One of the ideas discussed during the fiscal cliff debacle in late 2012 and early 2013 to deal with the GOP's intransigence on raising the federal debt ceiling was the platinum coin trick.
The idea was pure genius. Using previously-granted legal authority, the Treasury would mint a platinum coin with a face value of $1 trillion and would sell that coin to the Federal Reserve which would then credit the U.S. government with the cash. That would eliminate the need for additional government borrowing any time soon and...presto...the White House's debt ceiling problem would go away.
The White House eventually said no to the platinum coin trick by saying that it didn't have legal authority to do the sale. It also became apparent when the administration rejected the other debt ceiling escape hatches like the 14th amendment that the White House's political strategy was to keep the pressure on congressional Republicans by making them deal with the one and only debt ceiling process: voting on it.
The budget conference committee that's been meeting sporadically since last month was given until December 13, that is, until a week from this Friday, to agree on some kind of deal.
So what happens if there is no agreement by December 13?
Like Seinfeld, which was a TV show about nothing, December 13 is the budget deadline that's about nothing.
Yes, there will be headlines about how another budget-related committee, task force or working group -- think about the Bowles-Simpson (or BS) commission, the anything-but-super committee, and all of the other botched negotiations that have taken place the past few years -- has failed. That's bound to hurt a congressional approval rating that last week fell to its lowest level in history (see question 3) and doesn't have much further to fall.
I've been talking for months about how the Grand Bargain or Big Deal that's always mentioned whenever there are budget talks in Washington won't happen until 2019 at the earliest.
I first posted about 2019 in June and have mentioned it a number of times on television and radio and in speeches since then.
I've also been told that my analysis recently made the big time when a group of the most senior tax lobbyists in Washington discussed it at a private meeting (It's not clear whether they were happy about having six more years to work on issues or sad that nothing much would be done before the end of this decade at the earliest).
Each time I've talked about 2019 I've gotten reactions that range from shock to amazement. No one ever tells me I'm wrong; they just shake their heads in disbelief.
So once again, here's are the top 10 reasons we're likely facing six more years of crisis-by-crisis budgeting in Washington and no Grand Bargain any time soon.
By changing it's rules yesterday to prevent filibusters on executive branch and judicial nominees (other than the Supreme Court) -- the so-called nuclear option -- the Senate further complicated a federal budget debate that was already overly complicated and had little chance of success.
Although it's still less likely than likely, the prospects for a government shutdown in January increased significantly. Based on yesterday's action, I have increased the possibility that funding for the federal government will not be adopted by the time the current continuing resolution expires to 40 percent.
And the likelihood for sequestration to occur as scheduled in mid-January also jumped significantly.
1. In general terms, the federal budget debate in recent years has always been more emotional than rational and far more political than substantive. The emotions and politics were significantly ramped up yesterday.
Eminent economist Martin Feldstein, former chairman of the Council of Economic Advisors during the Reagan Administration, had an op-ed in The Washington Post earlier this week that shows he just doesn't understand what's happening with the budget conference.
Here's the money quote:
The key to a political compromise is to recognize that raising revenue does not require increasing tax rates. Substantial revenue could be raised by limiting the government spending built into the tax code."
Feldstein accurately notes that this would give congressional Democrats enough of what they want in a budget deal to agree to changes in mandatory programs, especially "slowing the growth of Social Security and Medicare."