of Reaganomics? Why not come out for a strong social safety net, but only for straight white people?

Part of the answer may be that the party still needs money from billionaires who want to keep their taxes low. But it also seems to me that the peddlers of right-wing economics have done an extremely good job of marketing their wares to politicians who don’t know or care much about policy substance. That Vought proposal, as I said, looks a lot like Paul Ryan’s plans a decade ago — but it’s titled “A Commitment to End Woke and Weaponized Government,” and somehow manages to mention critical race theory [CRT] — which is not exactly a line item in the budget — not once, not twice, but 16 times.

In any case, where we are now is that Biden is offering a basically reasonable fiscal plan, while Republicans are talking meanspirited nonsense.

A few weeks ago, Krugman was interviewed and offered his opinion about the debt ceiling. He said he knows of at least six different strategies that would allow the government to keep paying its bills and avoid a financial crisis even if Republicans refuse to raise the debt ceiling:

I think a lot of us are operating under the working assumption that the Biden people will deny up till the last minute that they’ll do any of the funny strategies. But then if push actually does come to shove they will. And they’ll mint the trillion dollar coin or they’ll invoke the [14th Amendment to] the constitution. [These] different, exotic strategies … all have zero economic significance. They’re all about just exploiting the fine print in the law to avoid [a crisis].

… America does many things well and many things badly. But one thing we do have is smart lawyers…. I assume that there is an ultra-secret team of lawyers maybe working under Cheyenne Mountain preparing debt strategies.

Something Very Smart About the Stupid Debt Ceiling

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Is it mere coincidence that one of the most sensible newspaper columnists working today, Paul Waldman of The Washington Post, almost always expresses opinions I agree with? No, I think not!

Anyway, his column today is so sensible it should be memorized by everybody in Congress and the Biden administration. It deals with the debt ceiling, the idiotic requirement that Congress has to have a new vote whenever the federal government needs to borrow more money to pay for things Congress previously decided to do.

Congress has always acted when called upon to raise the debt limit. Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents [US Treasury].

Congress raised the debt limit three times the last time we had a Republican president (you remember him, the orange one). Now that we have a Democratic president, Republicans are threatening to vote against raising it. That would mean the US government would be unable to make payments it’s legally required to do — for the first time in American history. Nobody knows what would happen then. Almost everybody with a brain thinks it would be a crisis, possibly a disaster, and certainly not something it would be cool to try (unless maybe you think the 2008 financial crisis was worth repeating).

Okay, back to the insightful Paul Waldman:

Even as they try to force a debt ceiling crisis, Republicans insist that they’re the reasonable ones. They just want a fair resolution to this disagreement about whether we should create a needless economic cataclysm by throwing the U.S. government into default. Why won’t the White House negotiate with them?

The White House has flatly rejected the suggestion, saying it simply will not negotiate over whether to default on America’s debts, no ifs, ands or buts. But here’s another idea: If we’re going to have negotiations, let’s make them real. Instead of countering Republicans’ anti-government agenda with a demand to maintain the status quo, Democrats ought to up the ante and insist on their own pro-government agenda.

If you knew nothing about this subject, it might sound like the president is being recalcitrant and Republicans are being sensible. “Let’s sit down together,” says House Speaker Kevin McCarthy (R-Calif.). “Nobody should be taking the position that we should not negotiate,” says Rep. Brian Fitzpatrick (R-Pa.). Even Sen. Joe Manchin III (D-W.Va.) says Democrats “have to negotiate.”

But we’re thinking about “negotiations” all wrong.

The problem begins with the current stance of the two parties. The White House’s position is essentially to maintain the status quo: Congress has appropriated the funds already, and those bills should be paid, which means borrowing the money to cover them. We can argue about how much of the cumulative debt is the responsibility of each party (they’ve both contributed) or how hypocritical Republicans are for pretending to care about debt only when there’s a Democrat in the White House (very). But the administration insists there must be a debt limit increase with no change to current policy.

Republicans, on the other hand, are fantasizing about all the savage cuts they’d like to make to domestic spending, up to and including slashing Social Security and Medicare. So if a negotiation produces a compromise, it would mean more spending cuts than Democrats want but fewer than Republicans seek. Which would still be a victory for the [bad guys].

Instead, Democrats are perfectly free to say the following: With their demand for across-the-board domestic spending reductions, Republicans are in effect proposing cuts to education, health care, economic development, clean energy, infrastructure, enforcement of environmental laws and a great deal more. So here are some of our demands:

  • A significant tax increase on the wealthy
  • An increase in the minimum wage, including indexing it to inflation
  • A national paid family leave program
  • A program to extend the Affordable Care Act’s expansion of Medicaid to the states that have refused to accept it
  • Universal pre-K
  • A permanent expansion of the child tax credit

That could be just the start. Republicans want to negotiate? Then let’s negotiate! Democrats will be willing to take half a loaf on some of these items; for instance, they might be able to accept only a modest tax increase for the wealthy, or an increase of the minimum wage to only $11 an hour rather than $15. That seems reasonable, doesn’t it?

Think about it this way and it’s clear how odd it is that we’re even calling the GOP demand a negotiation. The choices are (1) give Republicans all of what they want, or (2) give Republicans only some of what they want, with the hope that if the outcome is No. 2, then they’ll be kind enough not to shove the U.S. economy off a cliff.

To be clear, the White House is right that there shouldn’t be any negotiations at all. You don’t negotiate with extortionists, and what Republicans are threatening is economic extortion. It shouldn’t be rewarded.

In fact, the White House ought to go further: The president should announce that in the White House’s view, the debt ceiling violates the 14th Amendment, and because it would be unconstitutional for the United States not to make good on its debts, the Treasury Department will ignore it and continue to pay the government’s bills. If Republicans want to file suit and demand that the Supreme Court allow them to destroy the country’s economy, they’re free to try.

But refraining from destroying the economy shouldn’t be considered a favor Republicans do for Democrats, such that the Democrats have to respond by granting Republicans concessions in return. If they want to have a real negotiation in which both sides get some of what they want, then fine.

That’s the only thing that should be treated as an actual negotiation. Otherwise, Biden should simply take care of the problem in the most expeditious way possible.