Of course I’m waiting like everyone else to discover what the President has to say tonight.
But here’s a hint about what’s actually going on:
I met today with a civil servant who was deeply involved in the planning for a government shut-down back when the House GOP threatened not to extend the Continuing Resolution. This far out from D-Day, detailed plans were in place and guidance had been given to the agencies. No such planning is now happening.
Sounds to me as if they have an ace in the hole.
All right, Mark, I don’t blame you if you want to play it mysterious for now, but can you promise that you’ll explain what you meant (and if you were right) later on?
That or the Obama administration is worse that Clinton’s.
Selfishly, I don’t want them to shut down - I have a vacation near Yosemite, and it being closed would bite.
It surely has to be the 14th-Amendment constitutional option. Bill Clinton floated the idea and it didn’t raise howls of outrage.
Dumb question here. Put aside the obvious textual problems with the “Fourteenth Amendment option.” I personally don’t think it passes the straight-face test on the merits, but assume that it could work. What would it do? Give the administration the ability to ensure that the interest payments were made? But there will be enough revenues to do that without a special constitutional “option.” The draconian cuts would be in other sorts of spending, not with regard to anything to do with debt obligations. So what good would the option do even if it were exercised? Sincere question — I don’t know the answer.
Carnap
Perhaps we could run a pool, active for the next 10 days.
Is Obama the:
11 dimensional chess master de la gente
or
Republican genius
or
possibly whatever Carnap is hinting at. I’ve read all his comments since he showed up (welcome!) and I can’t tell any difference between his stuff and McArgleBargle (He won’t know who that is, I’m betting, the GOOG is happily a bit coy). So Carnap, help us out here with a short (5 words or less) summary of what you think the betting man’s judgment of Obama should be, so that our pool is reality based.
I vote for Republican genius. I am so hoping I am wrong, but… fool me once, shame on, shame on you. Fool me, you can’t get fooled again.
I vote for good at getting elected, and piss poor at everything else.
What’s it mean that there are no preparations for a shutdown? Just that the dufus isn’t doing his job. Nothing more.
Hi, Russell. I wasn’t hinting at anything, just asking an honest question, because I don’t understand how this is supposed to work. You’re right, I have no idea who “McArgleBargle” is, or what “the GOOG” is, so I don’t know what to make of your message or whether it’s supposed to be a put-down or not. In either event, thanks for the welcome. For purposes of your pool, it seems pretty obvious to me that the President is not at all any sort of genius playing multidimensional chess, nor is he a closet Republican. I think he’s clearly a sincere progressive, but that he has decided he needs to position himself as more of a centrist for purposes of his reelection effort. So he wants to have a deal he can campaign on showing that he’s responsible and cut spending. It seems pretty straightforward to me.
Carnap
Brett, category noted, and I’ll add it, thanks.
Carnap, how about 5 words, maybe 10 at the most. Unless you more or less agree with Brett? Don’t take this as an insult, but did you know your comment writing prose style is very similar to Noam Chomsky’s off-the-cuff interview style, transcribed?
Unless the RBC proprietors object, I’m going to run this as a community game, and honestly tot up the votes, updating daily.
Pool prize is, assuming the proprietors again don’t object, is a free subscription to the RBC.
As of 9:34 PM EDT, that must be one very very deep hole. Because I couldn’t see an ace down there even if it was glowing white-hot.
Cranky
@Anonymous: No intention of being mysterious. The very same administration that prepared meticulously for the possibility of a shut-down a few months ago isn’t doing any such thing now. That means to me that they think either that they have Boehner so badly squeezed by Wall Street that he has to fold - and I doubt they’d gamble on such a calculation - or that they have some out that means that the House GOP can’t actually run the ship on the rocks. I agree that the 14th Amendment option protects only the bondholders and other creditors, so it must be something else: if not coinage, then scrip, or selling the gold reserve, or something that allows the checks to keep being written.
Is the “statutory conflict” argument the same as the 14th Amendment argument?
If not, that’s what I go for.
Still, I’m wondering. Obama might have an ace in the hole - I hope so - but don’t overlook the possibility that he’s just planning to fold his hand.
I simply can’t believe that Boehner’s corporate masters will let him let us default. The Tea Party was great when it was just another bunch of dupes like the religion right…but this…this is serious. Surely they will bring the GOP to heel. Er….right?
A government shutdown (when there’s no budget) requires a lot of planning to comply with the AntiDeficiency Act. But if we hit the debt limit, there are no such legal procedures. For example, without a budget (or continuing resolution), nonessential government workers are committing a criminal act if they keep working. However, if we hit the debt limit, government employees can legally keep working. It’s just that the government won’t have enough money to pay them.
Sadly, my current vote is incompetent, but we’ll never find out because an agreement is made at the very end.
Well, if they made shutdown preparations only a few months ago I suppose they’re still ready to whip them out and deploy them, no?
Russell, please put me down for “incompetent progressive masquerading as centrist for purposes of reelection.” Nine words.
Carnap
Do those of you who still think that Obama may be a progressive ever consider his decisions relating to the “war on terror,” such as his decisions to fight wars in (I believe now) seven Muslim countries, to engage in assassination attempts against U.S. citizens, to maintain secret prisons to which the Red Cross is denied access, to imprison people indefinitely without due process, to torture Bradley Manning and prosecute Thomas Drake as well as a record number of other whistle-blowers, to engage in warrantless surveillance, and not only to violate the Convention Against Torture by not prosecuting torturers but to interfere with foreign nations’ attempts to prosecute them and torture victims’ attempts to sue them? A real progressive, isn’t he?
The Obama hate is strong here. My only question: paid Republican operatives pretending to be liberals, or dupes who do their work for free?
Marc, I for one consider Obama the lesser evil, as compared with any potential Republican presidential candidate. Does that mean I shouldn’t criticize him? And that all my criticisms reflect not rational grievances but hate?
Marc, I’m not usually concern troll, just depressed.
I thought it was bad in 94, with the Contract for America stuff, but now I’m just
well,
blah. Sorry.
Marc,
Not hate. Not at all. But disappointment? Yes.
Hate? No. But at some point the Lesser of Two Evils becomes the Evil of Two Lessers, so we may as well get on with it.
Marc,
Can I put you in for “11 dimensional…”? Or something else? Additional categories are interesting in that it gives each of us insight into how other diverse people view the current proceedings.
Disclosure: I’m not paid to do this.
Around 10AM Pacific Time tomorrow I’ll update with a short summary table so far. Really I think some of us want to be wrong and most want to be right but to paraphrase Carnap I think none of us knows the answer to the question, which is, what’s going to happen?
No, you can put me down for “no patience for silly online posturing”.
I think Obama really does want to reduce the long-term deficit. He’s trying to minimize the short-term harm from spending cuts in the face of overwhelming public support for them. He thinks that the GOP refusal to raise taxes on the rich and desire to cut spending on everyone else is a strong line of political attack (which is why he is repeating it so much.) He is going to campaign on this over the next year. He’s trying to make himself look reasonable and his opponents look unreasonable. Nothing mysterious (and the garbage 11-dimensional insult is getting pretty stale now. Can it.)
In terms of his strategy - he (correctly) figures that long-term vague future spending cuts don’t matter much and sound good, so he’ll agree to some of them. He’s pretty good on the details (as per the last budget agreement, which turned out to be better than it appeared initially.) There is no reason why the debt “deal” couldn’t be the same.
Unless, of course, you’re already predisposed to think of him as incompetent, someone with bad intentions, or both. In which case nothing will satisfy you.
Probably a dumb question, but if Treasury can’t get the money by
selling bonds, what is there to stop them printing dollars and
using them to pay the bills ? And a bit of inflation would be a
good thing in our current slow economy.
I remember when the left was really unified and we elected George McGovern president. Those were the good old days.
I think Obama really does want to reduce the long-term deficit.
To what end? How does reducing the “long-term” deficit do anything, ANYTHING, for the health, prosperity, and well being of the United States of America?
The Treasury doesn’t have the authority to print money; it’s the Federal Reserve that does that. Indeed the Fed could print up some money and pay off some of our debt. (That is, they could buy treasury bonds on the open market, and destroy the bonds).
On the other hand, in recent weeks I’ve seen the argument that the Treasury could use its authority to mint platinum coins of any denomination as a way to “print money” and monetize the debt.
Marc - Absolutely the best, most concise, intuitively accurate, rational, and believable assessment of this situation yet.
Maybe Obama’s “ace in the hole” is stopping Social Security payments, hence no need for elaborate plans. But I sincerely doubt he has the stones for that.
Personally, I think Social Security checks not going out is what will ultimately lead to a debt ceiling hike. Social Security checks are due to be mailed on August 3rd. Without a debt ceiling increase there simply won’t be enough money to pay them (until about a week later) and there will be no Social Security checks.
Marc, right on. More of this kind of pragmatic, non-panicky, rational assessment please.
I have no idea why the Republican party thinks it’s a good idea to give a President of the opposite party so much discretion in what checks will be mailed and to whom.
Seriously, in my fantasy world, all payments from the Treasury to addresses in a red state stop.
So Marc is not picking the 11-dimensional chess - just the regular 2-d kind.
I can accept that.
“Without a debt ceiling increase there simply won’t be enough money to pay them (until about a week later) and there will be no Social Security checks.”
Without a debt ceiling increase there simply won’t be enough money to pay something. If it’s the Social Security checks, that won’t be mandated by the debt ceiling staying fixed. It will just be the standard government tactic of making sure the cuts hurt as much as possible whenever the money gets short, so that people will cough up more money. I think everybody is familiar with that from local and state government.
The nightmare scenario for practically anybody in government, is a government shutdown that lasts long enough for people to notice that they’re getting by just fine. That’s why shutdowns are always managed to maximize immediate pain.
If it’s the Social Security checks, that won’t be mandated by the debt ceiling staying fixed
Sorry, but without a debt ceiling hike, Social Security checks aren’t going out on August 3rd, whether Obama wants them to or not. If you look at the daily deficit analysis (p. 23), on August 3rd, $23 billion of Social Security checks are owed, but there will only be $12 billion of revenue available.
Ragout - thanks for the explanation. So basically Bernanke and the Fed can choose to
print the money, but Obama and Geithner can’t do it on their own.
But presumably if the worst happens and we hit Aug 2 without a deal, then the
Fed would have the choice of a) doing nothing and having a huge financial crash
or b) printing money and allowing the bills to be paid. It seems pretty clear
to me that they would choose path a), at least in the short term. Heck, Bernanke
may be a Republican, but he isn’t a lunatic.
And if Obama and Geithner have already been discussing contingency plans with
the Fed and feel confident that Bernanke & co are going to step up, that
might explain why there aren’t plans for a shutdown.
Under these circumstances, it seems that printing money to cover much of the
deficit would also be quite justifiable in terms of the Fed’s mandate to
maintain price stability and employment (not that the Tea Party would see it
that way).
Sorry, I meant they would choose path b) and print the money.
They have three aces in the hole-the question is which one they want to play.
1. Ignore the debt limit and take it to the courts. Their position will probably be that the most recent appropriations bill repeals the debt limit, not that the debt limit is itself unconstitutional.
2. Pay off treasuries on schedule and in full, but stuff little IOUs into everyone else’s pay envelopes, as required. Like California did not so long ago. Banks will probably even honor them.
3. Print money, either through striking those crazy platinum coins, or persuading the Federal Reserve to “purchase” the National Parks or the gold reserves or what-have-you.
Any way you go, there is no need for a default, and I can’t imagine that Tim Geithner, for crying out loud, will ever permit one.
I think there will be a deal-but if there isn’t, count on one or more of the above. For instance, how much time would Geithner buy just by refusing to invest the Social Security surplus in government debt?
The safety of the republic shall be the supreme law-or, as Harry Truman put it, the President has the power to keep the country from going to hell.
Let’s see, so far we have:
1 Genius Republican
0 11 dimensional chess master de la gente
1 2 dimensional chess master
1 incompetent progressive masquerading as centrist for purposes of reelection
1 good at getting elected, and piss poor at everything else
I believe the last two are effectively the same. Also the 11D vs. 2D chess master are essentially the same, but in deference to the delicate feelings of the partisan I’ll leave the 2D chess master category.
BTW, when I say Obama is a genius Republican, I do not mean that he is incompetent, quite the contrary. The goal of the Republican Party is to promote increasing returns to the rentier classes and incumbent corporations via technological and financial innovation around a calcified political system. Bernanke and Geithner are his tools. Or is it vice versa?
Richard Cownie: “Ragout – thanks for the explanation. So basically Bernanke and the Fed can choose to print the money, but Obama and Geithner can’t do it on their own.”
I think how it works is that the Fed creates money in the form of numbers stored in a computer, while the Treasury handles actual physical currency. However, the supply of bills and some coins is limited by statute, so they can only create platinum (and possibly palladium) coins of an arbitrarily large denomination. I could be wrong, however.
Brett, as I’ve asked in the past, do you say this with metaphysical certitude? The same metaphysical certitude, the lack of which, prevented you from being certain that Barack Obama was born in the US, since you weren’t physically present at his birth. I only ask this question because I know you are a sincere person who analyzes situations based on the facts, but I don’t understand your analytical framework. Also, when the ball goes beyond the couch, do you believe that it is really there? You know, since you are not physically present to observe it?
[...] may have some other gimmick up his sleeve, like minting $2 trillion platinum coins, swapping Social Security treasuries for public debt, or [...]
Marc, loved your analysis.
Mark, is this what Obama had up his sleeve? He’s desperately trying to get reelected and is willing to sellout to do it. Plain and simple. No multidimensional chess game going on here, unless you concede his only goal is to win next November. I’m not panicked or posturing, but that doesn’t mean I have to think the guy is any better than the rest. Sadly, I’ll be voting for him again in ’12.