On to the Debt Ceiling

Now that the fiscal cliff has been averted  delayed, we move on to the debt ceiling. Critics are correct in noting that there is no principled reason not to raise the debt ceiling, since it is nothing more than the sum of past spending and taxing decisions.  One can hardly blame the credit card bill for the patterns of spending that created it. Nonetheless, the House GOP skillfully used the debt ceiling in 2011 to extract the agreement that led to the fiscal cliff (and we all know how well that worked out for the GOP).

In the wake of the fiscal cliff, President Obama struck a hard position regarding the debt ceiling. As he proclaimed:

“I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed, Let me repeat: We can’t not pay bills that we’ve already incurred. If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic — far worse than the impact of a fiscal cliff.”

Of course, the President will bargain. As George Sargent notes in todays Plum Line:

The idea appears to be that the White House and Democrats will only engage in conversations over the sequester, tax reform, and spending cuts, and simply won’t confer any legitimacy on GOP threats not to raise the debt ceiling. But it’s unclear to me how this will work in practical terms. Unless Obama is prepared to go into default — or to pull some other ace out of his back pocket, such as the 14th amendment or “platinum coin” options — he will inevitably be negotiating over the debt ceiling. And he doesn’t appear prepared to do any of those things.

One can doubt that the President would be willing to go into default, so he will bargain (or more correctly, he will proclaim, campaign, disengage, and send in Biden). But is there any reason to take the House GOP seriously at this point regarding its willingness to stand its ground?  Given its recent track record, does the President have any reason to believe that the House won’t blink?

I remain skeptical.

3 thoughts on “On to the Debt Ceiling

  1. Just think about how the international markets would react without that comforting Debt Ceiling reality show.

  2. More Kabuki please!

    Who takes Obama the negotiator (or not) seriously? Compare what he proposed as resolution of the fiscal cliff crisis to what he got – he lost significant ground on nearly every point of his request, and all while he had maximum political power. Then, in the final days, he punted negotiating the final agreement to the Senate and Joe Biden. Yikes!

    If I were Boehner I wouldn’t for a second entertain having discussions with the President; he has demonstrated his unwillingness to engage or use his power, which means he is meaningless in the negotiations.

  3. Its amazing the way politicians fight over money that they don’t have. Its like they stole someones credit card and are running up a tap that they,the politicians, won’t be responsible for. America is fiscally bankrupt and has been since 1934 when FDR stole the people’s gold. The government can’t tax anymore,except the so called “rich” which is anyone that is productive. If they print more money it will only create massive inflation so the politicians are looking to borrow more. They want to raise the debt ceiling. So who is going to buy all this unsustainable debt? Probably the Federal Reserve. So you’ll have paper bonds backing devalued paper money buying real goods and services. What happens when the money is worthless? That will be the final nail in the coffin containing the American Economy and whats left of America’s vaunted Constitution. That is when the progressives(socialists) will step in and say “see free market capitalism doesn’t work,we need something better.” The something better they have in mind is a fascist controlled economy with them in charge and an army of jack booted thugs to enforce their whims. In the end you’ll have the gulags.

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