The Looming Catastrophe

[N.E. Brigand]

And mine was in response to V's. I don't really want a constitutional crisis, and I do recognize the risk that if President Biden were to ignore a Supreme Court ruling, then his successors would feel freer to do the same. I am not at all convinced that such an outcome would be worse than the damage to the global economy that would result from the U.S. government defaulting on its debt. I do fear that President Biden may have been too slow to grasp that many House Republicans are willing to throw the world into chaos and hurt their own constituents simply to undermine his presidency, and thus that he didn't plan ahead for this in time. We shouldn't be in a position where we have to wonder whether or not the rich men who appear to own a number of Supreme Court justices will pressure them to do the right thing in order to save their wealth. But if they do the wrong thing, it will be they not Biden who precipitate a constitutional crisis.

It is also possible that President Biden actually thinks that cutting some government spending will have economic benefits and that (2) making a deal with Republicans will burnish his bipartisan credentials and help his 2024 reelection chances, and that's why he's let things come to this pass.

[N.E. Brigand]

Rep. Matt Gaetz, Republican of Florida, speaking today about the House negotiations with the White House over the debt ceiling:

"I think my conservative colleagues for the most part support Limit, Save, Grow; and they don't feel like we should negotiate with our hostage."

[N.E. Brigand]

Notable that in 2012, Mitch McConnell also used this metaphor, saying the debt ceiling is "a hostage worth ransoming."

They know they're terrorists. Usually they try to keep it quiet, but that's the truth.

[N.E. Brigand]

Matt Bruenig pushes back on recent arguments that President Biden cannot act unilaterally if Congress fails to do so with a summary of all the reasons that Biden is in fact legally required to do so when default is imminent. What would then happen?

If you keep the question abstract, you can just say something like "the Supreme Court will uphold the constitutionality of the debt limit" or something very reasonable-sounding like that. But this abstract gloss misunderstands the actual legal question that the Supreme Court would have to answer, which is not whether the debt limit is constitutional, but rather what must the president do when Congress mandates an amount of spending that exceeds the amount of authorized financing?"

Emphasis in the original. Bruenig feels that the Court would decline to take the case, and he thinks "the best way for Biden to deal with the debt limit is to sell zero-principal bonds." He gets into the weeds at the link.

[Voronwë the Faithful]

Have I or anyone else have posted about the lawsuit that was filed by The National Association of Government Employees (NAGE) against the Biden administration earlier this month to block it from enforcing the debt ceiling? I don't recall. I doubt will have much traction, but it is only actual effort that anyone has made that I am aware of to force Biden to follow the vague and ambiguous dictate of the 14th Amendment.

As this article in the New Republic notes, NAGE takes a different approach than most who have argued this point.

NAGE’s lawsuit spins some of these assumptions on their head. Most discussions of the debt ceiling depict it as a burden imposed upon the executive branch by Congress. The union argued that the debt ceiling actually amounts to a line-item veto for the president to wield at his own discretion. What appears to be a restriction based on the political dynamics of the situation is actually, according to the filing, an unconstitutional transfer of congressional power.

“Already near the debt limit, the last Congress adopted in the current fiscal year a budget that would require adding $1.5 trillion in debt without identifying or indicating any priority of payments once the limit on indebtedness was reached,” the lawsuit claimed. “Congress then failed to raise the debt ceiling or increase taxes and effectively offloaded the dirty work of repealing parts of the spending that Congress itself had just approved.”

The Supreme Court previously struck down a line-item veto in the 1998 case Clinton v. New York. Writing for the court, Justice John Paul Stevens noted that the Constitution had carefully and deliberately laid out the process by which bills become law. Deviations from that “finely wrought” structure are unconstitutional, especially when they result in “truncated versions” of the laws that were actually passed by Congress.

...

What makes the union’s lawsuit noteworthy is also how it avoids some of the procedural questions that might bedevil other debt ceiling lawsuits. The U.S. technically already hit the debt ceiling on January 19, as Yellen informed Congress at the time. The Treasury has avoided default thus far by relying on what it describes as “extraordinary measures,” or certain creative accounting maneuvers. In this case, Yellen told lawmakers that she would suspend the Treasury’s investment and reinvestment in various civil servant retirement funds that were authorized by law, to give the country some breathing room.

In the filing, the union argued that this amounted to a legal injury for its members. “The debt issuance suspension period continues in effect and continues to diminish the value of the assets of the benefit plans of the CSDRF and Thrift Savings Plans in which [NAGE’s] members are participants,” it claimed. “While [Yellen] is required by 5 U.S.C. 8348 to make good on these losses when the debt issuance suspension period ends, there is presently no end in sight or increase in the debt ceiling, and the retirement plans continue to lose value.”

As I say, I doubt that this will really end up making a difference, given the winding road that any litigation would need to take to reach the level of finality that would actually matter, but we'll see. It's another thing to keep an eye on.

[Voronwë the Faithful]

While it is unlikely that they will be able to get five GOP members to sign off on the discharge petition (which would pass a clean debt limit increase), it is possible that are some who would threaten to do so unless McCarthy negotiates a reasonable deal.

[Voronwë the Faithful]

Now, do they really have the votes?

[Voronwë the Faithful]

[Voronwë the Faithful]

And, right on cue.

[RoseMorninStar]

Biden should never have said he would take the 14th off the table.

[River]

If this deal collapses the WH might feel at liberty to rethink its position. Or not. I have no idea what anyone in the Biden Admin is thinking, but I do know that negotiations can be an elaborate and theatrical dance. If the current plan falls apart, the dance begins again, to a different tune.

[N.E. Brigand]

If this deal collapses the WH might feel at liberty to rethink its position. Or not. I have no idea what anyone in the Biden Admin is thinking, but I do know that negotiations can be an elaborate and theatrical dance. If the current plan falls apart, the dance begins again, to a different tune.

Unfortunately, there's not much time left before...

[Voronwë the Faithful]

If the deal collapses, my guess is that the backup plan is to try to get five GOP members to sign off on the discharge petition.

[N.E. Brigand]

Lots of Republicans are saying they hate it.

The center-left writer Matt Yglesias had some interesting thoughts last night about the deal, including this:

I don't think it's a coincidence that this process has felt much more humiliating to the White House than the Obama Era equivalent and yet the substantive outcome is a lot better. Biden frustrated a lot of his allies on the Hill over the past month by not having more of a communications strategy, but the best insight the president has brought to all his bipartisan legislating is that the less said the better in order to negotiate in private around real demands rather than in public around positions. Case in point, part of this deal is a modest trim to Democrats' plans to fund the tax police. That's borderline absurd -- of all the spending to cut, why one that increases the deficit? But the reason is Republicans love rich tax cheats! You could call them out on their hypocrisy or you could give them a win.

Yglesias argues that because Republicans control the House, Democrats were going to have to take these hits later anyway, but he does think President Biden made a mistake in taking the 14th Amendment off the table early in the process, and that Democrats should have tried to remove the debt ceiling entirely when Donald Trump was president.

Jordan Weissmann at Semafor restated Yglesias's point this way: "If you had to boil down the Biden administration's theory of politics to its absolute essence, it's basically that the bully pulpit is vastly overrated." And several people pointed to what Republican Senator Mitch McConnell wrote in a book about his dealings with President Obama: that rather than accepting that Republicans and Democrats had different goals and horse-trading on that basis, Obama always wanted to try to change Repubilcans' minds first. Yglesias himself add that a "senator, comparing Obama and Biden, told me Obama liked to 'win the argument' and that didn't always work to his advantage. Biden doesn't really care."

Mind you, I don't agree with the idea that minds can't be changed!

[Voronwë the Faithful]

I think that Biden handled this extraordinarily well and resisting the entreaties of people like Yglesias to threaten to use the non-existent 14th Amendment option took amazing fortitude. Like many, I tend to understatement Biden.

That having been said, who knows whether this will really pass in time to avoid catastrophe.

[N.E. Brigand]

Speaking of Mitch McConnell, he has praised the new deal.

[River]

That bodes well if the deal makes it to the Senate.

I think everyone underestimates Biden. It's both his superpower and his Achilles heel. In the case of the debt ceiling deal, you'll notice that there are voices on both sides declaring victory and voices on both sides screaming in anger that they got rolled. To me, this is a sign that, all things considered, we got a good outcome. Definitely would have been better if Congress just moved the thing during their lame duck session but they didn't. So here we are.

[RoseMorninStar]

To be clear on my earlier comment, I didn't think Biden should have pursued or threatened to pursue the 14th amendment or given into pressure to do so. I am of the opinion that he shouldn't have publicly let it be known what his thoughts/plans were in that regard. In negotiations I would think a 'Don't show them your hand' would be a more prudent course of action, but Biden has been in politics a long time and I'm sure he had his reasons for handling it as he did.

[Voronwë the Faithful]

Let the madness begin.

[N.E. Brigand]

I think that Biden handled this extraordinarily well and resisting the entreaties of people like Yglesias to threaten to use the non-existent 14th Amendment option took amazing fortitude. Like many, I tend to understatement Biden.

That having been said, who knows whether this will really pass in time to avoid catastrophe.

If this whole thing falls apart (I'm hopeful it won't: I don't think many progressives will join the hard right in fomenting default), I'm pretty sure President Biden will indeed turn to one of the procedures supported by the 14th Amendment, and we'll all learn together how non-existent those options are or aren't. Biden ruled out the possibility fairly early on, but then began to acknowledge more recently that he was able to MTFC (or take other steps along those lines), except that he said it was too late to avail himself of those choices. And somewhere I saw an interesting recent article on Treasury and Federal Reserve officials and former officials -- none quoted by name -- where it emerged that when those folks started seriously looking into the matter, none of them could find a clear decision in the past to rule it out. Everybody had just sort of assumed you couldn't do it, if they thought about it at all. I for one am glad that some commentators got people thinking outside of their bubbles. (Yglesas himself was relatively late to get there, but he is more influential than others who have been talking about this for more than a decade.)