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View Diary: Progressives in Congress: Vote for the President to Do It! (35 comments)

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  •  You confident the markets would view it your way? (0+ / 0-)

    In other words, leaving it up to President Obama "to prevent the default himself" using one or more of your six options would have the same effect on the economy and the markets at home and abroad as a formal debt ceiling increase? Permit me to doubt that very much.

    But that outcome would be preferable because ... Progressives would be right?

    Obama and strong Democratic majorities in 2012!

    by TRPChicago on Sun Jul 31, 2011 at 11:48:40 AM PDT

    •  the markets (0+ / 0-)

      will fall short term.

      they will fall much more long term if any of these "deals" pass and put us into a double dip recession, or worse.

      Stop being ruled by fear.

      •  The "short term" promises to be long ... (0+ / 0-)

        ... if we don't get past this debt ceiling business. As for the "long term," Yes, a double dip recession you mention is looming  but it's not an either/or proposition with the debt ceiling.

        Sure, it would have been far better to have stimulus spending a first and higher priority than this narrow-focus preoccupation with the level of America's debt. But that train left the station a while ago, unfortunately, and the debt mess is now very much on the front burner.

        The way we get to policies and actions that pull or push us forward is to focus on those going forward, not to kill the debt ceiling deal.

        Obama and strong Democratic majorities in 2012!

        by TRPChicago on Sun Jul 31, 2011 at 12:34:32 PM PDT

        [ Parent ]

        •  Can't agree (1+ / 0-)
          Recommended by:
          psyched

          Killing a deal will force the President to handle it, and he won't have the option of making a deal then. he'll have to settle it without any budget cutting. Then the maneuvering will start for a new budget, and we'll have another opportunity to fight austerity. The longer we can drag this out, the more likely it is that we'll be able to pressure progressives not sacrifice the safety net on the cross of austerity. Facts are building up from around the world that austerity is failing. Our own economy is on the brink of a double-dip. If it's clear that we're in one by October, austerity-mania will recede, because the president will know by then that if he goes through this then he's dead duck next year. When that's clear to him; he may quit feeding the deficit/debt reduction nonsense. He's a stubborn man, but not so stubborn that he won't be able to see the writing on the wall.

          •  So let it get worse. Then the real problem, which (0+ / 0-)

            ... is our moribund economy, will be clearer. This will teach the President a lesson, and he will change his mind. And ...

            ... the role for the Republicans in this scenario would be to change their minds, too, perhaps as they see the public and the pundits agree that stimulus is a far better alternative than austerity? Or, the GOP risks losing a year from November. If they don't see this as clearly as we do, however, I think we'd have to forego any notion that the GOP would support stimulus or job creation. And that, Obama cannot enact by himself.

            I admire the boldness of your thinking and I completely agree that President Obama needs to feel pressure from the left to set him on the course he should have been on several months ago when this debt ceiling problem rose up. But expecting that the 14th Amendment or maybe magic coins will handle the crisis of confidence in debt obligations of the United States and that things will turn around before they get dramatically worse eludes me.

            Obama and strong Democratic majorities in 2012!

            by TRPChicago on Sun Jul 31, 2011 at 01:46:28 PM PDT

            [ Parent ]

    •  I'm confident (3+ / 0-)
      Recommended by:
      psyched, The Moonlit Knight, maddogg

      that the markets don't matter if the president chooses the PPCS option. In that case, he can mint a coin large enough to pay off 40% of the total debt within a week and most of the remainder over the next three years as the debt instruments mature. We'd never have to borrow back our own money again. So we really would not have to worry about the bond vigilantes or their markets. And, before you raise nonsense about this being inflationary, please read this and this.

      •  A magic coin? (0+ / 0-)

        Forgive me for being blunt, but does any respected economist support the coinage notion as an answer to the debt ceiling problem?

        Obama and strong Democratic majorities in 2012!

        by TRPChicago on Sun Jul 31, 2011 at 12:40:01 PM PDT

        [ Parent ]

        •  Sure (2+ / 0-)
          Recommended by:
          psyched, maddogg

          Jamie Galbraith, Warren Mosler, Randy Wray, Brad Delong, Paul Krugman, Stephanie Kelton, Scott Fullwiler, and God knows who else since it went mainstream over the past few days.

          Also, forgive me for disputing your label. The coin is not magic. It is just fiat money created by the United States. Guess what, all of our money is currently fiat money.

          Once the Fed credits the face value of the coin to the Mint's PEF account, and the Treasury sweeps that account, the TGA will be able to spend in the usual way, by marking up private sector reserve accounts. No magic involved!

          The only thing new here is that the Executive would be using a new method to fill the nation's purse. PPCS would replace borrowing back fiat money the United States previously issued, as the method used to fill the purse. Control over the purse strings, however still remains with Congress.

          •  You've thought about this more, obviously, but ... (0+ / 0-)

            ... I can't agree that Paul Krugman, for one, endorses the idea.

            What he said, in his NYT op ed piece a couple of days ago was:

            "These things [trillion dollar coins and exploding options to buy up all the US government's real estate] sound ridiculous — but so is the behavior of Congressional Republicans. So why not fight back using legal tricks?"

            Krugman also said, "Outrageous behavior demands extraordinary responses. Over to you, Mr. President." But again, that's not much of an endorsement of the coinage alternative.

            Obama and strong Democratic majorities in 2012!

            by TRPChicago on Sun Jul 31, 2011 at 01:54:38 PM PDT

            [ Parent ]

          •  We also have (0+ / 0-)

            Mark Kleiman Professor of Public Policy UCLA says

            Is it legal? Arguably, it would be illegal not to do it. The President is bound by the Constitution and his oath of office to “take care that the laws be faithfully executed.” Appropriations bills are laws; he’s not allowed to impound appropriated funds, but must expend them. If the debt ceiling isn’t raised – won’t have the cash to do so unless he issues the trillion-dollar coins. And if that’s the only way to carry out his Constitutional duties, then he is not just allowed, but required, to do precisely that.

            Michael Froomkin, Laurie Silvers and Mitchell Rubenstein Distinguished Professor of Law, University of Miami, commenting in Brad DeLong's blog appears to agree. that coinage is aq legal way to circumvent the Debt Ceiling.

      •  Inflation (0+ / 0-)

        wouldn't hurt right now anyway.

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