|This is me, right now.|
Boehner gave a speech in which he said:
Wow ... just ... wow.So last year around this time, I accepted an invitation to address the Economic Club of New York. I went up there and said that in my view, the debt limit exists in statute precisely so that government is forced to address its fiscal issues.Yes, allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt ceiling without taking dramatic steps to reduce spending and reform the budget process.We shouldn’t dread the debt limit. We should welcome it. It’s an action-forcing event in a town that has become infamous for inaction.That night in New York City, I put forth the principle that we should not raise the debt ceiling without real spending cuts and reforms that exceed the amount of the debt limit increase.From all the way up in Midtown Manhattan, I could hear a great wailing and gnashing of teeth. Over the next couple of months, I was asked again and again if I would yield on my ‘position,’ what it would take, if I would budge…Each and every time, I said ‘no’ … because it isn’t a ‘position’ – it’s a principle. Not just that – it’s the right thing to do.When the time comes, I will again insist on my simple principle of cuts and reforms greater than the debt limit increase. This is the only avenue I see right now to force the elected leadership of this country to solve our structural fiscal imbalance.
This is such a SELF-EVIDENTLY AND PROFOUNDLY STUPID IDEA that I barely have the ability to contain myself to type out a semi-intelligent response, as I'm pretty sure that even hearing an idea that stupid has lowered my intelligence - though only temporarily, I hope.
Let's see ... how many ways is this idea stupid ...
- Most of the "debt" and "deficit spending" that Boehner is complaining about was actually all caused by Republicans, not Democrats.
- This is such a dangerous idea, even business magazines have started running articles entitled, "IT'S OFFICIAL: The Whole World Thinks Republicans Are Dangerous Maniacs Threatening Everyone."
- Either way it plays out, this will lead to another recession, if not a depression, by either 1) hugely slashing government spending in a time of relatively low demand, or 2) throwing the entire financial system into utter chaos.
- The market is saying, as loudly as it possibly can, that the U.S. government should be borrowing and spending MORE, not less. It's very simple - the U.S. can borrow money at negative real interest rates. If investors thought that the U.S. was borrowing too much money, they'd be demanding a 7% interest rate (like they are for Spain), or a 30%+ interest rate, like they are for Greece. When investors start to think that the U.S. is borrowing too much, they'll start to demand higher interest rates; right now, they're not, so the government can (and should) borrow and spend more.
- The last time the Republicans did this, they earned the U.S. its first credit rating downgrade ever. Obama took an approval ratings hit, but Congress took a far bigger hit, and independents blamed most of the debacle on the Republicans. I find it hard to believe that it's wise for the Republicans to want to go through this again.
But why is Boehner acting so crazy?
Because (on the bright side, as I explained in November) the Congressional Republicans have painted themselves into a corner. While they succeeded in extracting some serious spending cuts in order to raise the debt ceiling last time, many of those spending cuts come from the defense budget, starting on January 1, 2013. Republicans had been hoping to simply undo those cuts without paying for them, but thus far, Obama has said he won't allow them to do it. Second, the Bush tax cuts are set to expire ... on January 1, 2013. The combination results in $6 trillion in deficit reduction, distributed far more progressively than any proposal ever advanced by either the Democrats or Republicans, since half of the spending cuts come from military spending, and increased revenue outmatches spending cuts by a 3:1 ratio.
This is a situation the Republicans are desperate to avoid, so they're using the only tool left in their box - a gun, held to the head of the American economy, and they're threatening to pull the trigger in early 2013 when the debt ceiling needs to be raised again, if they don't get their way.
(I will note that this is more than a little hypocritical, as the Republican's own proposed budget doesn't meet Boehner's own demands. When someone pointed out this out to him, he responded in typical Republican fashion by saying that the rules Republicans impose on Democrats don't apply to Republicans.)
I hope Obama has the good sense not to try to negotiate with the Republicans this time. Instead, Obama should invoke one of the many options available to him to abolish the debt ceiling entirely, either by law or in practice:
- Exercise "the constitutional option," i.e. invoking Section 4 of the 14th Amendment, which says that “the validity of the public debt of the United States … shall not be questioned” and simply ignoring the debt ceiling altogether. Bill Clinton has said that this is what he would do, if he were in Obama's situation, though the Obama administration thus far seems to have ruled this option out.
- Preemptively sue Congress over the issue and force the Supreme Court to decide whether it's constitutional for Congress to pass budgets on the one hand and then refuse to pay for them on the other hand. On it's face, it's stupid that Congress is allowed to do that, and I'd hope that the Supreme Court would agree, but who knows - the Supreme Court has been making all kinds of bad, stupid decisions lately.
- Mint $1 trillion platinum coins. A little nuts, yes, but 100% legal.
It's almost enough to make me start looking for jobs in a country where the leaders aren't crazy. However, Europe's economic policy has been even worse than America's as of late, so I'm not sure where that leaves me to move to - I'm not going to subject myself to the whims of any country that isn't fully democratic. So, where does that leave ... South America, perhaps? Any suggestions?
P.S. As I said a couple of days ago, I'll be traveling until after Memorial Day, so no new posts until then. Check out the archives, and have a good couple of weeks!