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Here's an exchange from last Friday's Chris Hayes “All In” MSNBC show among Chris, Robert Costa of the National Review, and Ezra Klein of The Washington Post's “Wonkblog.” In what follows I've slightly edited the MSNBC transcript to get rid of obvious verbal deviations but haven't corrected for punctuation.

Robert: i think ezra brought up a great point. you saw eric cantor trying to come up with this plan and that would allow conservatives, allow the right to have a vote on defunding, but not really attach it to the continuing resolution. the minute he brought this up, the conservatives they revolted. you have a republican leadership that wants to fund the government, but they don't have the votes.

Chris: you've got 233 house republicans. you need 218 to pass something and 33 republicans want to fully defund obama care. you had harry reid today saying about john boehner, i feel sorry for him. everyone's constantly looking at him saying he has essentially the worst job in washington. what is the way out of this box?

Robert: it's a great question. i think as much it's not a great way out of the box. what you see speaker boehner doing behind the scenes, don't have a shutdown on the government. he is using the 2011 model. he says i was able to get concessions in 2011. we'll fight for them in december. come with me. let's fight on the debt limit. i don't want to have a shutdown. it's not going to help you with your races in 2014.

Chris: the thing about that is, that's an even sick higher strategy.

Ezra Klein: this is terrifying that this is the argument. And the analogy I would use is this is like trading a bad flu for septic shock. it is the worst trade in the history of all trades you could imagine . . .

Then after further remarks from Ezra on the doomed strategy, a reference by Chris to game theory and games of chicken and a reinforcing comment by Robert Costa about the intransigence of the right wing and their hope of getting some concession from the Administration delaying some part of Obamacare, Chris asks Ezra if the Administration has a negotiating position “to throw the conservatives a bone?” And Ezra replies:

Ezra: no. the white house has complete religion on the debt ceiling. they believe not just about this negotiation, but about as a matter of presidential legacy. if they are the white house remembered for permitting the debt ceiling to become a routine matter of hostage taking in american politics, imagine you just think there's a 10% chance of any debt ceiling negotiation going on. it's not very big, but over ten years, it's going to go wrong. this white house does not want their legacy to be they set in motion the chain of events that led to america's role as an economic corner stone of the world being degraded. so they believe not just as matter of this negotiation, but all negotiations going forward. they need to break this habit now and that's why i am scared going into this. nobody believes we're likely to go over the debt ceiling, but if you look at the positions on the table now, the white house's we will not negotiate and boehner's, right now, the only thing that is there is the default.
I found this exchange really interesting because of Ezra Klein's framing of the situation, more or less reinforced, if not endorsed by Chris Hayes and Robert Costa. Ezra's terrified about the situation because he says there are only two positions “on the table,” namely, one side insisting on the ransom of a concession on Obamacare; while the other side is insisting on a “clean” debt limit increase bill. But, what does “on the table” mean? Does it mean only the positions that the Administration will publicly talk about, or perhaps only the positions that Ezra Klein and Chris Hayes, who know better, will cover? Both Ezra and Chris, and I suspect Robert Costa, as well, know very well that there are other options for the Administration besides giving in to the Republicans on Obamacare, or letting the Government default, shut down, or both.

They know this because there were at least four other options that were offered in the blogosphere and the news media during the 2011 debt limit crisis, three of them at CNN, that a well-informed White House might have been expected to know about. The four options were:

1. a selective default strategy by the Executive, prioritizing not paying for things that Congress needed, and perhaps not paying debt to the Fed when it falls due and working with the Fed to get the $1.6 Trillion in bonds that it was holding canceled;

2. an exploding option involving selling a 90-day option to the Fed for purchasing some Federal property for $ 2 Trillion. Then when Congress lifts the debt ceiling, the Treasury could buy back the option for one dollar, or the Fed could simply let the option expire;

3. using the authority of a 1996 law to mint proof platinum coins with arbitrary face values in the trillions of dollars to fill the Treasury General Account (TGA) with enough money to cease issuing debt instruments, and even enough to pay off the existing debt; and

4. using the authority of the 14th Amendment to keep issuing debt in defiance of the debt ceiling, while declaring that the debt ceiling legislation was unconstitutional because it violated the 14th Amendment in the context of Congressional appropriations passed after the debt ceiling mandating deficit spending.

Since, the summer of 2011, beowulf has offered yet a fifth option for getting around the debt ceiling by issuing consols. Consols are debt instruments that pay a fixed rate on interest in perpetuity, but never promise principal repayment at a maturity date.

The debt ceiling law is written in such a way that what counts against the ceiling is the principal repayment guaranteed by the instrument. Since consols provide no principal repayment, one can have unlimited consol issuance without increasing the debt-subject-to-the-limit.

The links above provide explanations of the various options, so I won't describe them in more detail than I've already done here. But I do want to note a couple of points.

First, why didn't Ezra and Chris remind everyone that there were many other options available to the Administration, apart from the one distasteful to the Administration and the other catastrophic to the economy? Were they so interested in the narrative of the terrifying game of chicken that they thought it best not to complicate matters by pointing out that there are other choices, less damaging for the economy, the Administration can make, and that these are not “on the table” only because they view the Administration as "the decider" of what is on the table?

What happened to the responsibility of the Press to put other choices on the table by acknowledging their existence and talking about them? Both Ezra and Chris have talked about some of these option, including platinum coin seigniorage before. Why not again now?

Why not point out that if the Administration does not negotiate with the Republicans, it can still prevent defaults and shutdowns due to the failure to raise the debt limit? Is it because the President prefers a crisis atmosphere, and perhaps even a shutdown to prepare the way for  the treasured “grand bargain” on entitlements he has been seeking since at least January 2010, when he appointed the beloved Bowles-Simpson Catfood Commission?

That there may be something to this, is suggested by two things happening this morning. In his address to the Business Roundtable, the President stated his willingness to negotiate with the Republicans on the budget on matters including entitlements, along with his unwillingness to negotiate with them on the debt ceiling. Since the issue of the budget and a government shutdown occurs first, at the end of this month, he is saying that he is willing to do a deal on the budget with entitlements on the table, if the Republicans agree to give him a clean debt limit increase bill.

Then later on MSNBC's “NOW with Alex Wagner” during a panel discussion also, including Alex Wagner, David Corn, and Ezra Klein again. After Ezra once again repeated his apocalypse now framing of the debt limit crisis, Sam Stein emphasized that Obama and the Administration continue to emphasize a willingness to negotiate over the budget.

Sam Stein: . . . you can see the contours of a deal that would upset both parties but palatable. something like in exchange for changes to social security payments, cpi, chained cpi. you could get a reprieve from sequestration. something like that along the lines where both parties are like, well, we don't really want to do it, but for the sake of making sure we pay our bills -- that's why the republicans keep going there. they know obama care defunding isn't going to happen, but there are other hostages.

Alex: why does president obama come to the table at all?

Ezra: i think that's the kind of deal they would come to the table on. they would consider that a deal over sequestration. i'm not sure if they would do that exact deal, but the two deals they won't do are the ones the republicans want. they don't want that sequestration deal. they want an obama care deal or a debt ceiling deal. they won't come to the table on those. . .

So, Sam Stein thinks the zombie “chained CPI” lives again, and Ezra agrees, but also thinks that the Republicans will not agree to that unless they get the deals they want. So, once again, the right wing, through their intransigence, may save us from President Obama's continuing insistence that seniors must suffer now, and future seniors must suffer as well, for the sake of an illusory long-term debt/insolvency problem that doesn't really exist, and that he can dispel at any moment by minting a $60 T coin.

Meanwhile, the four Versailles “progressives” on this panel laugh at the stupidity of the Republicans who are marching to the doom of their party, while refusing to call attention to the fact that this “funding” crisis, and the previous ones since 2010 were and are all kabuki, since the President could and still can dispel the illusion of possible insolvency any time he chooses to use the power Congress has given him to mint that coin. The big $60 T one; not just the timid TDC.

(Cross-posted from New Economic Perspectives.)

Originally posted to Money and Public Purpose on Wed Sep 18, 2013 at 06:49 PM PDT.

Also republished by Pushing back at the Grand Bargain.

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Comment Preferences

  •  Once again we are playing (6+ / 0-)

    the Congressional Game of Chicken. If it's not filibuster, it's shutting down the government.

    Here are the two videos from Hayes and Wagner.


    "Information is power. But like all power there are those who want to keep it for themselves" Aaron Swartz, 1986 - 2013
    TheStarsHollowGazette.com

    by TheMomCat on Wed Sep 18, 2013 at 07:00:21 PM PDT

  •  Couldn't Pelosi use a discharge petition? (12+ / 0-)

    Have all 200 Democrats sign one for a clean raise and see if there isn't 18 Republicans to sign it?  This would put incredible pressure on the supposed moderates who otherwise pretend to be held captive by the far right in their caucus.  Make the moderates own the tea party extortion completely as well.  

    Glenn Greenwald promotes far-right fringe extremist group The Oath Keepers - https://twitter.com/ggreenwald/statuses/377787818619064320

    by Jacoby Jonze on Wed Sep 18, 2013 at 07:09:22 PM PDT

  •  good analysis (1+ / 0-)
    Recommended by:
    Lujane

    It appears clear now that they will negotiate over the budget.

  •  I prefer a crisis atmosphere (2+ / 0-)
    Recommended by:
    SoCalSal, Greenfinches

    In a game of chicken, a good strategy is to throw your steering wheel out the window so that your opponent knows you are incapable of swerving.

    I think the correct political strategy from the perspective of the White House is to paint this as a stark choice between default and Republicans completely caving.  No negotiations and no platinum coins or other financial trickery.

    So, if people such as Ezra Klein and Chris Hayes are narrowing the options in the debate, then I think that is a good thing.

    •  It's never a good thing (1+ / 0-)
      Recommended by:
      psyched

      to lie to the public even if it is a lie of omission. But second, what sense does it make to risk crashing the world economy to break the Republicans' resistance, when you can avoid the debt ceiling problem by filling the public purse with $60 Trillion making the debt ceiling instantly a dead letter?

      Also, you can break their resistance with the coin too, since once it becomes apparent that we have plenty of money to cover all the deficit spending we will need to meet our many problems including reducing inequality, creating full employment, and much else, then very heavy pressure will build up on the Republicans to pass programs that cost money. The deficit/debt problem has been their fig leaf for meanness. Once it's gone, they'll either become more open, or they will suffer a severe defeat in 2014. Minting the coin, and following that with an expansive 2014 campaign is the way to take back the Government.

      •  Minting such a coin will accomplish ... (0+ / 0-)

        only one thing ... making an utter laughingstock out of Democrats.  It certainly will not result in the utopian solution to all problems apparently envisioned because creditors will NEVER accept Monopoly Money as payment any more than the diarist would accept it as payment for personal salary.  The fact that the idea is even still being floated is embarrassing.

        "Two things are infinite: the universe and human stupidity, and I am not sure about the universe." -- Albert Einstein

        by Neuroptimalian on Wed Sep 18, 2013 at 08:48:48 PM PDT

        [ Parent ]

        •  We accept monopoly money now (0+ / 0-)

          It's all been fiat since 1971. Don't you know that; or have you been asleep since then.

          In any case, why do you think it will make a laughing stock for Obama to have $60 T in the Treasury and never have to issue debt to deficit spend again? What's funny about that? No one will be laughing when he pays back $6.7 T the first week to the Fed and the Federal agencies holding debt.

          •  Uh huh, sure. (0+ / 0-)

            Minting a coin of any amount backed by nothing but air will not pay a single debt, especially a coin of such a ridiculously high amount.  How anyone can think otherwise is beyond perplexing.  Do you really think other countries would recognize such a thing as having any value whatsoever?  If so, give at least one example of when this was done successfully in the past.

            "Two things are infinite: the universe and human stupidity, and I am not sure about the universe." -- Albert Einstein

            by Neuroptimalian on Thu Sep 19, 2013 at 10:17:08 PM PDT

            [ Parent ]

            •  Lincoln's Greenbacks and (0+ / 0-)

              Money printing in the US during WW II. There were bonds sold. But only after we used money printing, and even after we began to sell bonds to drain off excess purchasing powers there wasn't a one-one match between bonds and deficit spending.

              Also, please note, I said that it's all been fiat since 1971. That means all our money has been backed by nothing other than thin air and the capacity of our economy to produce goods and services. In the United States that's all there is -- money backed by nothing. Grow-up! Face it! That's what we've got.

              Now, I think there are three main options about the debt. 1) Pay it off by running surpluses and ruin the economy because there will be no money for people to save and no excess of imports over exports for Americans to benefit from; 2) Pay it off with fiat money like PCs; or 3) let it ride, increasing somewhat each year and never worry about it. So, what is it you want to do?

              •  When our GDP reaches something ... (0+ / 0-)

                in the neighborhood of an EXTRA 60T, then we can talk about minting a coin with such a denomination.  

                "Two things are infinite: the universe and human stupidity, and I am not sure about the universe." -- Albert Einstein

                by Neuroptimalian on Fri Sep 20, 2013 at 10:24:02 AM PDT

                [ Parent ]

      •  It's not a lie (0+ / 0-)

        Dropping a nuclear bomb on Syria is technically an option.  Not mentioning it is not a lie of omission.  The platinum coin strikes me as a silly option that I want no part of.  Default would be preferable.  

        It might hurt in the short run, but if we can't do things the normal way then the system is irreparably broken and I would see crashing the world economy as the best way to scrap the Constitution and start building a less dysfunctional system.

        •  Just because (0+ / 0-)

          your intuition tells you it's a silly option; doesn't mean that journalists who know about it and who know it is legal shouldn't mention it, and should hype the cul de sac we're now in. It also doesn't mean it's a silly option. Why do you think it's silly? What are your reasons, or are you just labeling something you don't like?

          As for "the normal way of doing things," that's just plain conservative BS, and completely rigid, and mal-adaptive. The Constitution allows the minting of those coins. The 1996 law gives that authority to the Secretary of the Treasury.

          So, why shouldn't the President use a legal option to adapt to a difficult situation? FDR did that all the time. He innovated, and innovated, and innovated until things got better. There's no reason why Obama shouldn't be doing the same thing.

  •  Another Option that proves it's all Republicans (0+ / 0-)

    fault by the fact of not doing it and that is simply 40-50 Republican Representatives in The House join with Democrats in a Discharge Petition to force a Vote "For The GOOD of The Country" but since they won't then all Republicans choose "what's BAD for the Country" by refusing to do so.

  •  We're In a Box That Contains the Universe. (3+ / 0-)
    Recommended by:
    Mr Robert, chuckvw, Nailbanger

    There are no out of box solutions such as consols or supercoins. We don't have anything resembling that kind of leadership.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Wed Sep 18, 2013 at 07:47:22 PM PDT

  •  How about getting the economy & revenue... (4+ / 0-)
    Recommended by:
    Lujane, sebastianguy99, chuckvw, Kimbeaux

    ...to a point we don't have to worry about hostage taking anymore?

    Slight tax increases - particularly on stock market trades - makes debt ceiling limits a non starter.

    I am not so sure I disagree about the need for knocking down the debt ceiling.  What I am sure about is that the GOP continues to use it as a cudgel to whack Dem members of congress, and in fact, any president with a (D) as his sur-surname.

    UID: 14791 Join Date: 7/7/2004 Status: Lifetime member Mojo: nearly infinite Any questions?

    by Richard Cranium on Wed Sep 18, 2013 at 07:57:48 PM PDT

  •  Some of the "options" you mention are non (4+ / 0-)
    Recommended by:
    SoCalSal, Mr Robert, Lujane, arabian

    starters while others are highly dangerous.

    Ultimately though, Congress needs to take responsibility and end its dysfunction and we can't continue to have as our answer removing Congressional power and handing it to the President.

    •  Well, (1+ / 0-)
      Recommended by:
      psyched

      the 14th amendment thing doesn't work if it ever gets to Court. But what's dangerous about the $60 T platinum coin and the consols.

      •  Most of my comment was addressed to the 14th (0+ / 0-)

        Amendment issue.

        But nothing in 31 USC 3101, which codifies the debt limit suggests that consols would not count against it.  In fact the language suggests that consols would count.  (The restriction is on the face amount of obligations issued, which in the case of consols would be the principal.)

        31 USC 5112(k) gives unlimited discretion to the Treasury to issue platinum proof and bullion coins in any denomination.
        There are a couple of issues here:

          (i) the Fed may not want to cooperate here, but this is the lesser issue;

        (ii)  the House will likely sue to invalidate the law under the non-delegation doctrine.  Trying to ascertain whether they will win is beyond me, but they have a colorable case.  This can take a while to resolve and cause the financial markets to have some serious questions about  treasury borrowing in the interim.

        •  OK (0+ / 0-)

          First, the House alone can't get standing, because both Houses passed the coin law. This is based on precedent. In the 1970s Senator Phil Hart and Rep. Henry Reuss challenged the Constitutionality of the Federal Reserve Act on grounds that Congress did not have the authority to establish an Executive function independent of the Executive Branch of Government. Only three branches of Government and all that. The Court decided they didn't have standing because they didn't represent the whole Congress. The same would apply here, because the Senate will never agree to such a  suit.

          Second, the non-delegation doctrine will not work here. See this argument against John Carney's reference to this doctrine.

          Third, the Fed 's agreement isn't necessary to use the coin. See 12USC246:

          … wherever any power vested by this chapter in the Board of Governors of the Federal Reserve System or the Federal reserve agent appears to conflict with the powers of the Secretary of the Treasury, such powers shall be exercised subject to the supervision and control of the Secretary.
          Fourth, as for consols, these instruments don't obligate the government to repay their face value. That is why they would not count against the ceiling.

          Fifth, if the President were to mint a $60 T coin, then there would be no additional debt issued and old debt would paid off as it came due without further borrowing. So, the reaction of the financial markets to buying new debt issues would be irrelevant.

  •  you can only play chicken with the train for so (3+ / 0-)

    long before it finally nails you.

    -You want to change the system, run for office.

    by Deep Texan on Wed Sep 18, 2013 at 08:54:27 PM PDT

  •  I gleaned that (3+ / 0-)
    Recommended by:
    blueoasis, Kimbeaux, Letsgetitdone

    the Republicans want to keep the sequester and the rest of it. [foodstamps, farm bill, anything else they can use to hurt more people].

    I do think Obama wants CCPI very bad. I am not liking him for a while now.

  •  The debt ceiling is an artifice. It's like (3+ / 0-)
    Recommended by:
    Kimbeaux, psyched, Ian S

    pledging to yourself you'll only have one Martini a day.

    The thing about the Cons is because they have no self-control, they have to pretend that check was imposed by someone from outside. They have to pretend they have nothing to do with it.

    Maybe it's actually a faulty memory thing. Maybe, like the Piraha, the Cons have no memory of what they don't actually experience and no numeracy either. That would explain why they're bad with numbers.

  •  I actually think you're wrong (1+ / 0-)
    Recommended by:
    Kimbeaux

    The problem advocates of the platinum coin or the use of the 14th amendment have always missed is that the debt ceiling is not only about literally paying our debts, but raising the ceiling is also a signal to world markets that we are a stable democracy and deserve our status as the safest place to keep your money.

    If Obama unilaterally tried to pay of our debts he would solve the financial constraint imposed by the debt ceiling, but, with the expected legal fights, including impeachment, that would ensue, his actions would probably do damage to the US reputation as a stable place to keep your money and thus result in an increase in rates, downgrades etc... The best solution is a clean raising of the debt ceiling with no legality in question.

    •  Why would the markets (0+ / 0-)

      become concerned about the Treasury rapidly paying back most of the debt as it falls due and not issuing new debt?

      Why would they conclude from such a payback that the US was not a stable place to put their money?

      And finally, why do we need their money since the $60 T coin will prove the truth, namely that the Treasury can produce all the money we will ever need, regardless of whether foreign nations want to place their money here?

  •  I think the simplest and most salient (3+ / 0-)
    Recommended by:
    Kimbeaux, Ian S, psyched

    point to make to the public is that this whole discussion is about paying for expenses that have already previously been authorized by Congress.

    Raising the debt ceiling is a purely functionary role and shouldn't be subject to ANY debate because the debate and authorization has already occurred.

    The reason not passing the debt ceiling will trigger a "default" is because that is exactly what we are talking about - the US not paying bills it has already run up. The Republicans are for blowing up the US credit rating the same way an individual's would be blown up if they simply announced that they weren't paying their already existing debt anymore.

    Although the White House knuckled under to previous ransom/extortion demands from the Republicans, they are absolutely correct in saying , no, we're not going down that path in the future. The Republicans with this "de-funding" crap are essentially saying that as a country, we can never again believe that anything that was legally passed and funded by the Congress will really happen or exist.

    Is that the country we want to live in? If they don't want Obamacare, they need to elect a Republican President, maintain the House and gain control over the Senate and repeal the bill LEGALLY.

    “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

    by Phoebe Loosinhouse on Thu Sep 19, 2013 at 05:33:24 AM PDT

    •  I think most folks would understand... (1+ / 0-)
      Recommended by:
      psyched

      the stakes if the President and the Democrats used this framing. Although the whole debt ceiling, deficit and national debt are difficult for the average Joe to understand properly when we are discussing a sovereign government with a fiat currency, the individual equivalent of not raising the debt ceiling i.e. refusing to pay your debts can resonate with the people. Call out the Rethugs as the deadbeat advocates they truly are.

      Just another faggity fag socialist fuckstick homosinner!

      by Ian S on Thu Sep 19, 2013 at 09:54:03 AM PDT

      [ Parent ]

    •  All true (0+ / 0-)

      Phoebe, but also irrelevant. None of this will help us get out of the game of chicken we're in without losing valuable programs to the Republicans or cutting things that ought not to be cut. But minting the big coin will help. It will destroy the debt limit as a factor in politics, and it will also remove any excuse for austerity the Republicans may have. The coin won't stop them from refusing to pass a budget. But they won't be able to create a default, in doing that, and the Government shutdown that results from their refusal to pass a budget will bring them to the table quickly, but this time with no need to trade anything for raising the debt limit.

  •  Again, it's a case of so called serious people (1+ / 0-)
    Recommended by:
    Kimbeaux

    grossly underestimating just how many of our right wing brethren would actually prefer to see the complete dismantling of our current form of government.

    And just how many such persons are in both the financial wing of the GOP and its fundamentalist wing. Oh - and its racist wing, too.

    And that overlap membership in all three is not inevitable but is certainly present.

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