So far today, over in no-we're- not-completely-bonkers House news, the House Republicans prepared a debt limit/funding bill, took it to a conference meeting, sang "Amazing Grace" (presumably more of a Diane Chambers version than you would find in the House Democrats' caucus, no?), found out they didn't have the votes, and then threatened to pass something and then leave town -- so the Senate and Barack Obama would have to choose to go along or go passed the Thursday-ish deadline.
I'll be writing more about this later, but it sounds to me like a brilliant Boehner strategy! After all, he has two problems right now: it doesn't appear that any debt limit/funding bill can pass with only Republican votes, and he really wants to pass one prior to total surrender; and, then, he has to do the total surrender part of it with as much cover as possible (of which passing the first bill is a key part, apparently).
A brilliant strategy? See it? Here goes:
1. Get reluctant House Republicans to vote for a debt limit/CR bill as part of the "leave town" strategy. Bill passes.
2. Head to airports.
3. Wait until the 30-60 or so crazy caucus boards planes.
4. Sneak back to Capitol, pass whatever the Senate sends over -- with any luck, unanimously, now that voting that way won't separate them from the not-present radicals.
5. Everyone pretend it's a great victory for Republicans -- that Harry Reid and Barack Obama caved and accepted exactly what Republicans wanted, a short-term debt limit and a sequester-level CR.
Hey, it almost worked for Johnny Cash! And it's not as if Louie Gohmert is as smart as Columbo, right?
Tuesday, October 15, 2013
Subscribe to:
Post Comments (Atom)
Posts
In all seriousness, the "leave town" gambit might make quite a bit of sense. I read an interview with Jacob Lew yesterday that noted that, as long as he has 24 hours warning, he can stave off the worst consequences of default; indeed, he can technically ensure that default never occurs.
ReplyDeleteThis is actually relatively easy. Lew simply unilaterally redefines the maturity (date and payout) of paper coming due. Got several billion of treasuries maturing on Thursday? With a stroke of his pen, Lew can make them due Friday, presumably with a small increased payout for the trouble. In theory Lew can do this forever, or at least until the liquidity needs of the holders cause them to storm the castle. Until that time, there's never a default, just an endless redefinition of extant t-bills.
For a reason I didn't catch, apparently the only hitch is that Lew needs about 24 hours warning. Its politically bad for the Republicans (or Democrats) to "officially" give up on Wednesday, admit defeat and give Lew the appropriate warning. The next best thing is probably to leave town and say the same thing, without really saying it.
I dunno...seems like not the worst way for Boehner to handle this, assuming he can't solve it.
Based on what I just read on Bloomberg, the 24-hour warning is to provide notice to the financial markets so things can be adjusted there. (In particular, the "repo" market, where T-bils are used as collateral for very short term borrowing -- usually seven days or less -- needs to take this into account.) Note that the U.S. will still be in technical default, and all sorts of problematic things are going to creep into place; this is to prevent global economic meltdown, which is what will happen when the repo market stops working. Things will get very hairy if and when people decide that they're not going to get paid in a timely fashion.
DeleteThanks for the clarification - that's definitely helpful info.
DeleteLew simply unilaterally redefines the maturity (date and payout) of paper coming due. Got several billion of treasuries maturing on Thursday? With a stroke of his pen, Lew can make them due Friday, presumably with a small increased payout for the trouble.
ReplyDeleteReally? If he has the legal authority to do that, why not just make them all due October 17, 2014, and stave off default for another year?
There are several problems with that - most importantly I suppose is that the holders' patience would be sorely tested. In addition, I suppose there's the same moral hazard issue preventing the parties from abolishing the debt ceiling altogether (i.e. the party owning the abject irresponsibility of it all). Finally, it would surely be much more difficult to set the terms - in particular the payout - of treasuries postponed one year than those postponed one day.
DeleteThere must be other problems too, but AFAICT there's no legal restriction on Lew moving everything back one year.
Well, I am a 14th amendment skeptic. I don't believe that the 14th amendment invalidates the debt ceiling. But unilaterally changing the duration of a loan is pretty clearly a default and a failure to honor that debt. Imagine if I told the bank, "Hey, I've decided that my mortgage interest isn't due until NEXT month." I would pretty obviously be failing to honor my debt to the bank, because I unilaterally changed the terms of the agreement. From the government, I'm certain that couldn't pass constitutional muster. There might be other loopholes that are legal, but I don't think this is one of them.
DeleteYes, to state the obvious, the issue isn't whether the word "default" is accurately applied per the definition in Webster's Compendium of Financial Terms (which I just made up). It's whether markets trust US debt. Something tells me unilateral changes in payout dates are not likely to inspire a lot of trust.
DeleteIn the "it won't happen" category, I'm wondering about a Spartacus strategy. House Republicans vote unanimously to raise the debt ceiling, because you can't primary the entire caucus, can you?
ReplyDeleteNow, one reason this might not work is that the crazy caucus would be most in danger of being primaried - there's a lot of Tea Folk in their districts. But, that might be the beauty part. Say someone primaries Louie Gohmert. Louie's obvious play is to call his opponent a liar, socialist and friend of Barack Obama. "Obama wanted to crash the debt ceiling as the first step in declaring martial and Shariah law. The plan was to shut down all the memorials to our glorious war dead, and when we tried to breach the barriers, troops would open fire. Fortunately for us, the troops were busy on the day of our protest, strong-arming people into signing up for Obamacare, but they've now been reassigned to guard the monuments and hiking trails. My opponent thinks it's fine for the government to gun down citizens exercising their rights. It may be politically incorrect to say so, but I don't."
I presume the Spartacus strategy is partly tongue-in-cheek (and btw it's hilarious), but it brings up a collective action problem in the GOP caucus where the equilibrium is almost always going to veer away from unanimity. If the caucus votes 231-1 on a bill, the guy who casts that one nay vote is going to be fucking golden for standing up against leadership and the 'Beltway agenda'. There is always going to be an incentive for that one, or more likely a few dozen, to break away from the pack and distinguish themselves in a way that appeals to the most rabid of their constituents.
DeleteYou know who's usually there to help coordinate and solve collective action problems? The leader: the Speaker of the House!
DeleteApart from #5 (which really ticks me off, that no matter how badly the Republicans have screwed this up and put the entire country's economy in peril, we all have to nod our head and pretend they did a good job so they don't throw another tantrum), it sounds better than my crazy plan.
ReplyDeleteThe Habeas Plan. It's mostly like the "leave town" plan, only it involves arresting people. ;)
It wouldn't exactly be a good idea. However, if Ted Cruz decided to pull a one-man default, that'd be worse.
///
Related, this is a lot like one of the sillier West Wing plots (6th Season, IIRC). A firebrand GOP House Speaker wants to pass some controversial law, stem cells or such, but he doesn't want to do it while the Democrats are in town, since enough of them and moderate Republicans would vote against it. It's the long weekend, folks want to go home, and the Speaker plans to vote once everyone is gone. So a lot of Dems all hide out in a back-bencher's offices and when the Speaker calls the vote, out file all the Democrats to defeat the measure. Yeah, WW kinda sucked after season 4 (except Vinnick... If the Republican party was a party of Arnie Vinnicks, I'd be tempted to vote for them).
That doesn't make any sense; Boehner could do that without leaving. I thought the plan was not a feint, but the real deal. That also would surely have meant that Boehner was going for something like Nixon's madman theory. I know it scared me when I first heard it.
ReplyDeleteBut I must applaud you for the connection to the Columbo "Swan Song" episode. That was brilliant!
Thanks! I was thinking - if you're only going to see one Columbo episode, it's not a bad one to choose.
DeleteIf this happened, could the Democrats not simply pass a "call of the house" motion and drag them back (kicking and screaming, maybe, but certainly enough of them could be brought back to pass anything as necessary)?
ReplyDelete