Investors brace for a painful crash into America’s debt-ceiling
economist.com
economist.com
Instead I’d rather changes that incentivize congress to act. Say a law that would automatically increase the debt limit as long as a budget or continuing resolution in force. And a second law that said that to the extent a budget is not passed that the 1/4 of the respective house or Senate’s membership of the party in control gets automatically term limited out in the next election cycle.
There are a lot of mechanisms that prevent the will of the people from being expressed at the federal level right now, but the two-party system, first past the post, and Citizens United are probably the big three.
The increasing power of the executive and the courts have come about almost entirely because the legislature has abdicated its power and responsibility. One of our two political parties is heavily invested in preventing action at the federal level, and the other two branches have stepped in to fill that power vacuum. This is sort of necessary, in that it keeps our country from grinding to a halt, but it also consolidates power to fewer, and in many cases unaccountable, people.
There are, unfortunately, no easy solutions here.
There is only 1 issue they care about. They all say it is the root, the basis for any and all other change.
Campaign finance reform. When you are campaigning and fundraising full time you cannot and will not do your job as a legislator. I have heard this over and over and over.
"What if we..." Campaign finance reform. "But isn't..." Campaign finance reform. "How about..." Campaign finance reform.
I've been flummoxed by the legislature's abdication of power for awhile now too, but your post brought a disturbing idea into my head. What if this abdication actually _is_ the will of the people? From my limited exposure it seems that the only people who communicate with their legislators are the most polarized constituents who would demand obstruction.But you do point out a significant problem, regarding polarized constituents. More than just communication, it's usually the most polarized members of a party who take part in the primaries. This has the effect of dragging politics towards the extremes, rather than the center, and makes cooperation between parties essentially impossible.
Removing first past the post, through ranked choice or some other mathematically superior method of handling elections, would do a lot to correct that.
I'm just so sick of Republicans being unserious about the debt ceiling and causing this FUD over and over again.
It’s a plainly ridiculous exercise that threatens the world and empowers right wing psychopaths.
It says nothing about default, it’s talking about disputing the debt. Disputing debt is different than not having the money to pay it.
Let’s say that Biden directs the Treasury to ignore the debt ceiling law, citing the 14th amendment. Who has standing to file a lawsuit to challenge him? Who is directly harmed? You and I aren’t allowed to sue the EPA to force them to do anything about climate change, because our harms are generalized. We need to prove we’re directly harmed.
Ok, but let’s say that someone is allowed to sue. It works its way through the court system and Biden loses. Does that mean we have to claw back all the payments the federal government made?
Procter & Gamble v. Bankers Trust [1]
P&G sued BT for losses incurred in derivatives contracts that should not have been sold by BT. This article [2] provides some more detail:
> In another high-profile case, Procter & Gamble Co. is suing Bankers Trust, its derivatives dealer, blaming it for a loss of dollars 195 million on two interest-rate contracts the company claims it should not have been sold.
> Procter & Gamble recently upped the stakes dramatically, claiming triple damages under U.S. civil racketeering legislation. In a related development, a shareholder has sued Procter & Gamble for financial irresponsibility.
The outcome of the case is that Bankers Trust settled with P&G as per this article [3].
The same article [2] also mentions the Orange County bankruptcy where OC sued its derivatives broker. At the time, this was one of the largest financial failures.
> Orange County is suing both its main derivatives broker, Merrill Lynch, and the accounting firm Peat Marwick
Merrill Lynch paid OC $437 M to settle as per this article [4].
[1]: https://casetext.com/case/procter-gamble-v-bankers-trust/cas...
[2]: https://www.nytimes.com/1996/01/13/your-money/IHT-moneyloser...
[3]: https://www.nytimes.com/1996/05/10/business/bankers-trust-se...
[4]: https://www.nytimes.com/1998/06/03/business/ending-suit-merr...
Right, but even if that means the executive can take some action that otherwise would be prohibited if the Congress passes taxing and spending bills but also passes a debt limit inconsistent with the net result, that doesn’t mean that the executive can take any action in his discretion. While, say, the Biden Administration might agree that the 14th Amendment would, ultimately, allow the government to pay its debts, they probably don’t want to take the risk that the courts would determine that that means that the executive must unilaterally cut appropriated spending to minimize any overage in the debt limit, and return within it as soon as practical while paying debt service. (Both because they wouldn’t prefer spending cuts to ignoring the debt limit, and because politically they don’t want to be on the hook for the impacts of spending cuts they don’t want to make.)
Conversely, while Republicans might like that outcome, they wouldn’t like court finding that, indeed, the executive can choose to just ignore the debt limit in the case of that kind of conflict.
So no one actually wants to get the position of having the courts resolve this, especially since US courts don’t give advisory rulings, so the only way to get it before the courts is to get into a situation where the court ruling is going to be atomic bomb for one side or the other on the issue.
Congress passed the budgets that got the debt, the president can’t pick and choose what to fund as some run around of all the laws and separation of power we have.
Not sure where you get that. While there is case law suggesting that budget spending is generally mandatory with certain exceptions, the Constitution itself does not expressly dictate that – it prohibits spending non-appropriated funds, but does not explicitly prohibit refusing to spend appropriated funds. You could make a textual argument that spending funds in violation of laws passed by Congress is “more illegal” than not spending funds directed in those laws.
> With following the debt limit, the president would essentially get sole discretion as to what programs to fund or cut.
I can see why that might be undesirable from a particular set of values, but I don’t see that that makes it “clearly illegal” in the only sense that matters, which is, “indisputably what the Supreme Court would rule should a dispute come to it.”
> That would essentially take all power away from congress.
No, because Congress could always pass a debt limit increase (even over a Presidential veto) that eliminated the conflict and took that power away from the President.
> Congress passed the budgets that got the debt, the president can’t pick and choose what to fund as some run around of all the laws and separation of power we have.
By the same token, Congress passed the debt limit, and the President can’t pick and choose what limits to ignore as some end run around all the laws and separation of power we have.
https://www.reuters.com/world/us/amid-us-debt-ceiling-stando...
Not a Democrat or a Republican.
After the negative consequences of default manifest -- the one thing we can know with certainty is that there will be a powerful consensus around not allowing this effect to manifest again. The damage of the idiocy will ultimately be worth it to avoid continuing this tragic hostage taking drama forever...
The move here is to steal yourself that you _will_ allow default and say "the united states does not negotiate with terrorists" -- and admit absolutely no discussions about anything other than resolving the debt limit without any strings attached.
Basically looks like another exercise of legislating for the hell of it, rather than making lives better for Americans.
Correction: legislating for the rich
Laws that favor very wealthy people pass through congress like a faint breeze on a daily basis (when congress is in session).
+ Legislating for the elderly.
The federal debt may be ~$30 trillion but the funding shortfall for Medicare and SS is ~$100 trillion. Something needs to change.
Average people don't matter in America.
This would be equivalent to just eliminating the debt ceiling, and that (either directly or in the effectively-equivaent form you have suggested) is the obviously the correct thing to do. However, it reduces the number of opportunities for hostage taking brinksmanship by a party that lacks a trifecta but controls at least one house of Congress, so it is difficult to pass while there is a party that (1) is currently in that state, or (2) sees itself as likely to be in that state and wanting to preserve the possibility of using that tactic in the near future.
https://en.m.wikipedia.org/wiki/Jude_Wanniski#:~:text=The%20...
If X is greater than Y then the remainder will turn up as negative capital at the Fed. By accounting identity.
The Fed has no legal authority to refuse a payment order from Treasury. The Fed just needs to account for the order and wait until Congress sorts itself out.
In other words there is no such thing as an empty chest and if Biden had any sense he would order the Fed to pay and then take it to court if the Fed refused.
Courts are used to interpreting conflicting instructions from Congress and the constitution.
Neutralise the weapon once and for all.
It is difficult to predict the impact of this. But it is more than likely to be severe financial collapse.
But given that 'abroad' is currently sending the US stuff in return for mere promises, where else are you expecting them to send their stuff?
It's a scare story. In reality, the players have nowhere else to go.
Just as they didn't when Nixon ended Bretton Woods.
If dollar payments to settle intl trade is interrupted, the consumption growth of goods and services in the US will stop and begin falling. The trading partners have been servicing this consumption growth for several decades only because of the relative safety of the dollar. Hoping that would continue regardless of the degradation of the safety of the dollar is wishful thinking.
Thinking that this won't impact the purchasing power of the dollar has no basis in logic.
You are talking about the Fed refusing to do its job. How long do you think the people in charge of the Fed will stay in charge in that situation?
The Fed is not God. It is the agent of the Treasury and it does what Treasury tells it to do - just as Bernanke said when he testified to Congress.
We run trillion dollar deficits… me and my kids will be burdened with this debt!
At the same time we hand out tremendous benefits to the elderly through SS. We should be spending more on children than the elderly.
I agree that it’s a problem. I’m just pointing out why nothing is being done. What you see here is 100% political theater and wheeling and dealing. Meanwhile the debt goes up continuously under both Democrats and Republicans.
Few members of either party are actually serious about cutting spending, especially when they get into power and cuts might be to their pet projects. There’s also a culture of using pork spending to almost literally buy votes. It’s been entrenched in the US systems for generations.
Your children aren't the ones paying for it. Numbers changing in a computer system is what pays for it.
Printing Money (expanding money supply) creates inflation now as supply cannot match demand.