Saturday, November 23, 2013

Debt Ceiling 201

This is the follow-up on the short post about why reaching the debt ceiling wasn't the rosy picture painted by some Tea Party wishful thinkers. I said that there was 1) no legal framework for prioritizing government payments (and thereby avoiding default on debt service) and 2) no practical mechanism to do it at this time.

No Legal Framework

The US government hasn't intentionally defaulted since FDR's presidency. Even then, that was a planned default, which is not what the Tea Partyers want. They want prioritized payments of US obligations to avoid default and do the least harm to the country.

No such prioritization has been established, so this is new territory. There aren't laws laying out how to do this. In the absence of such laws, who will decide what the priority should be? That's a huge constitutional question. Does the president unilaterally decide since he's the executive? Does the Congress decide? Can Congress impeach the president for making unilateral decisions? Can Congress impeach the president for refusing to prioritize payments? Will the Tea Partyers who want the prioritization of payments guarantee that they won't call for Obama's impeachment over the decisions he makes in this regard? I sure haven't heard anyone making such a promise.

Will Congress quickly pass the legal framework required? HAHAHAHAHA.

No Practical Mechanism

All the accounting programs, sign-offs, clearances, etc. that it takes for the government to send money to the correct people are probably much more complex than anyone's monthly disbursements. How readily can that all be changed to send out prioritized payments? Not readily, I'd bet. There would need to be an entire design/implementation cycle with the requisite planning, programming, testing, bug-fixing, and retesting.

Political Motivation (1)

Now that the practical considerations are out of the way, let's consider the motivations of the parties regarding prioritized payments. For Tea Partyers, the motivation is to prevent default, incur no new debt, and pay the most important government expenses. However, there isn't strong agreement on what the most important government expenses are. That's one reason not to leave the decision-making unilaterally to the president, just in case he's a scum-sucking, pinko, socialist bastard.

So those who support prioritized payments will probably also want a big say in determining the priorities. But again, there is no legal framework at this time for that. Congress would need to follow the usual law-making procedures--but the chance that the House, Senate, and president will pass one prioritization plan is so close to zero, it is effectively zero. So there will be no prioritization in established law.

I've never heard any proponent of prioritization discuss this wrinkle in their plan. I'm guessing that they gloss over that impediment, and imagine that their priorities are so obvious that they'll be followed. Then, reaching the debt ceiling is equivalent to immediately going to a balanced budget. By refusing to raise the debt ceiling, they achieve one of their biggest policy goals. And they didn't even have to pass a balanced budget law or amendment. Hooray! No wonder they gloss over so many details.

So if priorities could be established, Tea Partyers have another way to achieve a major goal--just don't ever increase the debt ceiling. That's a lot of added leverage for them in any budget negotiation.

Political Motivation (2)

What is the political motivation of the Democrats, including the president? They aren't for an immediate balancing of the budget. They aren't for establishing spending priorities at a much lower budget target point. They don't want the Tea Party to have greater leverage in budget talks. Their motivation is to make the debt ceiling as painful as possible, so that the GOP will always back down.

In this, they have history on their side because the debt ceiling has always been increased. Neither Congress nor the president has ever stepped over that line, because it would be too catastrophic a move to make. The US government would go into default, which would destabilize the world economy and probably cause a worldwide depression.

The Democrats have no reason to make the debt ceiling less scary. That hands leverage to those who want severe budget cuts, which are not the Dems. So there's no way that the Dems will pass any legislation that prioritizes payments in the event of reaching the debt ceiling.

Wonderland Scenario

Maybe the next time the GOP controls the House, Senate, and presidency, they can pass the legislation and build the accounting mechanisms to implement prioritized payments. That will be somewhere on their list of must-have legislation including the repeal of Obamacare, rolling back regulation, closing the EPA, block-granting Medicaid or just getting rid of it, outlawing abortion, and ushering in the permanent GOP majority.

Maybe, like Rip Van Winkle, I'll go to sleep for two decades, and then wake up to a US where all this has happened. Somehow, I doubt it, but we'll see. Nighty-night!

Come on, it's simple.


Dangerous said...

"Maybe the next time the GOP controls the House, Senate, and presidency, they can pass the legislation and build the accounting mechanisms to implement prioritized payments."

Perhaps, but it will be for when the Dems are back in charge, not when the GOP calls the shots. As has happened every time before, the debt and deficits will matter little when they have ownership of them. Tax cuts will come first, last and always, no matter their impact on the budget deficit. They will only cut where it is politically viable (i.e., with solidly Dem constituencies they have outnumbered), but don't expect Social Security or Medicare cuts they would own since they know they would lose votes as a result.

The GOP is after support for the poor, particularly healthcare and food stamps. They will spend 100 times more for prisons and the military than spend one more dime on the safety net. It's good politics for them -- the swing constituency is the suburbs where those programs mean nothing but money out of pocket.

Consider: If debt and deficits matter so much to Republicans, why did they explore with nary a shrug under Reagan and Bush II?

Rarely sincerely said...


"The GOP is after support for the poor, particularly healthcare and food stamps. They will spend 100 times more for prisons and the military than spend one more dime on the safety net. It's good politics for them "

I am not going to argue if this is true or not but there is more depth to the conservative argument then you are allowing. If you look specifically at the values conservatives say they hold you can find alternative explanations. Any National program that overtakes states rights but is not outlined in the constitution will interfere with the federalist conservative values. Pick an issue that you think conservatives have wrong and are being stupid/evil about and I can try to show you what I mean on your terms.

I think saying that the GOP is opposing Obama's ideas just to win is a very narrow approach. They simply do not have the same values that you do.

someone I follow posted this, and I think he is correct

"To me the left/right debate, when done correctly is a debate about whether freedom is a higher value than equity. It doesn't all get down to that but most of it does. There's no one answer to that question but conservatives will more often answer yes and liberals will more often answer no. As a result, conservative bad outcomes are usually generated by free people making bad choices. Liberal bad outcomes are usually generated by government making bad choices. I prefer the former because the degree of bad is generally much lower."

ModeratePoli said...

@rs, it's the familiar framing device. Conservatives, and particularly libertarians, love to use 'freedom' and 'liberty.' It certainly works for them, in the abstract. The actual nuts and bolts are a lot harder to sell. If 'freedom' means an end to all sorts of redistributive policies such as: public elementary and secondary education, Social Security, Medicare, Medicaid or most healthcare for the poor, unemployment insurance, SSI--it seems to me that generations of Americans have decided for a little less 'freedom' and more safety net.

Only the hardcore want to eliminate those programs--the kind that booed the uninsured crash victim question at the GOP primary debates, for example.

Certainly the liberal do-gooders overreached with social programs, but partial rollback, which I think is the desirable option favored by most, is not at all like giving the responsibility "back" to the states. The states did a crap job or none at all, and the people wanted the feds to step up. And they got that.

That looks like democracy to me. I'm not worried about going back to the strict interpretation of the constitutional limits because people don't want it.