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Down With the Debt Deal

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I’ve been holding off on ranting about these debt negotiations for weeks, mostly because I’ve already blasted President Obama for his political incompetence and/or malfeasance so many times that there’s nothing new to say. But as the clock ticks down to the arbitrary deadline for raising this arbitrary debt ceiling and the news media milks all of the drama out of this absurd charade as they possibly can, I just want to briefly remind everyone that there was never any need for this “crisis” in the first place and that it’s still completely possible for the President to have the debt ceiling raised without striking any kind of deal with Republicans.

To just briefly clarify my position, I think the negotiations over raising the debt ceiling have been leading to one of the worst deals for the American people that a Democratic president has ever been willing to accept. I agree with economists like Robert Reich that now is not the time to make massive spending cuts, and I stand with the majority of the American people in believing that while eliminating waste in our national budget should absolutely be a long-term priority, what’s needed most in the here-and-now of the recession is more spending to create jobs, thus putting more money in the hands of the middle class and spurring demand to help kick-start the economy again. Once unemployment is reduced, then we can talk about debt reduction.

Instead of making this case however, our compromiser-in-chief has been playing the same bipartisan-posturing game he always plays and agreeing with the Republicans that debt-reduction should be Priority One in order to appear like the most reasonable man in the room. He’s certainly succeeded in appearing that way and it’s going to help him politically in the short-term, but he seems oblivious to the fact that there will be consequences to the painful cuts he’s willing to make and that if he does nothing to reduce unemployment between now and Election Day 2012, the American people—most of whom don’t pay close attention to politics—are going to fire him no matter how reasonable he appears today.

The most pull-your-hair-in-frustration part of this entire debacle is the fact that it never needed to come to this in the first place. The debt ceiling can be raised without any debt ceiling deal whatsoever. The Republicans are holding the economy hostage [again] in order to force the president to meet their draconian demands, and he’s playing along because he thinks conceding to these demands (and acting like he agrees with most of them in the first place) helps him politically. But it turns out there’s no need to meet any of these demands at all—the Republicans are writing ransom notes but they’re not actually holding anything hostage.

By now almost everyone has heard of the idea of invoking the 14th Amendment to get around Republican threats not to raise the debt ceiling. Because it says that “The validity of the public debt of the United States, authorized by law . . . shall not be questioned” the President could theoretically declare that the United States will pay the money that Congress has already appropriated no matter what threats the opposition party is issuing.

What far fewer people are aware of—and I didn’t even know about this until receiving an e-mail about it this morning—is that there’s a way around these debt ceiling negotiations in the debt-ceiling law itself. Quoting now from the Public Debt Law of 1941:

The face amount of obligations issued under this chapter and the face amount of obligations whose principal and interest are guaranteed by the United States Government (except guaranteed obligations held by the Secretary of the Treasury) may not be more than [some arbitrary huge number] . . .

With the approval of the President, the Secretary of the Treasury may borrow on the credit of the United States Government amounts necessary for expenditures authorized by law.

By now it’s painfully clear to all of us that the full faith and credit of the United States should not be placed in the hands of children (i.e. politicians) to play political games with. Luckily, the drafters of the public debt law were wise enough to give the president the express and unilateral authority to direct the Treasury Secretary to cover any and all expenditures that have already been authorized by Congress. We can negotiate all day long over future spending, but money that’s already been appropriated must be spent no matter what the clowns on Capitol Hill have to say about it.

Whether he invokes the 14th Amendment or the Public Debt Law of 1941, the best thing the President can do for the middle class, for the markets, and for the international reputation of the United States is to end these absurd debt talks now, save Medicare and Social Security from the cuts he’s been poised to make to them, and proclaim to the American people and our foreign creditors that no matter what kinds of political games get played in Washington, the United States of America always pays its bills.

Yes, he’d take a short-term hit for waiting so long to do this, and the conservative media would blast him mercilessly for shutting Republicans out of the process (they’d no doubt accuse him of behaving like a dictator) but in the long-term I believe it would not just help America but help Obama as well, as he’s been desperately needing to flex some muscles and show some spine for quite some time, and if he doesn’t do it now—with both the majority of Americans and the law on his side—he never will.

If you feel as I do, please take a moment to visit this link and have a fax submitted to the White House and your representatives in your name saying as much. We can still get the debt ceiling raised without having to swallow this awful budget-slashing legislation they’ve been working on, but only if we make it clear to our elected officials that we’re aware of the fact that we can.

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