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Josh Marshall rightly extrapolates from the utterly insane and terrifying comments of Ted Yoho (R-Airstrip One) that we should all be very, very afraid. He’s not wrong, exactly (I just said he was “rightly,” after all) but I don’t think we’re going to default on the national debt. Here’s why:
40-50%: Debt limit compromise on process. Not enough, methinks, has been made of this report from Greg Sargent:
The principle articulated internally is simple. Never mind delaying or defunding Obamacare — there will be no policy concessions in exchange for a debt limit that would damage Dem priorities. Republicans must refocus on legitimate legislative means, i.e., the legislative process’ normal give and take. In exchange for the debt limit hike, there will be no medical device tax repeal. No Keystone pipeline. Obama administration officials are open to the possibility of face saving moves by Republicans being part of the endgame, but only ones involving process — not policy concessions — such as the McConnell provision, a device floated last year that would have largely transferred debt limit authority to the president.
This strikes me as being both politically and policy-wise the best solution. The Democrats and the President maintain that they did not offer policy concessions for ransom, the Republicans get to claim that they won something, and the potential of future debt ceiling crises is permanently defused in a wholly-legitimized manner. The main goal the President is trying to accomplish (and that the whole world should be behind) is that a faction of Congress cannot threaten massive catastrophe in exchange for unilateral policy concessions, and even a completely clean debt ceiling hike doesn’t wholly remove that possibility from the table in the future, though it would make it far less likely.
20-30%: Clean debt ceiling hike, AKA, the GOP caves. Who knows what lives in the addled mind of John Boehner? Of which GOPers are truly mad and which are eyeing the emergency exits on the crazy train? Certainly, though, it seems that if the Senate were to pass a clean hike soon, the pressure on the House to do the same on Oct 16-17 would be enormous, and it seems that wouldn’t be a too-unlikely scenario. This is certainly what the President wants, and it would hopefully defuse future crises of this nature, but of course, nothing is guaranteed.
20-30%: The financial crisis is substituted with a wholly political one. In this scenario, the President would emerge when the first payment is due beyond what is in Treasury’s coffers and above the legal borrowing limit and, legal memo in hand, declare the debt ceiling unconstitutional and order his administration to proceed as if it did not exist. (I don’t think the platinum coin, awesome though it is, has a snowball’s chance in hell of happening). What would happen then is – the government and debt markets proceed as normal, forever. The GOP would epically flip out, the House would pass a bill/resolution ordering the POTUS to respect the debt ceiling, but a) it wouldn’t pass the Senate and b) the POTUS/WH would simply lump that in with “unconstitutional threats to the credit of the US” and move along. The House would then impeach the President on a purely party-line basis, the Senate would acquit, and there it would lie. Certainly nothing would move forward in Congress through the rest of Obama’s second term, but it’s not like anything would anyway! Whether the POTUS’s decision was correct legally would be debated, but morally, pragmatically, and governance-ally the consensus would be sympathetic to him. This would have the effect of burying the debt ceiling as an issue forever, since it’s unlikely that the GOP would believe so strongly in this that, in 2017, a President Christie/Jindal/Cruz/Paul/Palin/whomever would take the oath of office and immediately order a cessation of payments on the national debt. It would also have the odd effect of making any US default ever, for any reason, untenable legally, and thus prevent the US from any kind of Argentina/Greece kind of debt restructuring/selective defaulting down the line, meaning an actual US debt crisis (as opposed to the political crisis nominally centered around the issue of the national debt) would have to be resolved through a combination of austerity and inflation.
…and that’s it. I truly do not believe that Obama and his administration has any incentive to elect to actually catastrophically default over taking the legal out above, and I think they would elect for that knowing full well it would result in impeachment.
But of course, they can’t say they’re going to do that, or even hint that they would, because that would eliminate all incentive for the GOP to cooperate in advancing either of the two other scenarios above. The GOP would love to paint Obama as a lawless debt-addicted tyrant and has been all-but-openly itching for a reason to impeach him since Jan 20 2009, so Obama in fact has to act like Option C is off the table even if he’s completely convinced that it’s the only alternative.
It’s going to be an interesting couple of weeks, folks.
This probably would have been better blogged last Monday, but better late than never – walking past a beautiful house on my block with a "Sale Pending" sign reminds me that we’d all be better off if our tax returns were public.
Think about the housing market. When a buyer and seller go to transact the sale of a house, both are armed with a lot of information – the last sale price of the house, as well as the last sale price of every similar house in that neighborhood and metro area, along with detailed information about the size of that house and its lot and its age and how many bathrooms it has. A common meme has it that the diminishing average time between listing and sale is a sign of bubbliness in the housing market, but it could just be the internet and ability of buyers and sellers to focus in on a narrow range of "correct" sale prices with far greater ease.
On the other hand, labor markets are a hornet’s nest of bamboozlement, opacity, resentment, and potential exploitation. Not knowing what anyone else is paid to do what work and especially given high unemployment, the median workers has relatively little leverage with which to bargain.
"But Squarely," you’ll say, "people have a right to privacy!" And so they do. But I would assert that one’s salary is sufficiently distinct from information indisputably covered by a right to privacy that, at the very least, it’s not axiomatic that one’s wages are inherently private. Firstly, if you work for the public sector, they’re not private. This includes public universities – if you want to know how much Tyler Cowen makes, just go find out. Secondly, if you play professional sports, they’re not private. Thirdly, if you are the CEO, CFO, or one of the other three most highly-paid officers of a public company, they’re not private. Fourtly, similar disclosures are required for public charities. Fifthly, while not required, these kinds of disclosures are expected of candidates for public officers, unless you’re, oh, what was that guy’s name? You know, that guy. Anyway.
Clearly, there are certain other unobjectionable concerns that override the right to salary privacy in many cases. And this is clearly distinct from other kinds of "private" activity – a database of who public employees have slept with, or what publications the CEOs of non-profit organizations choose to read in their homes, would clearly engender outrage, while publicizing their salary does not. I think making all salaries public (via the mechnanism of tax returns, perhaps truncated, edited editions for public consumption) would have salutory effects on labor markets and the labor share of national income. If you disagree, I think you need to disagree on those grounds.