StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



debt ceiling

Posted by Stan Collender

Last week's news reports about congressional (actually...congressional Republican) action on the debt ceiling did what in the journalism business is called "burying the lead," that is, the stories typically didn't start with the most important part of what happened.

To a certain extent that wasn't surprising. As most reports said, the GOP folded its debt ceiling tent and went home. Three years after Senate Minority Leader Mitch McConnell (R-KY) began to insist that Congress would never allow the  government's borrowing limit to be raised again unless Republicans got something something in return, and long after House Speaker John Boehner (R-OH) said there would be no debt ceiling increase unless he got a dollar in spending cuts for every dollar of increased borrowing authority, congressional Republicans allowed the government to borrow more without getting anything from the White House and congressional Democrats.

Posted by Stan Collender

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.

Posted by Stan Collender

House and Senate budget conferees will formally get together again this week. This will be their first meeting since the ceremonial opening session on October 30 featured nothing more than politically self-serving opening statements,

Expect nothing to happen at this meeting...unless you believe that a further hardening of the positions each side stated at the last meeting represents something happening. it's simply too early in the process for anyone to offer a concession of any kind. The meeting will also be way too public for anything like a serious discussion, let alone an actual negotiation, to take place.

As I've said before, a budget conference committee of 29 representatives and senators is so unlikely to be able to agree on anything that, unless they want to go hungry, they had better delegate to a single staffer the authority to decide what to order for lunch. That's especially true if the lunch discussion takes place in an open hearing where CSPAN and others are broadcasting the deliberations.

Expecting little to happen should be the mantra for everyone following the budget events scheduled for the next few months.

Posted by Stan Collender

Some quick thoughts this morning:

1. It's still no better than 50-50 ("a coin flip" as @thefix said to me on Washington Post TV last week) that the debt ceiling will be raised by October 17, the date Treasury says it will run out of the ability to use "extraordinary measures" and the government will have to operate just from the cash it has on hand every day.

2. If anything the situation has gotten worse rather than better over the past few days with House Republicans in open warfare against their GOP Senate colleagues. It appears that House Republicans need to get something out of the box the are in with the government shutdown and debt ceiling even if it means extracting a pound of political flesh from their own party to do it.

3. Let me say this yet again as directly as possible: John Boehner (R-OH) is the weakest and least effective speaker in my lifetime, and he may come close to taking the all-time title.

Posted by Stan Collender



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