Saturday, July 30, 2011

No Disaster Necessary

On Friday night, Lawrence O'Donnell continued to explain how the debt ceiling controversy is being benevolently stage-managed by President Barack Obama for the benefit of a nation which eventually will be grateful. He opened by commenting

The House of Representatives has now passed a Tea Party fantasy that will never become law once again leaving the job of working out a realistic compromise to the United States Senate.

Two hours earlier, it was Luke Son of Tim Russert and MSNBC host Al Sharpton agreeing on the futility of passing a bill including a balanced budget amendment which they understand never will become law, Congress not having adopted complete disregard for the American economy. Russert commented

But look, all of this is really for naught, Reverend Al, because this is going to go to the Senate. It`s going to be tabled by Harry Reid. And the question then becomes, what can Harry Reid work on with Senate Republicans as a compromise that`s acceptable to them that they can get out of the Senate and then come back over here to the House, where it`s ultimately going to pass with a combination of Republican and Democratic votes?

Sharpton then responded, apparently as to House Speaker Boehner, "Well, a lot of it, you`re right, is all theatrics."

A fantasy, perhaps, though not one without effect. And hardly "all theatrics." Brian Beutler reports that Talking Points Memo has been given a copy of the most recent proposal by Senate Majority Leader Harry Reid, in which he

hopes to entice Republicans to support his plan in two ways. First, with slightly deeper cuts. Second, by adopting an idea, first proposed by Senate Minority Leader Mitch McConnell, that would delegate the authority to raise the debt limit to President Obama -- and give Congress the prerogative to attempt to block Obama from taking that action.

It does not include any penalties or triggers to force Congress to enact entitlement and tax reforms in the coming months.

The new cuts aren't very extensive. They bring the package's total deficit reduction up to $2.4 trillion -- but only when judged against a slightly outdated January baseline. Judged against the current baseline, the revised plan would still reduce the deficit by $2.2 trillion....

Late update: At a late Friday press conference, Reid suggested that the door is still open to further tweak his proposal, including by adding fai lsafes to assure future entitlement and tax reforms -- but it's up to Republicans to offer up their votes.

Given the Abolish The Government fervor of the House GOP and the Cut The Heart Out of Government Programs of President Obama, Reid has his work cut out for him and can hardly be blamed for trying to hold the line while reaching a settlement. But he has compromised further from his previous proposal- and has done so following defeat of a dangerous proposal from the House Republican leader and passage in the House of an even more dangerous proposal. The goalposts have been moved again, this time by, as O'Donnell characterized the tea party senators," the work of the children in his party, the political Peter Pans who still, with the United States of America careening towards default on its obligations, refuse to grow up."

Fashioning a new debt limit bill in response to the success of the far right of the far right Party should not be necessary. Yale constitutional law professor Jack M. Balkin identifies two alternatives- aside from the oft-discussed 14th Amendment- which would prevent congressional Republicans from emasculating Obama:

A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.

The government can also raise money through sales: For example, it could sell the Federal Reserve an option to purchase government property for $2 trillion. The Fed would then credit the proceeds to the government's checking account. Once Congress lifts the debt ceiling, the president could buy back the option for a dollar, or the option could simply expire in 90 days. And there are probably other ways that the Fed could achieve a similar result, by analogy to its actions during the 2008 financial crisis, when it made huge loans and purchases to bail out the financial sector.

As Balkin notes, there are sound reasons that the Administration has not floated the possibility of employing either of the two latter options. But presidential press secretary Jay Carney has contended "only Congress has the legal authority to extend that borrowing authority. That's our position," and the President himself has suggested that he would not go 14th Amendment.

Evidently, all is moot if agreement if Congress gives the Executive borrowing authority before August 2. But appearances are deceiving. President Obama's apparent reluctance to signal willingness to take unilateral, decisive action if necessary has signaled to his opponents that everything they want, including his party's principles, can be had for a price. This is no way to run a presidency, or a great nation.

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