The "T" Coin For The Tea Party

Demonstrating yet again that there is nothing as powerful as an idea whose time is coming, we are now swept by a wave of posts celebrating the Trillion Dollar coin as a solution to our debt ceiling woes.  There's (pocket) change we can believe in!

The notion has been smoldering since January but respected Constitutional scholar Jack Balkin broke through to Memeorandum with this CNN column:

We are having a debt-ceiling crisis because Congress has given the president contradictory commands; it has ordered the president to spend money, and it has forbidden him to borrow enough money to obey its orders.

Are there other ways for the president to raise money besides borrowing?

Sovereign governments such as the United States can print new money. However, there's a statutory limit to the amount of paper currency that can be in circulation at any one time.

Ironically, there's no similar limit on the amount of coinage. 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.

Matt Yglesias scratches his head, gulps, checks the statutes (1, 2), and concludes that this might work.  Brad DeLong keeps his eye on the Big Picture (or anyway, the big screen):

I suggest that[ Treasury Secretary Geithner] immediately mint 50 ten-pound liberty-head coins, each of them denominated at $100 billion, and temporarily store them in the Treasury Secretary's office. Then the Treasury Secretary can take them up one at a time to the Federal Reserve Bank of New York in a special armored train as required.

Think how much money the federal government could make from the movie rights alone...

Well, yes.  An unsmiling analysis was provided on July 18 by Joe Firestone of CorrentWire.  And we can find a semi-denunciation at MarketWatch from a few days back:

10 craziest things about the debt-ceiling crisis

...10.) We can ‘mint” our way out of this mess. This is an idea that’s bouncing around some of the blogs. The basic idea is right: The Treasury doesn’t actually need to borrow any money at all to pay our bills. Why not? Because we live in a world of fiat currencies, in which the Treasury can unilaterally create money out of thin air. Read Joe Firestone’s explanation.

Instead of borrowing the money, we could use seigniorage to create it.

So, the idea to get around the debt ceiling is for the Treasury to mint a one-ounce, $1 trillion palladium coin and deposit it in the Treasury’s bank, the Fed. (Under the law, the monetary value of any coin has no relation to its metallic value.) The Fed would credit $1 trillion to the Treasury, which could use it to pay our creditors.

It’s a brilliant and creative idea in theory, but in practice it would be almost as devastating to the full faith and credit of the United States as a default would be.

If this gimmick were used only once in an emergency, that’d be one thing. But once the government got the idea that this sort of alchemy is an option, it would use it all the time. Inflation — perhaps hyperinflation — would result from overuse of the alchemy/seigniorage option. Don’t go there.

Wel, hmm.  First of all, we are only using the idea once, this time.  It will be someone else who uses it a second time.

Secondly, as an astute commenter noted at Brad Delong's post, if the size were manageable the Fed could simply sell some if its own Treasury holding to offset the seignorage impact.  The net result would be as if the Fed had sold bonds to finance the Treasury (which is naughty), but the immediate impact need not be inflationary, depending on the size of the coinage.  I happen to think that the notion of a $50 billion coin to carry Treasury through a week or two of Congressional wrangling might just fly.

I was saying last night (before the crowd hooted me down) that if the Treasury Secretary is staring at a dwindling cash balace and has to choose between not paying Medicaid, not paying the military, not paying the Veterans Administration, not paying the Coast Guard, not paying the Border Patrol, not paying food inspectors, not paying the NIH, or issuing a $50 Billion coin, well, none of the choices are appealing, but the special coin might not be the most unappealing. 

As a bonus wrinkle, it would be worth knowing just how quickly this ploy would be reported - the Mint reports annually, but I presume Treasury and Fed balances are reported on a more timely basis.  That said, if Geithner could slip a few high value coins into the mix in early August and only report it in early September on some Treasury report covering August activity, well, the debt deal would probably have been wrapped up by then.

FWIW, net seignorage profit in 2010 was a mere $388 million as reported by the Mint, so we are talking about a notable change in practice here.

DO REMEMBER:  The idea that the US might simply spin the printing presses to satisfy foreign bondholders is hardly news, as this Eerily Prescient post from a year ago illustrates.  Striking coins updates the metaphor.

LEFT UNADDRESSED:  How might the coins be presented to the Fed?  Should Tim Geithner dress up as a stage magician and pull the magic coin from an unsuspecting taxpayer's ear?  Or maybe the coins can be delivered by Rodeo Clowns.  Tough call, given the seriousness of the enterprise.

Comments

[Jack is Back!]

All that does is further weaken the value of the dollar as an asset unless the coins themselves are made of $2T worth of platinum or gold.

I can't wait to hear Ron Paul's reaction.

[Danube of Thought]

Minus 18 at Raz today.

[peter]

Once again, we are seeing the results of the devastation of the Socialist of Hyde Park, FDR.

[Rick Ballard]

Wouldn't it be more efficient to simply mint a $100 trillion coin to cover the deficits for the next 100 10 years? By doing so, Uncle Sugar could avoid all the expenses associated with conducting the silly auctions peddling 0.0% debt to primary dealers who then collect fees for reselling it to the Federal Reserve which just prints "new" money to buy them anyway.

It's really just a modest proposal that worked pretty well for a month or so in the Weimar Republic - maybe this time it will have some long term success?

[narciso]

Did these twits, Balkin included read 'Lord of Finance' and Havenstein's comments on what
he did, 100 trillion won't even completely
cover the unfunded liabilities.

[Maubee]

D'eres no such t'ing as a $10,000 bill, mon.

http://en.wikipedia.org/wiki/The_Mighty_Quinn_(film)

[Tollhouse]

These people are insane.

[centralcal]

is dat you, Maybee?

[Appalled]

The danger is not a government shutdown, so much as a downgrade of US debt and the danger to the economy of that. I think this could certainly do the trick of getting US debt down to AA promptly, and would work the same recessionary magic as a Fed increase in interest rates.

The Dems have some shutting up to do. Their failure to pass a budget is a major reason the debt limit has become such a pitched battle.

[RichatUF]

Appalled-

When they passed the "Obamulius", they could have passed whatever debt limit number they wanted. Math is hard.

Oh nice GDP release today. Wonder what that does to the budget numbers.

[Danube of Thought]

Downgrade was inevitable in any event.

Obama about to speak. I won't watch; I'm counting on you folks.

I'm not sure what the hardline Tea Party members feel they have accomplished.

[RichatUF]

so much as a downgrade of US debt and the danger to the economy

California is the worst in the nation and still has buyers.

[Extraneus]

Imagine if these geniuses would use some of their vast brain power to help figure out how to balance the budget?

[MarkO]

Of course, I would cast any vote that would keep Obama from having more time as President. It is that way only that we can control the size of government in the next 6 (count 'em, 6) years. Perhaps these folks who are standing on their principles know better than I. But, if they deliver to Obama a theme that the economy did not recover because of their desire to play politics with the economy, well---then it is a vice.

[Appalled]

DoT:

I fall in the camp that uncertainty we have the political will to pay our debts is what will drive the downgrade, not the debt load itself, as we have the tax revenues to carry it for the next ten years. You obviously have a different opinion (which I am sure you exlained somewhere). Just curious what's driving your viewpoint.

[Jeff]

QE1 and QE2 ...

the Fed bought bonds with newly printed money ...

they can sell them ...

[Mitch H.]

Balkin is an economically ignorant professor of law, and his eager followers are left-wing morons. What's your excuse, Tom? You've surely heard the term "monetizing the debt", and know why it's not a slippery slope, but the edge of the fucking abyss itself.

[PD]

Apple's $76B in cash reserves surpasses US government operating balance

[Danube of Thought]

My viewpoint is derived from what I read and hear about what the ratings agencies are saying, namely, that even passage of a bill raising the debt ceiling will not allay their concerns about our willingness and ability to pay our debts over the long haul. I have no independent knowledge sufficient to form an opinion.

[Frau Pfui!]

"As I said earlier, we are running out of time..."

[Pops]

Wouldn't work, if we paid off the debt with Trillion dollar coins, we'd just have to borrow the Trillion dollar coins back to finance new debt.

What liquor store is going to cash a trillion dollar coin?.

[Dave (in MA)]

On Abdo:

As tempting as it might be to point fingers, we all owe it to ourselves as Americans to avoid casting blame[...]. We’re better than that, people.

[Porchlight]

Once again, we are seeing the results of the devastation of the Socialist of Hyde Park, FDR.

Obama would be the Second Socialist of Hyde Park, I guess.

Let's stay away from Hyde Parkians in the future. (Disclaimer: I was born in the Chicago one.)

[Jane]

The danger is not a government shutdown, so much as a downgrade of US debt and the danger to the economy of that.

As Dot said, downgrade is a given. But then again we will be downgraded by the very people who said Fannie and Freddie were doing just fine.

I missed Obama's speech, but I will tell you what he said anyway:

I inherited this problem from george Bush. I am the only adult in the room. The republicans are the captive of the evil tea party. And the only thing the public cares about is that we don't have to do it again before I am re-elected.

And my birthday is coming and I'm going on vacation so get cracking!

[Pops]

I love how Obama claims it was the Congress that spent all the money so its the Congress that needs to raise the debt.

More specifically Mr. President, it was the PELOSI/REID Congress with you as the chief BIG SPENDER cheerleader that speant all the money..

and thats why the public threw them out and put people in that weren't going to write you a blank check.

[Pops]

Another liberal/media fantasy is that failing to raise the debt ceiling will cause our a rating downgrade, when the fact is it is the massive borrowing with no plan to reduce the borrowing that IS causing our downgrade, so more debt ceiling raises
aren't going to fix that.

[Threadkiller]

I am confused. Won’t we still need a $25 Trillion coin to operate the “machine”?

It will be embossed with:

"I came to change Washington and all I got was a smashed elongated novelty Trillion Dollar coin"

[Porchlight]

Another liberal/media fantasy is that failing to raise the debt ceiling will cause our a rating downgrade

That is their prepared meme coming out of this. It's been the strategy at least since December, per Reid himself.

[Dave (in MA)]

Tails on both sides.

[Porchlight]

Rep. Jeff Flake (R-AZ) via Twitter:

Good news. Looks like Boehner bill will now include BBA. Now it cuts, it caps, it balances. If so, I'm for it.

Flake was a no vote as of last night...

[Neo]

This only goes to prove that old adage ..

There's never enough time to do it right, but there's always time to do it again

[Neo]

... or was that ...

if you take on a vast effort, and then only do half of it ... it becomes half vast

[Janet]

I like the title of this American Thinker article - Tea Party Crashes Washington Orgy.

[Janet]

This is a good line too from Bookworm Room -
A blog premised on the belief that conservatives deal with facts and reach conclusions; liberals have conclusions and sell them as facts.

[Rick Ballard]

"Wonder what that does to the budget numbers."

The current CBO scoring is predicated upon an assumption of 3.1% real growth in GDP for 2011. I believe that the impact of the rather abysmal Q2 number and Q1 revision should be characterized as 'ungood', if not 'double plus ungood'.

IOW - the CBO scoring is a pathetic joke based upon wild optimism.

[jimmyk]

California is the worst in the nation and still has buyers.

At what price, and with what expectation of a Federal bailout?

Treasury debt will always have buyers, but why anyone is paying such a high price now is a mystery. Not because of literal default, but because of de facto default via inflation.

[Jane]

I'm going to be fascinated to see this vote. When is it happening?

[Appalled]

The 1-trillion dollar coin --

On side 1 is the President, with an expression showing he is looking forward (to his birthday). Underneath is the slogan -- "Yes, We did".

On side 2 is the great seal of the US. There are hands covering the eye. Both slogans are there "A New Age Now Begins" and "In Debt We Bet".

[Ben Franklin]

"Japanification", which, to me, means the 20-year recession. If the world economy could be described as an 'organism', then the various body parts, we sometimes see as separate from the organism, is part and parcel of the organism.

Krugman:

For some reason events in European bonds markets aren’t making big headlines. But they should be: even as the GOP does its best to destroy America’s credit, things are falling apart, with a vengeance, on the other side of the Atlantic...

What this is surely about, instead, is the growing sense that European recovery is sputtering out, and that the European Central Bank — which sets short-term rates — will eventually call off or even reverse its planned rate hikes, with rates staying low for a long time.

In short, what the markets seem to be seeing is disaster on the periphery and the Japanification of the core. And I can’t say they’re wrong.

[sbw]

Naw.

One side says "Hope" underneath his high-flying chin.

The other side says, "This is your change."

[sbw]

Mel, your thoughts?

The underlying downturn is systemic, representing that we are half-way through a 40-year change in how we employ people (bring dollars into homes), changing from manufacturing/retail to knowledge/service with bumps and uncertainty much like we suffered a hundred years ago when we moved from agrarian to manufacturing/retail.

The administration, failing to appreciate the underlying cause, tried to solve a different problem. Failing miserably, they worsened the problem. THe administration hoped to win more power and ended up hurting people and their own future prospects.

[Ben Franklin]

This ugliness, imo, is a big part of the decline in durable goods. The 'stagnation' reflects a drop in gubmint spending.

That 'pipeline' could be 1/2 inch pvc at present with room to spare.

http://bea.gov/newsreleases/national/gdp/2011/txt/gdp2q11_adv.txt

[Jane]

Can't you just see Michelle's rage at her stupid husband potentially wrecking her 7th vacation this year. HOW DARE HE?

[peter]

This administration never had any agenda other than expanding and holding onto its own power. The systemic downturn be damned.

[centralcal]

Nah, Jane. Moochelle will simply go without him. Nothing stands in her way when it comes to vacays.

[Melinda Romanoff]

DoT-

You need to see the chart on this page.

As in, that's only 4 or 5 days of high yields. And keep in mind it is a YIELD chart, not a price chart, which would be the opposite picture.

[Ben Franklin]

I watched then tried to type bullets of this on Wednesday. Here is the actual transcript:

http://www.dailyhowler.com/

MATTHEWS (7/27/11): It gets back to the numbers. A $14 trillion debt, half of it is from Bush, and almost half of that is from the tax cut. Another portion is from the prescription drug bill. And the whole rest of that really is from a lousy economy under Bush and these two wars he came up with.

BARTLETT: Well, that’s right. We—the Republicans keep saying that tax cuts are the key to prosperity. Well, the 2000s is evidence that that’s not true. And also we raised taxes in 1982. They said it would be a recession. We raised taxes again in 1993. They said it would be a recession. We had booming economies in the 1980s and 1990s. I think if we went back to the taxes we had the 80s and 90s, we’d be a lot better off.

MATTHEWS: What is the argument against the kind of tax policy— Well, let’s just say it again. It seems to me we had a heck of a great economy in the 90s, with a tax rate for people in the higher brackets of about 39.6, as opposed to 35, right?

BARTLETT: Right.

MATTHEWS: And that is the one that the rich bitch about, to use a crude term. And yet that didn’t hurt the economy and it helped balance the budget.

BARTLETT: Well, that’s right. And don’t forget also that Ronald Reagan raised the capital gains tax rate to 28 percent in 1986 and now it’s only 15 percent. And of course, the wealthier you are, the more of your income comes from capital gains.

MATTHEWS: Yes. Last night, we showed the 400 richest people in the country, whose average income is $270 million a year, pay about the same as a poor person pays. They pay about 18 percent.

BARTLETT: That’s right, of income taxes, that’s right.

MATTHEWS: Whereas the middle class and the upper middle class, who think they are the majority of the country, and they actually are, they’re paying a higher rate.

BARTLETT: That’s right. I don’t think there is any question that we would have positive economic effects if we went back to the Clinton-era tax rates.

[Danube of Thought]

Sorry, Mel--not my field. I don't know how to interpret the chart.

The 'stagnation' reflects a drop in gubmint spending.

Right. It's been dropping like a stone.

[Ben Franklin]

Obankster knows what he's doing........

http://www.nakedcapitalism.com/2011/07/team-obama-fiddles-while-debt-ceiling-fires-burn.html

"President Obama’s plan at social and economic engineering, of rolling back core elements of the Great Deal out of a misguided effort to cut spending in a weak economy, is similarly blazing out of control. The debt ceiling crisis was meant to be a scare to provide an excuse for measures that are opposed by broad swathes of the public. Polls predictably show that voters want five contradictory things before noon: they are against cutting Social Security and care much more about more jobs than about less deficit, but yeah, they’d like that too if they can have it."

[Ben Franklin]

As of a few min ago, the Markets seem calm.....seemingly. Tenuous, ambiguous?.

http://www.nasdaq.com/aspx/market-headlines.aspx

[jwest]

The final option to solve the problem is to eliminate debt and expand the revenue base.

Cancel all debt held by foreign entities. If China doesn’t want to just write off the loss and continue as usual, let them find another market to sell to. If Middle Eastern countries don’t want to send any oil until we make good on the debt we cancelled, let them know we just might move 100,000 troops into the area. What are they going to do?

Taking a cue from Vito Corleone, start charging for the “protection” the U.S. provides around the world. “Nice country you’ve got there. It would be a shame if anything were to happen to it.” It’s time that the DOD becomes a profit-making operation.

Throughout history, the last word has always been spoken (and history has always been written) by the group with the most powerful military.

[Old Lurker]

DoT it looks like as the talk about a downgrade occured starting 3 weeks before the cut, interest rates rose. By the time the downgrade happened, they stayed flat. Three weeks after the downgrade, rates had returned to their starting point six weeks before.

[Melinda Romanoff]

Bullard yapped.

Guess again.

[Pops]

The Republicans should propose an
ObamaDebt Individual Mandate.

That is all Americans need to pay, say 700.00 a year for every trillion of ObamaDebt.

If you don't pay your 700.00 per Trillion, you are not eligible for any goervment programs. Illegal aliens are disallowed from making this payment.

[Captain Hate]

I love how Obama claims it was the Congress that spent all the money so its the Congress that needs to raise the debt.

Well the JEF never had a health plan because he's incredibly ignorant and couldn't begin to explain anything that his staff of 3,000 ideologues could come up with. The same situation exists now. So he continues to float along as our first affirmative action president; dumb as a stump and never having had to prove otherwise. If B+ Hussein's life was accurately portrayed and presented as fiction, it would be rejected as too implausible.

[Rick Ballard]

jwest,

Hadn't that better wait until we have a CiC who doesn't lead from his behind? The Libyan Ali Babas seem to be doing about as well as the NATO Coalition of the Broke assembled by the President to help them through this Arab Spring Summer.

[Charlie (Colorado)]

Cancel all debt held by foreign entities. If China doesn’t want to just write off the loss and continue as usual, let them find another market to sell to. If Middle Eastern countries don’t want to send any oil until we make good on the debt we cancelled, let them know we just might move 100,000 troops into the area. What are they going to do?

That is very possibly the dumbest idea I've ever seen.

[jimmyk]

Somewhat off-topic, but I find this profoundly disturbing on many levels:
Carmakers Back Strict New Rules for Gas Mileage.

What are the issues?

1. The regulation is insane. We will all be driving golf carts if this is kept in place.
2. It is done by executive fiat. No role for a vote by our representatives.
3. This newfound support from automakers coincidentally comes after the government bailed out two of them and owns significant stakes in them.

And then there's this:

That standard will be made more easily achievable by credits that automakers can earn by producing battery-powered vehicles, hybrids and alternative-fuel models. Details of how the credits will work have not yet been made public....

[mojo]

People who think "money" is a physical thing just don't understand the concept.

[jwest]

Charlie,

I agree that the option I laid out might move us a little lower in the eyes of the Nobel committee, but as anyone who has been on the losing end of dealing with a bankrupt company can tell you, sometimes you eat the loss and move on.

[Dave (in MA)]

jimmyk, not to mention the fact that the same forces that prevent us from using our oil resources will going after Big Lithium.

[glasater]

Obama wants to raise the debt ceiling amount to carry him through the next election.

Why in the world should the taxpayer 'pay' him to brainwash the voters into voting for him for the next sixteen months.

[Ben Franklin]

people who don't understand the concept of 'metaphor' shouldn't use the word, 'concept'.

[Ben Franklin]

history--apologies to those who believe the Earth is 7000 years old.

http://www.theleftcoaster.com/archives/020039.php

[Ben Franklin]

If Bohner survives this debt-celing crisis, I have a feeling he's gonna have some payback for inexperienced freshmen. He's knows some tricks.....

http://thehill.com/homenews/house/174253-house-conservatives-angry-over-pell-grant-funding-in-boehner-debt-bill

House conservatives who have stalled legislation to raise the national debt limit are angry that it includes $17 billion in supplemental spending for Pell Grants, which some compare to welfare.

Legislation crafted by House Speaker John Boehner (R-Ohio) to raise the debt limit by $900 billion would directly appropriate $9 billion for Pell Grants in 2012 and another $8 billion in 2013.

[jimmyk]

I would translate the "Details of how the credits will work have not been made public" as: "Indulgences will require donations to the DNC to be determined at a later date."

[Danube of Thought]

"the Markets seem calm.....seemingly. Tenuous, ambiguous?"

People who are referring to an ambivalent market shouldn't use the word, "ambiguous."

People who use the phrase "seem calm...seemingly" need to drill with the redundancy squad squad.

[Danube of Thought]

Cancelling all debt held by foreign countries would bring an abrupt end to this republic.

[Ben Franklin]

http://www.spaceweather.com/

CHANCE OF FLARES: Sunspot 1260 has developed a delta-class magnetic field that harbors energy for powerful X-class solar flares. Such an eruption today would be Earth-directed as the sunspot turns to face our planet.

[Ben Franklin]

'his leadership of the Republicans in the House and being speaker is clearly at stake here, if he can't bring his people along."

Read more: http://www.foxnews.com/on-air/on-the-record/transcript/mccain-boehner039s-leadership-stake-debt-bill-obama-now-bystander-debate#ixzz1TW5OKfLh

[Janet]

People who use the phrase "seem calm...seemingly" need to drill with the redundancy squad squad.

Hahaha...that reminds me of one of my favorite daddy posts -
"So I'm for Crist. Proudly standing up for amnesiacs & Alzheimer's voters, & for amnesiacs & Alzheimer's voters also. And for amnesiacs."
LOL!

[jwest]

DoT,

In the words of Buck Turgidson, “I’m not saying we wouldn’t get our hair mussed.”

Debt is a ledger entry. A few electrons holding ones and zeros in a piece of silicon. One minute it’s there, the next it’s gone. The only option at that point is to act as if it never existed and move on as before, otherwise chaos would truly ensue.

[Danube of Thought]

Let's see.. GDP growth in 4th quarter 2010 was 3.1%. Then George W. Bush did something to make it drop to 0.4% in 1st quarter 2011. Is there no end to the damage the man can do?

[Ben Franklin]

http://www.j-bradford-delong.net/movable_type/

Jobs...Jobs? Who cares about jobs?

"What would be the ideal way out of this mess? The politically implausible, but economically sound, answer is higher deficits today, from more spending or lower taxes (or both). Deficits are a dirty word in Washington, where "borrow-and-spend" has because a slur. But the ability of the government to borrow and spend represents an ability to rake money into the economy, not unlike exporting a good in exchange for cash.

The private sector isn't growing, business investment is weak, and exports are a tiny sliver of the U.S. economy. If government doesn't continue to pursue high deficits, we're dooming ourselves to month after month of jobless, "recovery-less" recovery. Which is to say: Basically, we're doomed."

[mojo]

Or similes either, presumably.

[Ben Franklin]

Thanks for the input, DoT. I didn't want to be the one to say it.

[Danube of Thought]

"act as if it never existed and move on as before"

If you act as if it never existed, the one thing you absolutely cannot do is move on as before. The US would instantaneouly lose the ability to issue debt; US assets would be seized around the globe; and etc.

[henry]

Big Government has a note on what Obama is doing instead of dealing with the US debt / spending issues . Its all political all the time.

[Extraneus]

It's like one of those advanced karate punches, DoT, where years later the victim suddenly keels over and dies.

[jwest]

DoT,

“US assets would be seized around the globe…”

Not if the country seizing the assets enjoys how their capital city looks with the buildings standing upright.

[Extraneus]

Am I the only one who thinks jwest was kidding?

[glasater]

Encouraging:

Obama Approval Drops to New Low of 40%

[RichatUF]

I hope jwest is kidding.

[Danube of Thought]

Glasater beat me to it.

You must be right, Ext.

[Boatbuilder]

I'm confused. The entire future of life in this country as we know it is being held up and threatened by a small group of hayseeds who've gone insane from drinking too much tea, or something. Right? And if this small group of backward hayseeds don't vote for the plan for salvation put forth by the Tan Man, we're all doomed. So the hayseeds must abandon all principle and vote for a bill which increases spending, even though they and ran on a platform to cut spending, and their constituents are demanding that they cut spending, because if they don't vote to increase spending the big spenders will be able to say they were irresponsible. Right?

Here's a dumb question. If this is so goddamned important (and not just pure political BS), why don't all those oh-so-responsible Democratic house members say they'll hold their noses and vote for the Boehner plan?

[jimmyk]

Boatbuilder, I don't have strong views about this, but Republicans only control the House. The Dems control the Senate and the White House. The Tea Partiers are only a segment within the Republican caucus. To vote for the least damaging bill that can possibly squeak by in Senate and not get vetoed by the President, one that requires all this to be revisited again in six months and again when the Republicans are swept into power in 2012, doesn't seem like "abandoning principles."

[glasater]

Tweet from:

Jonathan Karl
@SpeakerBoehner just stopped by a pizza lunch w/ Senate Republicans (in the Strom Thurmond room, of course). Got a standing ovation.

[Boatbuilder]

JimmyK--the point is that all the "centrist" commentary is that the alleged intransigence of the tea partiers threatens the very Republic. The fact that nobody has even asked the Dem members of the house to throw themselves on their swords simply proves that the whole thing is political BS. The concern of the establishment R's that the public is too stupid to see this and will give Obama a pass when the END OF THE WORLD happens is certainly understandable, but I am not fully convinced that the END OF THE WORLD is upon us, and I don't think that the public is either. If there's really so much at stake, how about all the responsible adults of both parties proposing a real plan with real cuts and no tax increases. That's all the crazy hayseeds are asking for.

[jwest]

Rich,

Yes, I’m kidding in the sense that I wouldn’t actually advocate cancelling all debt and using our military to shake down the globe, but the basics behind the scenario are worth exploring.

Any event that disturbs the status quo and brings circumstances that would materially affect a majority of Americans in a negative fashion sets the stage for extraordinary measures to restore what people believe to be normality. If the current fiscal crisis brought on a general collapse, deeper and more widespread than what we are experiencing now and people entered the mindset that this depression was the new reality – not a temporary dip – it wouldn’t be a giant leap for a charismatic leader to convince the country that this problem wasn’t our own making. Once the blame is put on the (foreign) creditors, it’s pretty easy to make the case for actions people normally wouldn’t think of.

Foreign governments holding U.S. debt are probably more in tune with the potential danger of having the biggest kid on the block in trouble. We’re not Portugal or Mexico. The U.S. is the only country with the option of walking away from its obligations with a better than even chance of having everyone accept it. Naturally, any elimination or restructuring of debt would be spun in legalistic terms and publicly acclaimed by all parties as the “responsible” thing to do, but the fundamentals would remain that every country capable of holding U.S. debt is deathly afraid of losing the stability that holds this planet together.

When the capability exists, you can’t discount the possibility.

[Extraneus]

Rush is taking shots at "Krauthammer Online" and the "Weekly Kristol" today. The point being that NRO says whatever Krauthammer says, and they're all exhibiting fear during these negotiations, when it's Obama and the Dems that are in the weak position.

0.4% revised Q1 growth, 1.3% Q2. 9.2% unemployment. Obama's polls, etc.

[E]

This is going to be a thug life moment for the country. First, the House must propose a bill. Then, the Senate must either vote it down, pass it, or amend it. Then it may have to be reconciled.

Only then can the President vote it up or down. Depending upon the timing The Senate may be faced with a sh*t sandwich they will have to eat.

The House (Republicans) will have presented a bill for passage and the tea party candidates are holding Boehner's feet to the fire.

The Senate may not like it but will they dare to vote it down if their backs are against the wall?

Then, will the President dare to vote it down and possibly throw the country into default? He might try to go around Congress, but this would then become a constitutional crisis which the President would not win.
The MSM has defined the game differently, but constitutionally, each branch has its assigned responsibility.

I wonder if Boehner is enough of a poker player to back the dems into a corner?

The next question is whether the Dems are stupid enough to vote against a bill they must hold their noses to pass. Enough of them are owned by Wall Street that I think they'll fold.

I think Bammy will fall in line since Goldman owns his ass.

If it wasn't perhaps the most singular economic Rubicon since 1929/31 it would make a great flick.

[Appalled]

Boatbuilder:

Speaking as a centrist (or a leftist, depending on the your POV), my main concern about getting Boehner passed is that it, rather than Reid's somewhat more mythical cuts, provide the framework for the ultimate solution. The Dems in the House are voting against the Boehner program for a reason -- I don't understand why the Tea Partiers want to be in a coalition with Nancy Pelosi to help them accomplish that obajective.

[Frau Einfach]

"Boatbuilder, I don't have strong views about this, but Republicans only control the House. The Dems control the Senate and the White House. "

jimmyk - Thomas Sowell agrees with you. From his IBD article "Boehner's plan isn't perfect, but it ain't bad":

"Is the Boehner legislation the best legislation possible? Of course not! You don't get your heart's desire when you control only one house of Congress and face a presidential veto.

The most basic fact of life is that we can make our choices only among the alternatives actually available. It is not idealism to ignore the limits of one's power. Nor is it selling out one's principles to recognize those limits at a given time and place, and get the best deal possible under those conditions."

[Charlie (Colorado)]

I agree that the option I laid out might move us a little lower in the eyes of the Nobel committee, but as anyone who has been on the losing end of dealing with a bankrupt company can tell you, sometimes you eat the loss and move on.

JWest, go read up a little on Smoot-Hawley, the Greater East Asia Co-Prosperity Sphere, the aftermath of the Versailles Treaty and then, if you still think that threatening China with default and the Middle East with occupation is a good idea, please consult a psychiatrist because you have completely lost your freaking mind.

[Boatbuilder]

Also--Asking them to vote for "the least damaging bill" which actually increases rather than reduces the deficit, on the basis that as a political maneuver it might reduce the ability of the big spenders to demagogue them, is, when you come right down to it, asking them to abandon their principles.
I tend to agree with the political expediency side of the argument--"If you don't like these principles, I have others..."--but I can certainly understand why the Tea Party caucus is not fully convinced.

[Charlie (Colorado)]

CHANCE OF FLARES: Sunspot 1260 has developed a delta-class magnetic field that harbors energy for powerful X-class solar flares. Such an eruption today would be Earth-directed as the sunspot turns to face our planet.

Cool. Not only might we get some aurora down to 40N, this is a sign that the Sun is up off the couch and ready for another round.

[Thomas Collins]

If Eliot Spitzer sees this, he is going to be pushing to become Geithner's successor as Treasury Secretary. Just think how many hours with Ashley Dupre Spitzer could score with his coining power.

[Charlie (Colorado)]

people who don't understand the concept of 'metaphor' shouldn't use the word, 'concept'.

I like it.

[Boatbuilder]

Appalled--the Tea Partiers don't want to be in a coalition with Nancy Pelosi. They shouldn't. Centrist Dems should, in theory, be willing to form a coalition with Boehner--if this is so important. It's not--it's political theater.

[Chris]

California is the worst in the nation and still has buyers.

Posted by: RichatUF | July 29, 2011 at 10:21 AM

Actually, I think Illinois may have edged out the fantasists in Cali for worst in the nation.