Apparently the White House has decided against using the 14th Amendment to protect the U.S. from default or extortion by the Republican Party:
" In addition to his warnings about the cost of a default, officials said, Mr. Geithner told the lawmakers the White House did not believe it had the authority, under the Constitution, to continue issuing debt if it reached the debt ceiling. Nobody in the room disputed Mr. Geithner’s bleak assessment, the officials said".
23 comments:
So Grassley is ready to use it but 1040 Timmy dismisses it?
Tom, what the hell is going on?
I dont even know how to describe Geithner.
Resp,
elastic currency theory
did the reserves swell yet ?
Geithner is Charlie McCarthy. Who is his Edgar Bergen?
here's the legal argument against this ploy from a Harvard Law Prof:
http://www.nytimes.com/2011/07/08/opinion/08tribe.html?_r=1&hp
BTW, in that article, he mention's Beowulf's platinum coin idea, it appears:
"In theory, Congress could pay debts not only by borrowing more money, but also by exercising its powers to impose taxes, to coin money or to sell federal property."
Question for Lawrence Tribe would be whether the Treasury Secretary (not the Congress) could have the coin minted and then deposit the coin at the Fed...
From Beowulf: "“No, Tsy isn’t authorized to just “print” money, the Federal Reserve Act gives that power to the Fed, However, the Coinage Act grants the Secretary of the Treasury rather broad coin seigniorage authority. Geithner could sidestep the debt ceiling this afternoon by ordering the West Point Mint to coin a 1 oz. $ 1 trillion coin. Tsy can then present the jumbo coins at the NY Fed to buy back $1 trillion in Fed-held debt (the Fed has to accept it, a creditor can’t refuse legal tender paid in to settle a debt):
(h) The coins issued under this title shall be legal tender… (k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”
Tribe writes that Congress has coinage authority but Beo provides excerpts from the Code that indicates the Secretary has this authority....
Tribe may have the correct interpretation, and one likely to be adopted by THIS Supreme Court. Grassley may have been trying to draw Obama into a potential constitutional trap.
Nice catch, Matt. Seems pretty clear...
Tribe's reasoning about the meaning of Perry is far-fetched. Perry is clear where Tribe is not and attempts to confuse the issue by extending Perry to where it never actually ventures. Perry says essentially that just as in contract law, you can't renege on obligations based on unwillingness to pay, neither can Congress once people rely on its promise to pay. Tribe tries to argue that Perry means that Congress therefore can't obligate itself because it might default at at some point, which is patently ridiculous. the man must be getting soft in the head and should retire before he makes a greater fool of himself.
Yglesias makes better point here.
This all makes sense, just as it makes sense for people to be urging serious consideration of the constitutional objections to the debt ceiling. But add it all together, and you’ve got the somewhat frightening spectacle of a president consistently and forcefully doing end arounds to evade Congress. When the political system stops working, that becomes the only path available to activists. But at some point, the underlying crisis in governance itself deserves to become the center of attention.
Lawrence Tribe wrote:
Moreover, it is well established that the president’s power drops to what Justice Robert H. Jackson called its “lowest ebb” when exercised against the express will of Congress.
Justice Jackson wrote "lowest ebb" (in Youngstown Steel case) immediately after writing:
When the President acts pursuant to an express or implied authorization of Congress, his authority is at its maximum, for it includes all that he possesses in his own right plus all that Congress can delegate.
The Secretary of the Treasury shall—
(3) issue warrants for money drawn on the Treasury consistent with appropriations;
(4) mint coins, engrave and print currency and security documents...
31 USC 321
"Tribe writes that Congress has coinage authority but Beo provides excerpts from the Code that indicates the Secretary has this authority...."
The section is clear. It's an executive option. Congress has appropriated funds. The executive is charged with administration. The Treasury secretary has been given the wherewithal under current law. What's the problem here? If Congress doesn't like it, they would have to change or rescind the existing law.
ohh god is ezra clueless. recommend my comment and add some of your own
http://www.washingtonpost.com/blogs/ezra-klein/post/is-the-debt-limit-debate-a-drag-on-the-economy/2011/07/06/gIQAIG4Z3H_blog.html?wprss=ezra-klein
Trader's Crucible weighs in on Tribe here.
I hate to call a prominent Harvard professor clearly and undisputedly wrong. But he is. Lawrence Tribe is wrong. He doesn’t understand money and sovereign money, so his legal arguments and theories are incorrect.
Tom, I left a comment there- Tribe is not undisputably wrong as TC says. The crux of his argument is not the debate over monetary sovereignty, it is over the President vs. Congress issue. The platinum coin idea seemingly gets around this though.
Not trying to knock on you or TC, love what you both do- but let's not go around saying a prominent scholar's core argument is categorically wrong when it isn't.
"Not trying to knock on you or TC, love what you both do- but let's not go around saying a prominent scholar's core argument is categorically wrong when it isn't."
OK, overreacting. But when someone comes up with a line of reasoning that says reasoning you favor is categorically wrong, the response is to say that it's the other guy that is categorically wrong. May object is to Tribe is that he has made a category mistake, the Perry ruling being quite specifically related to contract enforcement and Tribe addressing something else entirely.
Obviously, there are different sides to constitutional issues and many different interpretations. But I still think that his reading is Perry misses the point, his understanding of the coin issue seems to ignore what the law plainly states, delegating power to the Treasury sec.
I don't think that one needs to be a constitutional lawyer to follow the logic. And some who are constitutional lawyers do categorically reject bad reasoning. For example. President Obama called the Citizens United decision bad law not only in front of SCOTUS but the world at STOTU. Many of the subsequent decisions of the Roberts court are patently biased in favor of business/capital and against labor.
I think Ed Harrison aptly summarizes what the Obama Administration’s strategy is and he handicaps the 2012 election well. Harrison’s main point is that carving out the center, having both progressives and conservative attack him is the strategy.
http://www.creditwritedowns.com/2011/07/obama-offers-up-social-security-cuts.html
That's been Obama's MO from the got-go. Remember the signature from his victory speech at the Iowa caucus? “We are not a collection of Red States and Blue States — We are the United States of America.” HIs whole bipartisan meme has been about capturing the center, and he thinks that the US is a center right country. But he apparently doesn't get that the Democrats lost heavily in 2010 because of low turnout by the base, or doesn't think that is a big factor in a general. It's not as big a factor but it counts.
The GOP is made up mostly of conservatives and 75% of eligible voters turn out. The Democratic party is mostly moderate with conservative and liberal wings. Only 50% of eligible voters generally turn out. This means that Dems absolutely need independents to win even if they have the edge in eligible voters. It's having the edge in likely voters that counts and then turning them out. an activist base is necessary for turning out votes.
Now it is all about capturing votes at the margin. It's just a relatively small number of voters that decide elections and the messaging has to be targeted at them once they are identified.
Tribe says correctly that only Congress has the authority to tax and spend, but as the executive, the President seems to have the responsibility to make sure that these obligations are met. Reading the Constitution on its face it seems to me that Congress can't both authorize and require the spending but then limit the executive from fulfilling these obligations.
Perhaps Timmy should break out all of those dollar coins that NPR reported they have in a warehouse somewhere, or get the mint busy making $10,000 coins.
Tom, on your comment “The GOP is made up mostly of conservatives and 75% of eligible voters turn out. “
you mean 75% of eligible GOP voters vote whereas only 50% of democrats?
if so how does this play-out in the in electoral college? I would guess (I do not know) that more hardcore GOP voters who push that turnout to 75% are in Southern states that are a given win for them anyway and the urn-out is less in other states. How do those percentages work out in battleground states?
That is the relatively small margin that counts and both parties realize that in the end, they have to speak to these voters while also turning out their bases. The base is not enough to put it over the top in the electoral college. They spend a lot of money figuring out just who these voters are and how to persuade them.
But if the base is not energized, it is also not possible to win. The FOP has the problem of coming across as too extreme in order to hold the base, and the Dems have a rather divergent base to speak to. So it is a balancing act that is not always clear to onlookers, who may think that the strategists are ignoring the polls. It's not the overall numbers that count but the placement. Winning a plurality of votes doesn't meaning winning the election.
"Throwing the middle class and poor under the bus"
yeah I wondered where those skid marks over my face came from!!!
A real leader would declare a state of emergency and keep issuing bonds. He would beat the Republicans up daily, going on television, radio, and the web and explaining how the bottom 80% haven't gained a proportionate share of the country's growing wealth for over 30 years. He would explain that since the Republican bill only cuts taxes for the rich while cutting benefits for most of the rest, that their priorities are revealed. He would point specifically to them leaving the payroll tax untouched in the process.
He would also point out that most American families have had much higher levels of debt than the Federal Government for decades, yet the overwhelming majority remain solvent, even in the worst economic times, and the government can tax and print money.
Unfortunately, Krugman may be right about Obama. The idiot actually believes we need to drastically cut the spending of the most solvent entity of any kind in the world, in the midst of high unemployment and lots of slack. There may as well be a Republican in the White House, and if a Republican can at least appear to retain a shred of sanity, there will be soon.
Sadly, I won't be surprised if Romney wins and then pushes a stimulus package through an all Republican-led Congress, and the economy picks up more. Obama's politically stupid too.
Tribe is right! But for the wrong reasons. The debt ceiling isn't unconstitutional because Congress provided the platinum coin seigniorage alternative that Treasury can use to facilitate spending appropriations: See my: http://www.dailykos.com/story/2011/06/30/990018/-The-Debt-Ceiling-Is-Not-Unconstitutional,-Right-Now!?via=history
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