Note: This post was initiated yesterday but, alas, time ran out for the reasons stated below and I am finishing it off today. Life sure does get complicated sometimes!
First of all, this is a somewhat hurried post, not at all up to the high standard of my usual carefully thought out and elegantly phrased pronouncements - and I heard that! - because it's my wedding anniversary and a special outing is called for - or else! Second of all, I would like to express my thanks to Mr. Waka Waka Waka who is not actually the partner of 'Miss Whiplash', although it sounds like it, no, he is Malcolm Pollack, the proprietor of an excellent blog who pointed me in the direction of an interesting article at NRO by Kevin D. Williamson. Actually, Malcolm sums it up in the title of his post which alerted me- "If something cannot go on forever, it will stop". The "it" he and Mr. Williamson are concerned with is American national debt.
The current imbroglio going on in Washington is simply a side show to the far more serious problem looming over the horizon in the form of a refusal by the House to allow Obama to raise the debt ceiling. Under the law of the land, the president must collect the taxes authorised by Congress and must spend the receipts on measures passed by Congress and if the first is insufficient to pay for the second then he must borrow. But what happens if the Congress refuses to allow him to raise sufficient money. A legal summary was provided by Henry Aaron in the NYT:
If President Obama spends what the law orders him to spend and collects the
taxes Congress has authorized him to collect, then he must borrow more than
Congress has authorized him to borrow. If the debt ceiling is not raised, he
will have to violate one of these constitutional imperatives. Which should he
choose?
In 2011, when Congress last flirted with not raising the debt ceiling,
lawyers disagreed. Some argued that the president must honor the debt ceiling,
thereby violating budget laws. Others held that he must honor budget
legislation. No one argued that he should unilaterally raise taxes. Professors
Neil H. Buchanan and Michael C. Dorf, who parsed the arguments in the Columbia Law Review in 2012, concluded that all options were bad, but that disregarding the debt ceiling was least bad from a legal standpoint.
Whichever he chooses, Obama will be in breach of the law and some on the Right-wing of the GOP would welcome the opportunity to see him acting in an unconstitutional manner which they feel is his natural, dictatorial inclination. Here is David P. Goldman in PJ Media:
If Obama refuses to postpone the implementation of his health care plan in
return for an extension of the debt ceiling, Republicans should stand their
ground, and force the president to tear up the Constitution and assume
dictatorial powers. Americans don’t like that, and they will dislike it doubly
if Obama does so to protect a hated piece of legislation. It would clarify the
choices before the electorate and give conservative Republicans something to run
against.
Hmmmn, deep and dangerous waters, methinks! However, Mr. Williamson at NRO pooh-poohs the idea of an immediate calamity if the debt ceiling is not raised. He reckons that net American interest on debt is around 7% of revenue so there is plenty of money in the till to pay the Shylocks. The real problem, as he sees it, is in the future - and what could be a fairly near future if matters take even a slight turn for the worst:
In 2010 Moody’s, working from Congressional Budget Office projections described by one analyst as “wildly optimistic,” calculated that policies being pushed by the Obama administration could drive interest payments as high as 20 percent of federal revenue by 2020. The CBO’s polite-nod-to-reality “alternative fiscal scenario” projects that sustained deficits will mean that interest payments will cost us an additional 1 percent of GDP in ten short years. And those are far
from worst-case, Chicken Little scenarios. A return to the interest rates that
prevailed as recently as the 1980s would turn our federal budget upside-down
practically overnight, with interest expenses far outpacing tax revenue. When
debt-service costs exceed revenue, default is a practical inevitability. [My emphasis]
Of course, Mr. Williamson acknowledges that there are some ifs, buts and maybes to that scenario (although I reckon the cost of Obama's programmes should not be under-estimated) but he reminds his readers that if governments are dangerously irresponsible then it is the People (dread word!) who must take that responsibility:
If you think that our politics looks polarized this week, imagine what it’s
going to look like when the choices are a more or less identical partial
shutdown of the government plus suspending most or all Social Security
payments indefinitely, eliminating federal health-care benefits, and/or
defaulting on our bonds and enduring the subsequent economic chaos. There are
people in Congress, Senator Rand Paul among them, with serious if necessarily
imperfect plans to help get us from where we are to a safer and more sustainable
place, and the main obstacle to such reforms is not gridlock or special-interest
lobbying or any of the usual suspects in Washington: It is the willful ignorance of the American people, who refuse to demand that their elected representatives act like responsible adults who can count. [My emphasis]
And whilst we're on this subject of the People's responsibility, we might care to bear it mind 'over here' as the three rascals running our political parties begin to offer their bribes in the run up to the elction!
