This diary is devoted to solving the current "crisis" of the "debt limit" within current constitutional and legal boundaries so as to NOT require any action on the part of the totally dysfunctional congress. It is EXTREMELY important to understand that the budget process controls the spending of the United States government and the "debt limit" is an irrelevant piece of legality that simply promotes political posturing and brinkmanship. Government (all the government agencies as controlled by the executive branch of government) can spend no more and no less than what has been appropriated in the budget. The budget is the law. Of late, there has been some noise made over Treasury seignorage as a way to avoid the debt limit problem. The people proposing such seignorage get carried away and start talking about Modern Money Theory and this causes the less alert to start screeching about the inflation monster and Zimbabwe and the Weiner Republic and all sorts of other boogerman stories.
The proposal for Treasury seignorage to avoid the "debt limit" brinkmanship is actually much more pedestrian, sane, and sedate.
The basic plan is to avoid the "debt limit" law and that is ALL. The Congress is still in control because the congress controls the budget. If there is no budget, the government shuts down. We all know this because we have been through it several times. The last was earlier this year. When we look at the "debt limit crises" we see arguments over the budget and we see brinkmanship being used by the House Republicans and by the president to extract concessions from the ideologues on the opposite sides of the right/left divide. Only the Democrats need this additional opportunity for brinkmanship. The Republicans control the House and can bring the nation to its knees quite easily by refusing to spend any money on anything other than war and religion and fascism. The Republicans GAVE this "debt limit" opportunity to the president by tying the budget to the "debt ceiling" and he is going to use it. The resolution of the debt limit problem using Treasury seignorage or actions of the federal reserve or both is a means by which the nation can operate in the way the government was designed to operate regardless of the (maybe unconstitutional) "debt limit" law. A simple return to government by the budget process. If the austerity nuts want austerity then they will have to spell it out and be held accountable for their particular immediate cuts in the next election.
There is something to be said about addressing the longer term problems that the deficits MAY cause. Consider that the fat lady never sings and that the Republicans, due to their attack on Social Security and Medicare may well be thrown out of the House and into the street come 2012. If the Democrats are on record undeniably as trying to protect social insurance (the proper name for what the fascists call "entitlements"), and there are no tax adjustments. then the Republicans will be the force behind a double dip recession and NOT Obama and the Democrats. Obama and the Democrats have tried about every trick in the book to keep from cutting spending in a time of economic weakness. They have offered up necessary sacrifices IN THE LONGER TERM to address the IMAGINARY debt problem. In the longer term we may/will find these sacrifices unnecessary. And at that point we can FIX the damned things.
What we CANNOT do is to allow the Republicans to sidestep the expiration of the Bush tax cuts by cranking up some "grand bargain" overhaul of the tax code. What is being openly discussed is yet another tax cut for the rich in the guise of "eliminating tax shelters". That same #%$^&(@ crap as with Reagan. It never changes. Freeze the taxes as they sit unless the Republicans are willing to simply do away with the most offensive shelters. Let the expiration of the cuts do its job. Adjustments to Social Security withholding are NOT an overhaul of the tax code. Any "grand scheme" adjustment to the tax code will be in lieu of Bush tax cut expirations. No Thanx.
Let the Republican House do their spending cuts and suffer the political consequences of them.