Tuesday, September 24, 2013

Analyst: Obama Will Raise The Debt Ceiling On His Own And Worry About The Legal Consequences Later


Business Insider out with a prediction from Greg Valliere at Potomac Research:
Obama is not shy about using executive authority, and he surely has heard from Constitutional scholars who believe he has the authority to raise the debt ceiling on his own. (Bill Clinton urged Obama to take this approach in the summer of 2011.)
Fearless forecast: if Treasury is out of money in early November and a default looks possible, Obama will simply raise the debt ceiling. He'll face instant litigation, but that wouldn't be resolved for months.
Valliere thinks the President may be obtaining some boldness on this "debt ceiling" issue after all.

I hope this actually goes down this way because it will set a precedent and perhaps dispatch with this whole "debt ceiling" issue once and for all.


9 comments:

Dan Kervick said...

Interesting. I would like to see that fight I think.

Harry Reid has been particularly aggressive in calling the right-wingers "anarchists". These are people who are utterly irresponsible bomb-throwers who are playing dangerous games with the financial reputation of the United States to advance an extreme agenda that they can't advance at the ballot box.

There is a perfectly clear constitutional process for cutting government spending. You pass laws and either get the President to sign them, or get so many of your colleagues to support you that you can override a President's veto. You have to win elections to advance this agenda. If you lose the elections, you are licked fair and square.

Michael Norman said...

Obama will never, ever, ever, EVER do this. Believe me, this is NOT going to happen. Valiere is crazy.

Anonymous said...

How using the Fed to expand IOR and telling the Treasury to issue nothing longer than a 3 mo. bill?

The Rombach Report said...

I thinking the most likely card the Republicans will play will be to offer to increase the debt ceiling in exchange for delaying the personal mandate on ACA to match the 1 year extension granted to the corporate mandate.

Aside from that, Congress, the Fed and the Treasury could come together and simply declare that the $2 trillion of Treasury debt held by the Fed should not apply to the $16.7 trillion debt ceiling because it is debt that the government owes itself. That would technically reduce outstanding debt to about $15 trillion which is way below the debt ceiling buy policy makers about 3 years of breathing space to fashion pro-growth economic policies.

Matt Franko said...

Ed

Something was out this AM that McConnell was going to oppose Cruz filibuster so was McCain and Cronyn, perhaps some others...

So the zanax is kicking in... decreased likelyhood of "shutdown" now...

rsp,

The Rombach Report said...

"decreased likelyhood of "shutdown" now..."

I agree. To be sure there is a schism among Republican ranks, but if the latest fiasco from unguided Cruz missile results in govt. shut down it will be nothing but a replay of Picket's charge with real bullets and cannon fire. The Republican leadership may be wanting to use the fury among Tea Party members as a threat, but I reckon it is just a bluff. Problem is that accidents can happen when people play road chicken. I think that President Obama would love to see this process result in a government shut down because he knows that the Republicans would take the blame for it and probably lose the mid-term elections as a consequence. Makes me wonder if the Republicans have learned anything from the 1995 government shut down. The don't call the GOP "The Stupid Party" for nothing.

Michael Norman said...

"Aside from that, Congress, the Fed and the Treasury could come together and simply declare that the $2 trillion of Treasury debt held by the Fed should not apply to the $16.7 trillion debt ceiling because it is debt that the government owes itself."

That would be far too rational and logical, so it won't happen. Besides, most members of Congress wouldn't even understand it and the public would be incensed.

The Rombach Report said...

"That would be far too rational and logical, so it won't happen. Besides, most members of Congress wouldn't even understand it and the public would be incensed."

Mike - I agree that the odds are very long that a solution this logical would be seized upon by Congress and the White House. It would be a learning moment though don't you think? Besides, who would have guessed that the White House on the Road to Damascus would have stumbled into the Russian initiative to disarm Syria of its chemical weapons arsenal? Sometimes things go right.

Anonymous said...

I thought the D's were the Stupid Party and R's were the Evil Party! They switch sides so often.. I.. I just get confused.