Sunday, January 6, 2013

No Negotiation. Period.

[As I posted to this discussion (which contains a useful link to opinions written by lawyers).]

Unless Obama holds firm to his "will not negotiate over the debt ceiling" pledge, there is no more separation of powers, welcome to the Congressional Dictatorship, where every bill in dispute is tied to a needed debt ceiling increase.  This is not the same as the perfectly constitutional funding requirement for several reasons.  One is that the mere advance threat of using the debt shutdown could roil financial markets, raise interest rates, bring on the debt crisis or another crisis sooner.  Second is that a government shutdown can be ended instantly, restoring confidence in US currency and debt obligations might take a long time.  I don't actually think either of these is at risk now, partly because people like Obama and Bernanke seem trustworthy to most world observers.

I remember being told when visiting DC in the 1990's that the Balanced Budget law could only be a restriction on Congress itself, since it passes the taxes and spending laws--either those are in balance or they are not.  The same logic applies here.  Congress cannot specify a line with three non-collinear points.  Therefore it should be unconstitutional for Congress to apply a Debt Ceiling to the executive that is inconsistent with their spending and taxing laws.  Something has to give.  As has been discussed here, the debt ceiling is likely to be that thing, as the older legislation, and for other reasons.

But if we see the spineless Obama, and a rough deal is cut, including ANY cuts to social insurance, then this is also the end of the republic.  Any visible caving means the tactic worked.

No negotiation, period.  And better if made explicit beforehand, so markets can be spared the drama.  Platinum coinage works for me.  Interfluidity describes a serious version of using platinum coinage: coins in the millions issued as needed only, it's been done before, with the Fed assuring they can neutralize any inflationary impact, all a big nothingburger as he describes it, except to those who thought they could play debt ceiling chicken.

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