And here we are again! It started in 2010. The Bush tax cuts were about to expire. There was leverage to negotiate a debt ceiling raise or to just let them expire. How do I know there was leverage? I know Republicans like tax cuts for the rich, and there was a deal for the purpose of extending them with Republican votes. It passed with those Republican votes, which led to this whole thing because there was no debt ceiling raise included.
Maybe others are unaware of this? I don't know. It doesn't matter though; the uninformed shouldn't dictate fantasy as reality in a reality based community. This is the actual reality and why we are worried about a global financial calamity with regard to a possible political default on the public debt, which is a choice and otherwise impossible for a sovereign currency issuer.
Obama on the Debt Limit — December 2010
Q Mr. President, thank you. How do these negotiations affect negotiations or talks with Republicans about raising the debt limit? Because it would seem that they have a significant amount of leverage over the White House now, going in. Was there ever any attempt by the White House to include raising the debt limit as a part of this package?
THE PRESIDENT: When you say it would seem they’ll have a significant amount of leverage over the White House, what do you mean?
Q Just in the sense that they’ll say essentially we’re not going to raise the — we’re not going to agree to it unless the White House is able to or willing to agree to significant spending cuts across the board that probably go deeper and further than what you’re willing to do. I mean, what leverage would you have –
THE PRESIDENT: Look, here’s my expectation — and I’ll take John Boehner at his word — that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen. And so I think that there will be significant discussions about the debt limit vote. That’s something that nobody ever likes to vote on. But once John Boehner is sworn in as Speaker, then he’s going to have responsibilities to govern. You can’t just stand on the sidelines and be a bomb thrower.
You know, we on the left knew what this would lead to. You don't trust John Boehner with the full faith in credit of the United States unless one is completely clueless or an economic nihilist. The resulting signs we are starting to see of a financial panic in response to the prospects of a default
on top of the ongoing depression, the jobs crisis, the continuing climate and ecological crisis all converging into one huge Epochal crisis,
point to a special kind of disdain for the public that all our elected leaders have for us. I mean, we have enough problems without adding to them through a self induced global financial then economic crisis caused by the President's pursuit of a deficit terrorist grand bargain whether through incompetence or outright corruption.
And so we come to an impasse; this is actually what happened and how; this is the actual reality. Some people can't deal with actual reality. When confronted with it, some people exhibit a sort of Pavlovian type of response one gets when these sourced facts are pointed out to support this conclusion. It goes something like, "It's all Congress! The President is not a dictator! It's all Republicans fault! Sellout deals are the only way unemployment insurance has EVER been extended!" There are many problems with these claims. For one, people in the know, know for a fact they aren't true.
They know Republicans caved on unemployment insurance before without Democrats having 60 votes and without some sellout politically damaging deal. They know the President was involved in this particular politically damaging sellout deal, because legislative deals from the White House with Congress are common, specifically this White House and this Congress. After all, the only real budget that even passed, The Budget Control Act, came from a deal to end the first round of this continuing debt ceiling debacle I predicted. The rest were just austerity stop gaps from similar deals.
The Budget Control Act funded the government from 2011 until the fiscal cliff deal at the end of December 2012 while enacting a decade of austerity budget caps from 2013 to 2023 in addition to the sequester. So back to the point: the President was asked about whether he was worried about John Boehner using the debt ceiling after a debt ceiling raise was not included the tax deal in 2010. For those that can read the transcript for what the real words in it actually says, the President actually said he trusted John Boehner's word he wouldn't use the full faith and credit of the United States and the debt ceiling to extract whatever Republicans in the House wanted in the future.
That's why we are in this debacle. That's what led to the super austerity within the Budget Control Act which came from the Simpson Bowles commission, in which, many in denial screeched hysterically about how it was dead. Oops, it's recommendations are now law, because of this crisis to crisis government Obama created to enact his grand bargain little by little to teach us New Deal extremists a lesson. You see, like I said, the Broken Hastert rule for the fiscal cliff deal didn't mean anything. It was John Boehner covering his ass over the denying of aid to victims of hurricane Sandy. Nothing more.
It's past time everyone realized that the debt ceiling will be continually used, as something to bargain with to enact a grand bargain piece by piece just like I told you it would be, once that precedent was established by the President in the 2010 tax deal. If the rumors are true about another short term increase of the debt ceiling Republicans plan to offer Obama, there will surely be some austerity and safety net cuts offered as well, before we go through this again and again, like I predicted we would.
As soon as the debt ceiling was a hostage or toy to be negotiated with, it would stay that way as I predicted. You can't blame this all on Republicans and the tea party. Republicans have been crazy for awhile ever since the 90s when they also shut the government down. However, despite my many problems with his administration, Bill Clinton at least knew how to deal with debt ceiling threats and not to give the debt ceiling away as a hostage. So no, this isn't some new unprecedented thing, it's a failure of the Obama administration.
Anyone that denied this back then and still does, will have a lot of pain and suffering on their hands by what they enabled (like people who made excuses for the White House's sequester). That is, unless they express regret whether this goes through or if pieces of the New Deal or Great Society are put on the chopping block to avert it until we go through this again in 3 months or not. The real sad thing is that whenever I point out these facts and criticize the President for turning the debt ceiling into a plaything in order to shore up the legacy of the grand bargain he wants, some people get angry.
Within them resides such passion in defense of a 1% politician living in the best public housing in America! Just not when it comes to the 99% he's supposed to be representing being stomped in these debt ceiling, deficit terrorist games. I guess it's because these limousine liberals in their third way ivory tower don't have to wait even an hour for a meal to come on wheels to feed them, but never arrives. Seniors do and it's drastically affecting their lives thanks to the sequester this White House wrote. But limousine liberals don't care, because they "got theirs."
They say, "How dare you! The President was forced to do this!" However, if one just does a little research, they find out this isn't true at all. The same callous disregard for everyone suffering from the sequester that was written by the White House involves the same callous disregard with how dangerous debt ceiling games in support of grand bargains are. This is what led to this continuing debacle we now go through every 3 months or so up to now. This was extremely easy to predict, as I have, among other posters here.
So I have to think there's something nefarious going on. The President is not this stupid, but he probably is this corrupt, though I'm sure he probably didn't see the Obamacare government shutdown backlash coming. He should have. Plenty of people explained to him that anything is up for grabs in the Shock Doctrine crisis to crisis government he and Speaker Boehner created together.
Conspiracy of Two
But the leaders, meanwhile, were acting like leaders. Only a President, elected to serve all the people, can do certain things — including reach out and lift up a friend or rival into the heady temple of Executive power. "I'm the President of the United States," Obama told Boehner. "You're the Speaker of the House. We're the two most responsible leaders right now." And so they began to talk about the truly epic possibility of using the threat, the genuine danger of default, to freeze out their respective extremists and make the kind of historic deal that no one really thought possible anymore — bigger than when Reagan and Tip O'Neill overhauled the tax code in 1986 or when Bill Clinton and Newt Gingrich passed welfare reform a decade later. It would include deeper cuts in spending, the elimination of all kinds of tax loopholes and lower income tax rates for all. "Come on, you and I," Boehner admitted telling Obama. "Let's lock arms, and we'll jump out of the boat together."
After a round of golf at Andrews Air Force Base in mid-June, they retired to the clubhouse for drinks. Obama asked Boehner how they should get the deal done. They agreed to begin meeting together at the White House, alone, without aides. They would keep the talks private.
The first meeting came four days later, when Obama hosted Boehner on the Truman Balcony. They met again on July 3 on the President's Patio. The next day, as thousands of military families gathered on the South Lawn to watch the fireworks, Obama slipped away to call Boehner. They were now talking once a day or once every two days. When they spoke again on July 6, they were aiming for a $4.5 trillion down payment on the debt — much bigger than either side was discussing in public. Democrats would have to accept hundreds of billions of dollars in cuts to cherished entitlement programs like Medicare; Republicans would agree to close gaping holes in the tax code; both sides would work together to pass a separate measure to flatten tax rates by the end of the year (a plan that meant that taxes on the wealthiest Americans would go up). Obama was willing to consider slowing the rate of cost-of-living increases for Social Security as well. Both parties would have to swallow hard, but it was the grand compromise that had eluded Washington for two decades.
There will be some that are more upset that all of this is being pointed out than the effect of all of this which led up what's actually happening and the danger to peoples' lives and well being, now. To add insult to these injuries, there's a general lack of empathy and whole lot of "I got mine" out there in response to these factual observations similar to anyone who has trouble signing up for Obamacare we've seen recently. This is, of course, in addition to the proud, willful, unsourced ignorance that is unfortunately coddled by some moderators of some forums in the blog-o-sphere.
I don't know why denying these facts is allowed, as if the act of doing so is recognizing a legitimate counterpoint, because that's not what the effect is. The real effect is dumbing down anyone who might be reading the exchange and the site as a whole. Maybe allowing conflict brings more clicks, even if one side sources things and the other side is just allowed to spout nonsense like climate change deniers do on cable news? I don't know. I do know there's not always two sides to every argument and that facts and sources matter like the posters who use them. That's how we know who deserves to be taken seriously and who doesn't.
I remind people of this, because it's important that we not be like the tea party and ignore facts, like how they are ignoring the damage of a political default. Factually, this is a government that has been run on austerity deals enacting austerity stop gaps and tax deals causing the debt ceiling, and leading to super austerity BCA budgets negotiated between the White House and the House. I went through this with links and sources as a reminder in case people want to make up their own facts, which they cannot without a sourced counter thesis.
Sadly, we have reached the point where many posters, on what is called the progressive blog-o-sphere, are no different than the tea party. Certain facts get certain people claiming to be liberal or progressive so emotionally riled up, that then the kind of behavior exhibited through their online commentary is then indistinguishable from the kind of attacks one would see at a tea party rally. This visceral reaction to sources and recent legislative history is a rather strange phenomenon, indeed. After all, one can't forget the importance of a sourced antithesis in their hysterical attacks on this proven thesis as to how this all started.
So yes, the President and Speaker Boehner are both responsible for this mess as well as everyone who made excuses for them; on MSNBC and the so called progressive blog-o-sphere. That being said, I'm not all about blame, I know there are solutions out there. For instance, High Value Platinum Coin Seigniorage that I and many others have written about. This is still very much what I support, despite the embarrassing pseudo legal theories from the village and their malcontents. These are in addition to the embarrassing theories of hyper inflation that economic idiots spout off thinking the coin would be released into the economy without appropriations from Congress.
This ignores the 7.7 trillion pumped into our banking reserve system from the bailouts that didn't chase goods or caused inflation either because the dynamics aren't there for that to happen. So basically, to have the President and his Goldman Sachs Treasury scoff at PCS and refuse to even consider it even though it's perfectly legal and feasible, is a slap in the face to the American people. It's also a slap in the face to anyone who understands public debt and money like my favorite economist James K. Galbraith who recently endorsed PCS. This administration had a huge hand in created this mess and refuse to acknowledged that they destroyed the credibility of the normal way of going about debt ceiling operations. This is petty, elitist, and childish like the elementary school defenses of it.
I prefer minting a high value 60 trillion platinum coin, because it starts us off on a path where we don't provide free liquidity to the FIRE sector so we don't needlessly borrow and pay interest on the same money we issue, while taking away Congress's power to use every Shock Doctrine debt ceiling event to enact more austerity over what was once routine proceedings. There are a real number of other options as well: We can use no face value consol bonds to get around the debt ceiling law as BruceMcF has outlined or have Obama's Treasury invoke the 14th amendment, raise the debt ceiling, and make the courts stop him as former Democratic President Bill Clinton said he would have done.
There better be some consideration for one of these proposals. The American people are tired of this shit. Mr. President, you can't put us all in danger and then look away while spouting off as if you're someone with credibility on this issue. You have no credibility. The damage from all of this is what Obama is going to be remembered for whether it's default or completely dismantling the New Deal to get out of this self immolation called a default. Only the privileged can blithely dismiss this or real solutions to this problem. Their failure or corruption means we have to change the way things are done.
This President and Congress have failed, and now the President thinks he and his Treasury can preserve the old debt ceiling gimmick way of doing things by holding fast to it their claims about not negotiating which have come too little too late. That's complete crap. I don't know what kind of legacy or power he thinks Bob Dole's old 1994 health plan has, but it won't be remembered at all if there is a default. Specifically since it was delayed for dumbass deficit reduction and not fully implemented yet. It's time to get real and act like a public servant instead of a blind ideologue.
Mr. President, if you really want to apologize to the American people as you claimed recently with regard to this ongoing crisis to crisis government I predicted would and is happening because of you and Speaker Boehner, then at least pretend that you want to defend the nation from this economic insurrection. Tell us that if Congress won't act, you will, or I don't want to hear anything from you.
And I don't want to hear any hysterical unsourced excuses for it from anyone else either. This is a huge continuing crisis to crisis mess, and it sure as hell ain't 11th dimensional chess!
Cross posted at Voices on the Square, The Stars Hollow Gazette, and Corrente