Sunday, October 13, 2013

Obama’s Powers and the Debt Ceiling Increase: What if the Tea Party is right?

Senator Collins

The debate is getting testy down south. The Republicans seem to believe that they have now become paragons of reasonableness, while the Democrats are risking armageddon:

Sen. Bob Corker, R-Tenn., said that while Republicans entered the shutdown debate with unreasonable demands to scuttle key portions of Obamacare, it is now Democrats who are guilty of bargaining too aggressively.

"Republicans started off in a place that was an overreach, to defund a law that was central to the president's agenda was not achievable," he said on "Fox News Sunday." "Now Democrats are I think getting too cute. They now are overreaching."

"It's not clear to me how this ends because there is such disarray," he added.

Still, some lawmakers expressed hope that the framework of a deal constructed by Collins could be resuscitated and reworked to eventually reach a solution.

Senator Reid, the leader of the Democrat majority in the Senate, seems to want to soften up the Republicans in future deficit talks by doing something about recently-agreed spending cuts:

Sen. Rand Paul, R-Ky., warned on CNN, however, that it would be a mistake for Democrats to undermine the deficit reduction accomplished by sequestration.

"I think the one thing I cannot accept, and the one thing that I think is really not even a compromise at all, is the Democrats want to exceed the sequester caps, these things that we put into law to restrain spending already," he said. 

"I can't imagine you're going to get Senate Republicans to vote for something that exceeds the sequester caps. I think it's a huge mistake for the country. The number one problem we face is our debt. We have to do something about our debt."

On the Senate floor Sunday, Reid disavowed any talk of exceeding the spending limits imposed by sequestration. "Any talk of breaking the caps is not coming" from Democratic leaders, he said.

Enter Senator Collins from Maine:

A proposal from the Maine Republican Senator might help break the deadlock:

The senior senator from Maine is a regular on the list of Republican lawmakers invited to the Obama White House when compromise is in the offing on a wide range of issues, from economic stimulus to gun control.

Friday was no different. Collins’s most recent foray into legislative diplomacy is a 23-page proposal that would end the government shutdown, extend government funding for six months with ­sequester-level spending cuts, repeal a tax on medical devices and raise the debt ceiling until the end of January.

Senator Collins has a reputation as a consensus-builder in the Senate:

Collins said Friday that Obama expressed interest in several points but did not embrace the plan.

“He clearly knew about elements of it. He described it as constructive but certainly did not endorse it,” she said. “I don’t want to give the impression that he said, ‘What a great plan, let’s go with it,’ because he did not.”

This kind of careful language is a Collins trademark. She has built a reputation as a moderate swing vote in a party where there are fewer of those than there used to be, and that has boosted her role as a broker during these very partisan times.

“She’s always in the middle because she makes such an earnest effort to shape the outcome and because she spends so much time and energy being a trusted player,” Dan Demeritt, a Maine-based political consultant and former Collins aide, said. “She doesn’t grandstand.”

Freshman Sen. Angus King (I-Maine), who defeated her in the 1994 gubernatorial race, said that, while he has long respected Collins, working with her in the Senate has caused her to grow in his estimation.

“She is very smart, very tenacious, knowledgeable about how this place works and, I think, is truly a moderate in the best sense,” he said.

King said that Collins’s middle-of-the-road approach is in the tradition of Maine senators and is what residents of the Pine Tree State have come to expect.

When she last faced the voters in 2008, Collins crushed her Democratic challenger, former congressman Tom Allen, by 22 percentage points. Her popularity remains high even as Republicans nationally have seen their approval ratings drop.

Obama’s Power come October 17:

Robert Reich, former Secretary of Labor in Bill Clinton’s administration, thinks that President Obama has two powerful weapons at his disposal to prevent any problem arising if the Republicans in the House refuse to raise the debt limit on October 17:

But the president can use certain tools that come with his office -- responsibilities enshrined in the Constitution and in his capacity as the nation's chief law-enforcer -- to achieve some of his objectives.
On the debt ceiling, for example, he might pay the nation's creditors regardless of any vote on the debt ceiling -- based on the the Fourteenth Amendment's explicit directive (in Section 4) that "the validity of the public debt of the United States... shall not be questioned."

Or, rather than issue more debt, the president might use a loophole in a law (31 USC, Section 5112) allowing the Treasury to issue commemorative coins -- minting a $1 trillion coin and then depositing it with the Fed.

Both gambits would almost certainly end up in the Supreme Court, but not before they've been used to pay the nation's bills. (It's doubtful any federal court, including the Supremes, would enjoin a president from protecting the full faith and credit of the United States).

I can see this president using these powers rather than letting the Republicans force the country into default next week. He has shown steel in the past; there is no reason to believe he won’t show similar steel when faced with the possible bankruptcy of the nation.

What if the Tea Party is right?

What does the Tea Party hope to gain from their tactics? Drilling down to the core of the issue, it seems that the Tea Party believes the federal government is spending too much, has resorted to issuing debt to fund its profligacy, and is in danger as a result. So the remedy is to reduce spending by the federal government.


And not to increase taxes (revenue) so that more can be spent.

If we consider that Americans pay lower taxes by far than most industrialized Western countries; that almost half of Americans do not pay any income tax; that there is no federal sales tax in existence; that most Americans distrust government as an institution and fear it increasing its powers; that many of the states are effectively bankrupt through a combination of low taxes, increased spending, and increased debt; and that the federal debt load has increased substantially under the current and earlier presidents, then one can understand the concern of the Tea Party.

If the Tea Party’s take on the financial condition of the federal government is right, then the use by the Tea Party of the weapons at its disposal (the threat to turn on so-called moderate Republicans come the next election, by running Tea Party candidates for their seats; the threat to shut down the federal government and refuse to raise the debt ceiling, no matter the costs, unless the Obama administration and Democrat Senators agree to drastic reductions in federal government spending, without raising taxes substantially) are simply means to a better end.

Even if many reasonably doubt whether the motives of many Tea Party members are so pure, and think their refusal to increase taxes is stupid.

And, really, if we take a hard-eyed look at the matter, does it really matter if the US government has a problem paying interest on its debt for a few months or so? After all, the country is still relatively an economic powerhouse compared to just about any other single nation, and even compared to the whole European Union. So where would international money flee to? Chinese debt? Russian debt? Hidden under the beds of bankers? Gold? There are hardly any nations that have not come close to bankruptcy over past decades, or even failed to pay their debts on time.

America will survive.

And if the result of these shenanigans is that the two parties and the president sit down to serious budget talks, aimed at reducing deficits substantially, would that not be a good outcome for the USA over the coming decades?

Right now, my sympathies lie with the Tea Party in this nasty little squabble.


  1. *stunned silence*

  2. Given your grasp of the facts, Glenn, your conclusion is not surprising. Just who do you consider the "Tea Party"? Do you mean rank and file Americans or lunatics like Michelle Bachmann, Rick Santorum and Eric Cantor? Rand Paul?

    We don't know how close the Americans are to losing the U.S. dollar as the global reserve currency but they could be in grave danger of just that.

    Just what is your understanding of what Obama has been doing about the debt and deficit? Have you looked into that because you really should.

    Sure, half of Americans don't pay income tax. But what do they pay, Glenn? Do you have the faintest idea? They pay payroll tax, money that is supposed to be invested in Social Security for their future. If that's what had happened to that money you might reasonably say they pay no income tax but that's not what has happened. Congress has defalcated. It has misappropriated their money into general revenues, issuing IOUs in their stead. Now your Tea Partiers are calling those unfunded liabilities "entitlements" as though they were neither paid for nor deserved. The thieves are calling the deserving 'gladhanders' and 'leeches.'

    Remind me, Glenn, why do you imagine you're a Liberal?

  3. As I read this I wondered, isn't this the same guy who declared the Egyptian revolution a roaring success this summer? Yeah, I was right.

  4. Good grief! Please tell me that you were playing Devil's Advocate here. If that is the case, then you should've said so early in your post.

    Or are you going through some weird bible phase?

    You sympathize with the Tea Party, you sympathize with the Koch Brothers and other corporate thugs.

  5. The comments of Jymn ("stunned silence") make more sense to me than those of CK and MoS.

    Obama and the Democrats have agreed with the Republicans that the deficit has to be cut and some federal debt repaid. The disagreement is on how much, when and what to cut.

    Remember the deficit cutting by the Liberals under Jean Chretien? And how the Liberal Party then and even today point to that effort as being proof of the responsibility of the Liberals in managing the stewardship of the economy well? So cutting deficits are also part of liberal policies, not just conservative ones, eh?

    Obama has also managed to shift the public discussion towards revenue enhancement (read: tax increases), by focusing on the reform of the tax code, through the removal of tax shelters. Even the Tea Party (those forty or so Republican Representatives, mostly newly-elected) agree with reducing tax shelters, because it offends their quasi-religious economic belief in paying your way and not getting any entitlements from the state.

    The battle will be over whose shelters are cut, by how much, and when.

    I expect even the revered interest deduction on personal residences to go the way of the dodo this time.

    In any case, the serious negotiations are now starting, with the Tea Party-driven automatic cuts each year setting the stage for bargaining over what should be cut more than others. It's gonn be interesting...


Thank you for commenting; come again! Let us reason together ...

Random posts from my blog - please refresh page for more: