This is nothing but an insurgency and the perps are violating their oaths of office and the Constitution.
Republicans Are Awfully Close to Violating the Constitution - NationalJournal.com
It is easy to fall into the “Chicken Little Syndrome” when debating authorization of a debt ceiling increase.
The point that some radical Republicans are trying to make is that refusing to authorize a debt ceiling increase is not the same as forcing default. The article you cited suggests that Congressman as well as the President have a Constitutional requirement to assure that the US always pays its debts fully and on time. That is true but it is not necessarily true that a Congressional decision not to increase the debt ceiling means that they are directing the government to act in opposition to the 14th Amendment. In principle, the income stream flowing into the government greatly exceeds the outflow required to pay debt interest and there is no ban on selling new debt as old debt matures as long as the total debt remains constant. Thus, even in the event of failure to authorize a debt ceiling increase, the Executive Branch has the ability to manage the government operations and uphold the 14th Amendment as long as the debt interest payment is given the highest priority among all government expenditures. If the Executive Branch chooses not to adjust expenditure priorities so that the debt is kept out of default, then the President is liable to impeachment. In effect, failure to raise the debt ceiling is equivalent to immediate imposition of a balanced budget without any planning or forethought. It is likely that the Executive Branch will not be able to fund programs created in laws that were enacted by the Congress over the years, and hence it may not “fully comply with the law”. If Congress fails to pass authorization bills that are consistent with the debt ceiling, then the prioritization below the debt service requirement is the choice of the President and he certainly can’t be legitimately criticized for his trade-off choices regarding how full compliance with authorization laws will be compromised. It is not a Constitutional crisis unless the President chooses to create one.
As I wrote before, I have personal experience that is analogous. Myself, and a few partners, started a engineered custom process equipment manufacturing company that grew successfully for 10 years. We sold the company. The contract was for installment payments over five years. The new owners seemed to have no concept of expenditure restraint so after a couple years they had lost a large amount of money and had created an enormous debt anchor at Wells Fargo. As 2012 ended, it was becoming clear that 1) they would not be making the rest of the installment payments to us, 2) Wells Fargo would not renew the loan when the note came due March 1, and 3) the load would go into default so that in principle Wells Fargo could demand liquidation of the company. I managed to re-insert myself into the company and take control. At the time, there were three large projects that were partially complete – all were government projects with national defense priority ratings. The problem was 1) complete the projects, 2) pay off as much vendor debt as possible, 3) return more to Wells Fargo than they could get from liquidation, and 4) find an assets acquisition buyer that would continue operations after reorganization so that customers would be served and most of the employees’ jobs would be preserved – AND THIS HAD TO BE DONE WITH A FIXED DEBT CEILING AND WITHOUT ANY NEW EQUITY – ALL OPERATIONS COSTS NO MATTER HOW THEY FLUCTUATED HAD TO BE PAID OUT OF THE PRODUCTION INCOME STREAM NO MATTER HOW IT FLUCTUATED. If we ran out of cash, we would be forced to close and auction the equipment. I had no choice but to set very definite and strict payment priorities every week (these were primarily dictated by the need to acquire materials for production and pay production workers), to hold off suppliers demanding payment when cash was short, layoff non-essential staff in concert with completing projects, and hold cash when we had short term excess so that we could bridge the next period of low income (which meant keeping Wells Fargo from taking cash whenever the checking account balance grew). I had to constantly maintain Wells Fargo’s confidence that continued operations was more valuable than liquidation. We made it work for 8 months and accomplished all four objectives. The asset sale was completed in the first week of September. It takes tenacity and honesty with all stakeholders regarding how you are setting priorities to achieve the best outcome for all (as you can best judge) and to maintain their confidence and participation in creating a positive result out of a dire financial crisis. If the Congress fails to raise the debt ceiling, they will be playing the Wells Fargo role in my story – forcing operations costs not to exceed income no matter how the two flows fluctuate over time. The President will have to do what I did. It will be easier for him however, because he has adequate income to stay out of default. He will have to do the equivalent of my actions – constantly set and adjust spending priorities to operate and produce as best as possible. The priorities are not selected to maximize popularity and the stakeholders don’t get to vote on the priorities. It will be very painful and he will have to constantly build confidence in his management decisions so that those who lose out in the priorities accept and believe that they are contributing to the best interest of all affected parties. The old saying “it is lonely at the top” is very true.
Is this a good idea? Of course not! It will be a sudden disruptive economic change without a plan. It will be chaotic and inevitably cause economic contraction – damaging the economic condition of most of our population.
At the same time, healthy operations (businesses and many state governments) manage fluctuations by holding cash to bridge bad times, borrowing to manage negative cash flow fluctuations, and paying down debt when cash flow is positive so that they will have access to borrowing in the next bad cycle. I am 64 years old. In my entire adult life the government has increased its debt every year except a couple in the 1990’s. That is not using debt as a cash flow management tool. It is financing losses by borrowing which is what the people that bankrupted my company did. We need an honest commitment by the President and the key leaders in the Senate and House to achieve a balanced federal budget through increasing revenue and clearly stated expenditure priorities over a couple of years so that we avoid chaos of a precipitous change in government finances. They need to make that commitment in a way that they trust one another to follow through. And they need to make it now. Otherwise, the debt ceiling deadline will pass due to paralysis. Refusal to negotiate and refusal to move from extreme positions will assure the showdown. There comes a time when the President of the organization (my business or the nation) has to swallow hard, assess and balance the interests of all affected parties, attempt to discern the path that best serves all, and step forward to lead the solution accepting that if he does it right he will satisfy no one and dissatisfy few. That time is now for President Obama.
