This is so much more than an economic problem. With the looming debt limit crisis we are facing a Constitutional problem that we have not had since the civil war. It is a consitutional problem in that the system of checks and balances between the three branches of government, with Congress being in two parts, has for the first time been turned on its head.
We have one part of the three branches that has every intention of destroying our not only the nation's economy, but because ours is the bedrock of the global system, the entire world's. Even if there is a last minute compromize, which I seriously doubt, the rest of the world now realizes that one elecition, where the peoplel of America are destress by an economic downturn could lead to the elimination of foundational principles that have made the American dollar the universal currency.
This is a Democratic Party blog by definition, so the pressure is to do exactly what has contributed to destroying our system, giving no credence at all to the other party. To do this one has to ignore history, that in the absence of Democratic support we could never have passed the Iraq War Resolution, and we would have had an extra trillion (maybe two) that would have been in the coffers. And to the best of my knowledge it was under a Democratic President that the decision was made to bail out Citicorp and AIG, to reward those who turned these institutions into casinos, and to use tax payer money to make sure that even when they lost-egresiously so, that the taxpayers would bail them out. Ms Blair of the FDIC was against it, but Bernanke and Geither (both men selected by the current president) was for it, so she lost.
Where was President Obama, the chief executive elected by the people of the United States?
If we do not have the debt limit increased everyone in government will be blamed-in proportion to their percieved power. This makes President Obama the one who will ultimately pay the highest price. Do not get the wrong message from the last government shut down lead by Newt Gingrich. This initially was recieved with most of the blaim going to to President Clinton. Only after the story of Gingrich's person pique for not being invited into the prime seats of Air Force One did public sentiment change against the Republican Congress.
What has been called the Unilateral Option, or the 14th Amendment method, has been endorsed by President Clinton and a recent OpEd in the N.Y. Times, written by the previous asst soliciter general under Reagan. This could have worked, but it may be too late, as President Obama's very servile "negotiations" with Republicans have given the process, better seen as Hostage Takiing, legitimacy.
And if this unilateral method had been tried, the Supreme Court, although not having constitutional authority, would have overriden the President. This would have triggered an Andrew Jackson moment, when he refused to accept an order of the Supreme Court. If this occurred we would have torn the fabric of our constitutional order. Individual would have had to decide whether to follow the Court or the President. Geithner would have been the subject of an injunction not to follow the instructions of the President on payment of obligations. Would he risk breaking a court order. I fear not. So, we have no options left that I can see.
This just may be the best week that we will have in a long long time.