The USA Defaults - on Its Constitution (Again)
Throughout these last few weeks, everyone involved in the negotiations on funding the government and the debt ceiling should have been repeating something over and over again - to the point that the American people should be sick of hearing it.
It is Section 4 of the 14th Amendment to our Constitution of our great nation. (I choose still to use the word "great" because I don't identify this nation with its government.)
"The validity of the public debt of the United States, authorized by law ... shall not be questioned."
Compare and contrast with the President's comment of a week ago: "As reckless as a government shutdown is ... an economic shutdown that results from default would be dramatically worse" or the opening of his address to the nation a couple of days later, in which he talks of meeting "Republicans and Democrats from both Houses of Congress in an effort to ... remove the dangers of default from our economy."
Let's be clear.
If anyone who has sworn an oath of office to uphold the Constitution would threaten any default by the USA when the USA has a) the revenue to meet the interest obligations on its debt and b) (for shame) the ability of a sovereign issuer of its own currency to pay all its debts at any time c) seen this coming for ages, and therefore had plenty of time to prepare for it, then he is doing little other than threatening willfully to violate his oath.
The credit of the USA should never have been in question and never had to be. As all of this nonsense of the last couple of weeks has been going on, everyone involved should have been repeating that part of the 14th amendment out loud, reiterating that all debts would be paid first out of government revenue simply because that is the supreme Law of the land - and because, therefore, their integrity as takers of the oath to uphold the Constitution would not allow them to threaten impeachable behavior for political ends - or, for that matter, for any ends whatsoever. Their priority would then have been to put in place the practical mechanisms for ensuring that would be done.
As a writer and speaker who loves my country and therefore the Constitution (or should that be the other way around?), I spend plenty of hours spreading the dangers of the monarchy that the American Presidency has become, as it deploys and expands power through Executive Orders. But there is just about one kind of executive order that I believe my patriotism would compel me to accept: that being an order that simply restates a part of the Constitution verbatim and the President's intention to defend it. Had President Obama told us he would be prepared to issue an executive order that reiterates the 14th Amendment to ensure that the Constitution would be followed throughout this "crisis", then the last two weeks would have been very different.
Not that the President has displayed any less leadership than anyone else on or around Capitol Hill.
Section 5 of the 14th Amendment states simply,
"The Congress shall have power to enforce, by appropriate legislation, the provisions of this article".
And that is what it should do. In particular, only Congress has the power to undo the two laws without which there would be no debt-ceiling crisis. They are the Second Liberty Bond Act of 1917 that establishes the debt ceiling, and the Federal Reserve Act that (broadly speaking) prohibits the Fed from lending directly to the Treasury.
If Members of Congress find themselves negotiating in a crisis that arises from legislation that cannot be violated without violating the Constitution, then their first order of business, should they take their oath seriously, must be to revoke, repeal or suspend the offending laws, or to pass further law that makes the "offending laws" benign. To put (or leave) the President in a position where he would have to violate law to follow the Constitution is to be no better than the President who would shrug off the same Constitution.
Rather than do the right thing by making any serious attempt to deal with the legislation that is the sine qua non of the debt-ceiling crisis - a predictable and repeating crisis that is becoming increasingly like a kabuki theater version of Ground Hog Day - House Republicans not only made no effort to attack the offending legislation but happily exploited it in an apparent attempt to extract ever-decreasing party-line concessions that concerned initially almost everything in their party platform, later just a few bits of the Affordable Care Act, and finally next to nothing at all.
Any credibility that this strategy didn't remove from the GOP was pretty much lost when it chose cynical parliamentary maneuvering in the form of covert rule-changes to help them get as much political mileage out of the whole mess as possible. The ultimate result was nothing worth speaking of - except the concentration (yet again) of even more power in the hands of fewer people in the House. Nice job, guys.
Lest anyone think that my beef is just with the Republicans, it isn't. The problem that precedes all of the foregoing is actual spending , without which there can be no debt, without which there can be no "debt-ceiling crisis". The Democrats have been in recent times even more culpable than the Republicans in legislating spending above the standing debt limit. In March, the Democratically controlled Senate rejected the $3.5T Republican budget, which at least made some (albeit too little) attempt to rein in deficits, to pass $3.7T of spending, knowing full well that it was spending money that on current law (with the debt-ceiling where it was), America could not cover by borrowing, even though it was not covered by revenue. To say that spendthrift legislators were counting on the rise of the debt ceiling is, rather, to make my point for me, for if the debt limit means anything at all, it is as a constraint on the spending of money in the first place. If a Member of the House or Senator votes for spending while knowing that it will eventually trigger a(nother) debt-ceiling crisis a few months down the line, he rather loses any moral basis for accusing anyone who voted against that spending for triggering the crisis when it finally happens.
The legislature knows the cause of these repeated debt-ceiling debacles - because it created it. The predictable, repeating crisis, which does nothing to help the American people, can only be sustained if our leaders see it as serving them in an important way - which, of course, it does. The notion that there is such a thing as a debt-ceiling provides a fig leaf for a fiat monetary system that allows government to spend without constraint and without taxpayers' feeling the immediate economic costs of that public spending, which instead, are felt over time through inflation. (In summary: politicians benefit now; people suffer later.) In such a system, the donkeys gain the political benefit of appearing to help their Constituents by social and economic engineering without economic constraint, while permitting the elephants to gain the political benefit of doing exactly the same thing when it suits them, or (as now) appearing to be upset when the donkeys overdo it.
Truly, it is a pox on both their houses.
History shows that the so-called "debt ceiling" does not constrain our government at all. Only the Constitution and the integrity of those who swear to uphold it can do that. If our government spent in pursuit of only what it is authorized to do, then the debt-ceiling would take care of itself, because American government spending would be nowhere near it. (And, as a bonus, we would still have due process, privacy, and the respect of other nations who would not see us as aggressors - because violations of all of those things are expensive.)
Put simply, public spending or the size of government is the long-term issue from which the debt-crisis is - ironically and conveniently for career politicians of both parties - the short-term distraction.
Clearly, the most serious debt in Washington has rather less to do with Treasury bills and social security checks than with the accumulated deficit of commitment of our leaders to their oath. No need to panic, though: we are not close to a ceiling on that. Washington D.C. defaulted on it years ago.