Tuesday, July 26, 2011

Did Obama Miss a Better Path on the Debt Limit?

Andrew Sprung thinks so:
What would have felt like leadership from a Democratic president in 2011? Outline a deficit reduction/tax reform plan that included new stimulus at the outset, backloaded spending cuts and at least $2 trillion in new revenue over ten years. Refuse definitively, early and often to tie deficit reduction talks to the debt ceiling; insist early, loud and often that the debt ceiling must be raised unconditionally, and threaten to use the Constitutional option if it weren't. Say to the GOP: I'm ready and willing to negotiate - call me when you're ready to consider revenue increases. Eschew high-drama deadlines, and make it clear that the Bush tax cut expiration date is the endgame.
I guess I just don't see it.

The ability of the president to force Republicans to separate deficit limitation from the debt limit, in Sprung's (or any other) scenario, is limited to the threat of invoking the 14th Amendment and running through the limit. Whatever the Constitutional status of that threat, I would have argued that it contained grave, serious threats to the president. Invoking the 14th now, or next week, after well-demonstrated GOP stubbornness and immanent danger, is one thing; declaring the debt limit unconstitutional by executive fiat right after a GOP landslide would have been seen by everyone except core partisans as an illegitimate overreach. Instead of constant reminders about presidents of both parties supporting increases in the debt limit, we would have been subject to constant reminders about how presidents of both parties accepted the limit, even when Congress delayed or attached stuff to it. At least that's my best guess. In my view, it would have handed the Tea Party House a huge gift: they, and not the president, would have been the reasonable ones.

The other half of this, as I mentioned over at Greg's place, is that even if the debt limit wasn't an issue, Obama and the Republicans in Congress would still be headed for the exact same showdown at the beginning of the next fiscal year this fall. Granted, a government shutdown without the threat of a default would hold somewhat fewer long-term dangers (and, therefore, I fully agree that the Democrats should have rid themselves of the debt limit problem last year, and at this point I definitely believe the president should seriously consider blowing through the limit if necessary). But a three-week or so shutdown will be damaging enough in the short-term, and therefore the president would still (will still) have a strong incentive to avoid it.

Beyond that, I just don't see any good options for Obama, then or now. Nothing we have seen gives any indication at all that the House of Representatives was at all willing to pass a debt limit increase without adding  measures unacceptable to the Senate and the Obama. I see no reason to believe that changes if the president spins better or bargains better.

I'm not at all convinced that Obama has done a good job bargaining over the budget so far this year, but I'm not convinced he's done a bad job, either. Mainly, I'm just not convinced it matters much, except on the spin and public relations side, where in my view he's doing just fine. As I've been saying, I really do think that liberals are not taking seriously enough just how wacky the U.S. House majority is right now, and how little ability anyone has to do anything about it. I agree with those who say that the exception -- maybe -- is the business community. If they put pressure on the House to be reasonable, then we'll get a deal. If not, and perhaps even if they do, we're not going to get one.

5 comments:

  1. Jon, I'd like to think you're right, and maybe you are. But no President has ever engaged in substantive negotiations over the debt ceiling; why should Obama have submitted to being the first? I didn't mean to suggest that he should have brandished the Constitutional option early; it could have surfaced much as it did in our noncounterfactual world, floated by law professors a few weeks in advance, and only embraced by the President in the endgame. More here: http://goo.gl/TosKu

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  2. Could the Democrats have rid themselves of this last year? Why wouldn't McConnell have filibustered any attempted debt ceiling increase last year? He would have wanted to keep his leverage for 2011. I mean if the Dems couldn't find the Senate votes for the 2011 continuing resolution, how were they gonna raise the debt ceiling?

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  3. I am not perhaps the greatest expert, yet hopefully someone in this forum should know the answer.

    My studies of the details of federal legislation suggest that there are plenty of duly-legislated-and signed-into-law emergency clauses in all sorts of legislation (typically dating from 1933-7, 1945-9, 1973-5, 2001-2 and other times) that, if a President wanted to dust it off and sign emergency declarations, that President would have a whopping panoply of powers to create and fund new agencies or existing agencies for various activities and purposes.

    Am I right or wrong in believing that such "authorization of national emergency" law exists?

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  4. Also, Ron Paul offered another deux ex machina, endorsed by Dean Baker of all people: have the Fed burn $1.6 trillion in bonds it holds goo.gl/ECAee

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  5. I think this is all just 18 layer chess to blame an inevitable downgrade of the US bonds on the Republicans.

    It had to happen, and as the Administration said one year ago, it was going to be about two years.

    Zero practical effect. The fed is sitting on 1.5 trillion and can sell them over the next three months.

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