An Alternative to Debt Ceiling Terrorism

jpn said:

Not at all. And this isn't really a difficult concept, which is why I said it was difficult for me to believe that you were being serious.

My contention is that two laws are in conflict in a unique way. Which congress passed them, or when they were passed, is immaterial.

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On the contrary - the most recent Congress has primacy. So, for example, if a prior Congress said that the top income tax rate would be 35%, and a new Congress said no, we are going to raise it, then, the President is free to enter into negotiations with Congress, but, he's not free to say "well, I like the earlier rate better, so, it wins".

Agreeably an imperfect example, but the pronciple that the President can't pick between Congresses is there.

jpn said:

One law (last year's budget) mandates the expenditure of federal dollars for specific purposes. Another law (the debt ceiling) prohibits that same spending. Which has precedent?

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What Congress has done most recently. Which is why this is a pretty big deal. If it was simply an administrative matter that the Executive could override at will, this never would have become a debate in the first place.

jpn said:

The courts could get involved to settle this, but there's a wildcard at play as well. The 14th Amendment says that federal debt shall not be questioned. It seems to render any debt ceiling law unconstitutional.

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No, because the debt ceiling does not determine our ability to pay roll over our debt, but, rather, our ability to do other things as well.

Courts would definitely get involved, but, I'd imagine more in a bankruptcy fashion, determining what among our non-creditors has primacy (if they can) under law for remaining funds. hopefully we never find out.

cpwill said:

Things do change, which does not alter the reality that, in fact, we have compromised on this before, and can do so again.

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We saw a compromise for an increase in the debt ceiling only for Republicans to abandon their entire premise of deficit reduction at the first chance.

cpwill said:

While I agree with both of those critiques, neither of those somehow obviate the point.

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IMO, we are long past the stage where compromise is feasible. Time to call their bluff.

eohrnberger said:

I agree. I further think that it should be done with regular order and that appropriations bills should have amendments permitted, something which hasn't been permitted since, what? 2016? That wouldn't happen to be the onset of Pelosi's speakership. would it? (Yeah, I can look both of those up, but it would seem to fall in line).


Who would sanction House leadership?

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The house membership.

craig said:

The house membership.

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Well, then, you'd have to ask the House Democrat majorities the last few terms why they didn't sanction House leadership.

Perhaps the new majority in this House session will permit regular order for appropriations bills, I certainly hope so, but we'll see.

eohrnberger said:

Well, then, you'd have to ask the House Democrat majorities the last few terms why they didn't sanction House leadership.

Perhaps the new majority in this House session will permit regular order for appropriations bills, I certainly hope so, but we'll see.

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They should have been. Party politics are preventing them from fulfilling their constitutional responsibilities. The moderates of both parties need to caucus and elect leadership the will do the job required.

Kushinator said:

We saw a compromise for an increase in the debt ceiling only for Republicans to abandon their entire premise of deficit reduction at the first chance.

IMO, we are long past the stage where compromise is feasible. Time to call their bluff.

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Agreed.

Biden needs to just flatly state (NOW, not wait till the critical point) that the administration will continue to pay bills, regardless of the debt ceiling kabuki dance. That will make the GOP rend its garments and clash its teeth, but the only thing they can do is wait for it to happen, and file a lawsuit to let SCOTUS decide.

craig said:

They should have been. Party politics are preventing them from fulfilling their constitutional responsibilities.

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Agreed, they should have been, but never were.
Seems that Democrat / liberal / progressive 'hive mind' lock step thinking would be a significant obstacle to 'Regular Legislative Order'.
The real problem is that Democrat / liberal / progressive 'hive mind' lock step thinking is what they expect from their political opposition, and are very angry when they don't get that.

craig said:

The moderates of both parties need to caucus and elect leadership the will do the job required.

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If you look at the process of the election of the present Speaker of the House, there's more independent thinking and push back there than was previous to that point in time. This may yet turn out to be a good thing, but it's too early to tell. We'll see.

eohrnberger said:

Agreed, they should have been, but never were.
Seems that Democrat / liberal / progressive 'hive mind' lock step thinking would be a significant obstacle to 'Regular Legislative Order'.
The real problem is that Democrat / liberal / progressive 'hive mind' lock step thinking is what they expect from their political opposition, and are very angry when they don't get that.


If you look at the process of the election of the present Speaker of the House, there's more independent thinking and push back there than was previous to that point in time. This may yet turn out to be a good thing, but it's too early to tell. We'll see.

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Neither party is able to break the hold of the money given to both to allow fiscal responsibility. We have seen that over and over. The parties are kept approximately equal with dark money. Only a coalition of members of both parties that are brave enough to break the party boundary will be able to do it.

craig said:

Neither party is able to break the hold of the money given to both to allow fiscal responsibility. We have seen that over and over.
The parties are kept approximately equal with dark money.

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Fair.
But differing views probably as to the greater damage being done to the nation's politics.

• Donations to Democrats second only to Soros (approx. $40M)
• Donations to Democrat leadership political figures
• Ignored by SEC, in fact invited to by administration to help craft crypto currency regulations and legislation
• This administration’s SEC and other regulatory agencies asleep at the wheel, as the money was flowing (too busy with ESG regulations and other ‘Whole Of Government’ Green idiocies)
• Will be used as justification by Democrats for instituting Central Bank Digital Currency (CBDC)
  What Is a Central Bank Digital Currency (CBDC)? (https://www.investopedia.com/terms/c/central-bank-digital-currency-cbdc.asp)
  Recall Trudeau cut off those he politically disagreed with from their own money via crypto with little more than a signed executive order

Additional support:






Not nearly seeing such a direct correlation between dark money, government public policy, even with the media's political propaganda driven coverage for the left, to see the same on the political right, but hey, I'll admit that I'm not aware of everything, I'll only just say that there doesn't seem to be all that media political activist covers of the right in this regard at this time.

craig said:

Only a coalition of members of both parties that are brave enough to break the party boundary will be able to do it.

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I'd love to see it, but I'm skeptical if I ever will in my life time, especially when the Democrat / liberals / progressives are in such lock step thinking as they are presently.

Kushinator said:

I do not. The Fed uses monetary policy as a means of meeting their mandates and not to provide the federal government with a funding lifeline.

It's not. Reserve balances are adjusted while the Treasury repays it's upon maturity.

When central banks change policy course, it does impact currency valuation. The most recent rise in dollar valuation is a direct result of increase short term interest rates.

I disagree. Markets always get worried about uncertainty, and an abrupt change in how government is financed is sure to spook them. I could be wrong.

The Treasury minting and depositing a coin isn't the same thing as the Fed easing monetary policy, for reasons i have outlined already. In essence, this practice would be the Treasury giving itself $1 trillion and therefore it wouldn't be an increase in debt.

Interest rates are substantially higher than they were 5 years ago, and this has had a direct impact on the value of the dollar.

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Help me out with the point of view of perception of US Dollar valuation, internal to the nation or on the exchange.

If trade demands remain, resource constraints are not an issue, and interest remains in a largely secure structured return (bonds,) why would Fed holding US Debt or a special coin matter?

If currency valuation was really a problem, why are we not seeing it already?

OrphanSlug said:

Help me out with the point of view of perception of US Dollar valuation, internal to the nation or on the exchange.

If trade demands remain, resource constraints are not an issue, and interest remains in a largely secure structured return (bonds,) why would Fed holding US Debt or a special coin matter?

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It changes the political risk factor not to mention the terms of repayment. Previously, debt maturity was paid from issuing additional debt and / or current cash flows. Now debt can be repaid by seigniorage.

OrphanSlug said:

If currency valuation was really a problem, why are we not seeing it already?

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Markets are not convinced we will see the platinum coin idea.

Otherwise, it's going to frighten markets.

cpwill said:

On the contrary - the most recent Congress has primacy. So, for example, if a prior Congress said that the top income tax rate would be 35%, and a new Congress said no, we are going to raise it, then, the President is free to enter into negotiations with Congress, but, he's not free to say "well, I like the earlier rate better, so, it wins".

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Oh come on. A new congress raising the rate overrides the existing law.

A better example is one congress enacting a budget ceiling and the next congress repealing it. But the budget ceiling and the budget itself are two separate things.