There Is No Magical Solution to the Debt Ceiling.
Now Stop it.
Every single day I hear about some new magical solution to the debt ceiling problem.
The president can just decide what law to break. Congress has ordered him to spend money and not given him the money to spend. No. He can’t do that. The constitution says he can’t do that. It’s very clear.
The Trillion Dollar Coin? Also probably unconstitutional. The constitution said that they can mint coins, but it’s pretty unclear that they can just do it on a whim… And then give the money to the Federal Reserve. While it is not explicitly prohibited, as the previous dumber option is, it’s pretty much prohibited.
And this new one that I just read. This one is just peachy, and the dumbest one yet. The treasury can just reissue new debt that’s at a higher premium when we pay off the old debt.
Now, where are we going to get the money to do that? That would require us to issue new bonds before we pay off the old ones. Literally, that’s the plan, to breach the debt ceiling for however long it takes to pay off the bonds. And, bond payments aren’t due on regular intervals, with normal amounts. Cash inflows and outflows are “lumpy,” which is the word that’s been making the rounds lately.
To put it succinctly: there is probably no legal way to pretend that our nation isn’t in a state of total political dysfunction.
And why would we want to? Even if we do any of these things, it doesn’t actually solve the problem of the debt ceiling. That problem is almost entirely political intransigence, not economics. Gimicking our way out of it excuses the dysfunction, it even normalizes it.
That’s the last thing we want to do. The entire reason that our credit was downgraded by the S&P last time, was because of their “view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges.”
Dancing around the issue doesn’t solve it, and it just further entrenches that view.
Besides that, the only one that could plausibly keep us paying all of the bills, and not just our bond payments, is the Trillion Dollar coin. All of the rest of them will instantly destroy 38.9% of our GDP. Holy fuck that’s a big number.
We really can’t use any of these bizarre ideas to do it. And we need to stop talking about it. This is just bond wonks having fun with government spending.
Our nation is too important for that. Our nation is too important for the world to do that. If we breach the debt ceiling next week, Lehman Brothers will be but a pale memory in comparison.
I know there are some out there who say that we’ll be okay going over it for a day or two. Maybe. Do we really want to take that risk? Who knows what would happen if we did that.
Nuclear powers don’t default. The United States is the safest bet you can make. People will stop thinking that if we keep playing this stupid game with our nation.
We need to get back to rational politics, and away from the politics of crisis. Please, everyone, don’t let this happen.
If you want to write or call your representative to urge them to stop this madness, you can use this page. I urge you to do so. Please, we all need to get together and end the madness and the stupidity in our governmental system.
