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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.
I’m quite surprised to find myself in agreement with the Tea Party but here we are:
Some House Republicans have proposed a bill which would kill the 1-dollar bill and replace it with a mandated dollar coin, The Hill‘s Peter Kasperowicz reports.
Rep. David Schweikert (R-AZ) and two other House Republicans introduced the Currency Optimization, Innovation and National Savings (COINS) Act last week, saying the U.S. would save $184 million a year by moving to the dollar coin.
But Massachusetts Sens. Scott Brown (R) and John Kerry (D) have introduced a competing bill called the Currency Efficiency Act which is supposed to protect the paper dollar from what they’re calling the "massive overproduction" of the "unpopular one dollar coin."
"The one dollar coin is misleading because it costs taxpayers so much more," Brown said. "In fact, we have over $1 billion worth of extra one dollar coins sitting idle in vaults and that’s set to double over the next several years." Their bill would stop $1 coins from being minted while the current surplus of $1.2 billion in dollar coins exist.
The Dollar Coin Alliance claims that Kerry and Brown are just covering for a business in their home state, Crane & Co., which supplies the paper used to produce dollar bills.
"Unfortunately, it seems the senators have chosen to protect a local business at the expense of the American taxpayer," former Arizona Rep. Jim Kolbe, the honorary chair of the Dollar Coin Alliance, said, according to the newspaper. "At a time when the government needs to be looking to save every dollar, we can’t continue to play the same Washington game of serving narrow special interests with half-measure legislation."
NPR’s Planet Money investigated the use of dollar coins earlier this year, finding pallets of them sitting around in Federal Reserve storage unused.
In a 2010 report to Congress, the Federal Reserve said the coins were being held "with no perceivable benefit to the taxpayer" and that banks are sending them back in increasing numbers, according to NPR.
"We have no reason to expect demand to improve," the Fed said. "We also note that a 2008 Harris poll found that more than three fourths of people questioned continue to prefer the $1 note."
Now I’m not sure if the Kerry-Brown axis is really just a front for Big Paper, but other than that everyone is right here – the dollar coin is unpopular. But it also represents vast savings for the government and should be widely adopted, and that’s why Congress ought to go the unpopular route and scrap the dollar bill. It’s more efficient and more ecologically sustainable. Plus, we’d get to circulate all the dollar coins we already printed. The euro doesn’t circulate any bills less than €5 in value but while that might annoy people at the margins that’s been the one thing about the euro that hasn’t incited riots and social unrest.
Brian Beutler’s piece over at Talking Points Memo aggregating GOP outrage over the President’s speech today is a clear sign the President did the right thing. As I mentioned above, the President has been dealt the better cards here – his position is more popular, he is more popular, he is an incumbent president running for re-election during a recovering economy, and the status quo – repeal of the Bush tax cuts – is an outcome far more favorable to him. Today’s speech was a display of strength, and a hostile reaction from Republicans was totally predictable.