The 14th Amendment solution

    By Flavius on Wed, 07/06/2011 - 10:31pm |

    Whis is further to my two days old blog  You can be the first on your block.

    NPR did a long segment tonight of All Things Consdered on this 14th Amendment fix for the debt limit crisis. If you didn't hear it you can go to the NPR.

    To recap here in a couple of sentences : In the post Civil War period the Southern Politicians rejoining the Senate were annoyed that the South's tax revenues would be used to  honor the Union debts as they matured.

    The 14th Amendment was written and passed with the clear objective of preventing Congress from interfering with the Treasury's activity of raising the necessary cash to pay those maturing debts.Essentially the 14th Amendment says a debt is a debt is a debt:pay it.Not just ancient history, there's a Supreme Court decision of the 30s pretty strongly supporting it.On Aug 12 or whenever if the Treasury needs cash to pay interest on the debt or to honor maturing  bonds it can do that and Congress can't stop it.

    Comments

    The White House has been talking this option down.

    I think they don't really want there to be a way out.  If the House Republicans think the executive branch will just issue more debt and  pay all the bills no matter what, then they have no incentive not to take a hard line.   The White House wants to play up the risk of default and chaos, so they can say "It's on them", and blame the House for recklessness.

    Also (just my guess), the White House wants to maximize the threat of extreme chaos so that when they are "forced" to cave in on the entitlement cuts they want to make anyway, they can sell the cuts to Democrats as a case of having no alternative.


    by Dan Kervick on Thu, 07/07/2011 - 12:15am

    http://www.reuters.com/article/2011/07/07/us-usa-debt-exclusive-idUSTRE7...


    by Dan Kervick on Thu, 07/07/2011 - 12:16am

    Here come the cuts:

    http://www.washingtonpost.com/business/economy/in-debt-talks-obama-offer...


    by Dan Kervick on Thu, 07/07/2011 - 6:58am

    Of course no one involved is speaking frankly . It interests me why the dems choose the particular words they use. Yesterday Obama shrugged off references to the 14th amendment by saying 'let's concentrate on negotiating' rather than dismissing the tactic.

    I haven't yet heard  the  Republican talking point in response.


    by Flavius on Thu, 07/07/2011 - 7:21am

    As a practical matter, there's no good reason to continue deepening the debt (14th Amendment notwithstanding). Seriously, you could not keep a house running the way it's been suggested to run the nation's economic affairs. There's a practical limit to debt. It reaches a point where everyone's working for the bank, where tax revenue can't satisfy what's owed without limiting the ability to operate. Even with the current zero prime rate past irresponsibility is catching up. Something has to give other than worsening the dilemma by increasing the debt. My $0.02 USD (true value: $0.0125) laugh


    by smithers_T on Thu, 07/07/2011 - 12:45am

    Household debt is the inverse of national debt ... GOPer talking point to confuse the issue with the illiterate and foolish.

    Beside if you had a clue about what you're talking about, you'd know the debt is all about unfunded legislation run up by the Bu$h Administration from 2001 to 2008 and approved by Congress ... Obama was left the job to patch up all the holes in the hull below the water line. It's the Bu$h tax cuts, both unfunded wars and the Medicare drug program Congress approved but never funded.  Remember, both war appropriations were never in the budgets throughout the entire Bu$h terms in office ... and it was all done with borrowed money - hence the debt. So it's up the the Executive Office to find the funding necessary for the programs Congress approved without funds. And the only way to do it is by increasing the debt ... only Congress can generate more revenue through taxes which the GOPer's refuse to do.

    Besides, at the moment, the US paying only pennies of interest on trillions of dollars worth of debt. If we play by your rules and don't raise the debt ceiling because you want to be practical then the jump interest rates alone on the debt would be astronomical. You don't understand the money we're borrowing is practically free use of other people's money. If we push the default limit, then bond holders will demand better rates of return and it will cost us out the ass and raise taxes astronomically just because you wanted to be practical ... it's not chump change - it will cost hundreds of billions of dollars more every time an interest payment is due for being practical.

    So the best practical resolution would be for Congress to pass constitutional amendment stating they must fund the legislation they pass and the debt will only appear in history books.

     


    by Beetlejuice on Thu, 07/07/2011 - 1:36pm

    Are all of you guys ready to get sold down the river again?  Here it comes!  Obama will cut Medicare, Social Security and all remaining domestic spending in order to get us to agree to closing a couple of minor loopholes. Then, he can claim he is the great compromiser.  Ha! When I was Pres, compromise was a dirty word.  I only cared about winning.

    Thanks for all the Happy Birthday greetings yesterday!

     


    by The Decider on Thu, 07/07/2011 - 9:23am

    Thanks for the NPR tip!

    As for the 14th, Section 4, I'm no lawyer, but the history I've read about it ...

    The Legislative History of Section Four of the Fourteenth Amendment

    http://balkin.blogspot.com/2011/06/legislative-history-of-section-four-o...

    tells my simple mind to was a memo written in the form of a Constitutional Amendment to the Congress of the day as well as future Congresses - any prior debt incurred is an obligation that is not debatable and must be paid.

    After listening to the NPR clip, I'd have to say NPR bunted on the issue rather than take a swing for first base ... perhaps they're afraid their funding might get cut further if they really debated the issue, in my opinion.

    I do take issue with the person being interviewed. He clearly hinted the Amendment was specific for the reconstruction era after the civil war ... as if it were meant only for keeping southern congress critters in check. If that were the case then it should have been repealed once the reconstruction era was over and the civil war debt had been honored. That it is still on the books leads me to believe the intent was more broad ... there may come another time when one side of the isle would be in rebellion against the other and the debt would be the battle ground. The amendment would be the hail mary amendment to keep the debt from being played as a political football which would have a detrimental effect upon the nation, the economy and the public.

    Interesting to see how the Constitution is being spun by such a wide variety of people all intent on pushing their agenda rather than explain the simple meaning of the wording and intent implied based on the facts of the day when the legislation was approved.

     

     


    by Beetlejuice on Thu, 07/07/2011 - 1:02pm

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