How Do You Solve a Problem like the National Debt?

July 11th, 2011

By Dan Miller

The Money FaucetLike a leaky faucet wasting water, it’s time to stop the careless flow of taxpayer money.  Also see Video: President Obama promises ‘massive job-killing taxes’ if he is re-elected, at The PJ Tatler.

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The sky is falling! Quick! Run hide under your made-in-China umbrella before it’s too late!

As talks over raising the national debt limit falter, a four trillion dollar reduction deficit reduction deal appears to be off the table and a two to two and one-half trillion dollar deal may be the best to be hoped for in time to save the world:

Democrats want to shield popular domestic programs from huge cuts and say that any deal must include increases in tax revenue, including an expiration of Bush-era tax cuts on wealthier Americans.

Republicans — under pressure from Tea Party conservatives — reject any increased taxes and want curbs on popular benefit programs such as Medicare, Medicaid and Social Security.

This is apparently because (a) President Barack Obama continues to insist on another trillion dollars in new taxes and (b) according to Secretary of the Treasury Tim Geithner, August 2 is the drop-dead date for a deal and if one isn’t struck by then there will be a catastrophe.  Obama says that a deal must be struck within ten days from July 10 — rather like ObamaCare had to be passed quickly so we could see what it said.  We the peons still do not know what spending cuts the Obama administration has on the table; why should we?  We don’t need to know, we just need to acquiesce and reelect him next year.  The new head of the International Monetary Fund says that if we don’t shape up very bad things will happen.  Preventing those bad things will make it necessary to Greece grease — right now — the palms of those who want to keep our welfare state perpetually afloat by taxing the “rich” more than we already do, resulting in lower tax revenues by decreasing incentives to invest in productive (non-governmental) sectors of society.  But don’t worry! There is method to this madness:

Last November Republicans won the House and landslide gains in many states in large part because of the deep unpopularity of the stimulus and ObamaCare. Mr. Boehner has a mandate for spending cuts and repealing the Affordable Care Act. If Republicans instead agree to raise taxes in return for future spending cuts that may or may not happen, they will simply be the tax collectors for Mr. Obama’s much expanded entitlement society.

Meanwhile, the Pigford scam goes on and the windbagsmills still need more funding.  Are we reverting to an age of collective insanity that led to the election of President Obama?

Relief was finally here. You see borrowing was not really printing money but a new sort of math in which the “people” would be saved from Wall Street chicanery by brilliant new stimulatory theories. Borrowing money “created” more money; spending “money” was stimulus that made even more money. Most of the debate centered around the pitifully small size of the new deficits: a three-year plan to print $5 trillion was deemed conservative or too timid by many of the Obama geniuses. Joe Biden, given his sterling credentials and vast knowledge (re: his call for Bush to rally the people — as FDR supposedly did as president “in 1929″ and “on television” no less) would oversee the trillion-dollar borrowing to ensure it was “shovel-ready.”

Senator Jim DeMint, Republican of South Carolina, said,

The fact is we will pay our debts if it’s the last dollar we have. There are enough assets in Social Security and Medicare to pay the benefits of those programs for several years. Other programs can be funded from tax revenue. There certainly will be disruption….But this is not a deadline we should rush and make a bad deal and do something that cuts benefits from seniors without giving them better choices.

Governor Sarah Palin,

made it clear that she’s against any deal that raises the debt ceiling and would hold House Speaker John Boehner’s feet to the fire if he agreed to one….

“No, we have to cut spending. It is imperative, and I will be very, very disappointed if Boehner and the leaders of the Republican Party cave on any kind of debt deal in the next couple of months.”

But she acknowledged that Congress will likely raise the debt ceiling anyway.

She and Senator DeMint are correct.

But how should spending be cut?  Reductions in Social Security retirement benefits have been suggested, on the theory that there’s still money available there to be used for other purposes and that besides, they are just part of a stupid Ponzi scheme in which participants were apparently foolish to invest.  The Social Security system is a stupid Ponzi scheme, but “contributors” to the federal Ponzi scheme — unlike investors in Mr. Ponzi and other such voluntary schemes — were and still are compelled by federal law to “contribute.” For the reasons I stated here, such proposals make no sense.  Nor did it make sense to rob the Social Security “trust fund” to pay for things bearing no relation whatever to its purposes:

The compulsory nature of Social Security “contributions” and the purposes for which they were spent — without so much as a “by your leave, Contributor” or even a “thanks a heap, Sucker,” are important differences. The Social Security “Trust Fund” has for years been a giant pig slop for our government to feed at to satisfy the political/ideological needs of our masters public servants. No need to become unpopular by raising taxes; we have the big pig slop.

That made — and still makes — no more sense than this:

Something has to be done.
This is something.
Therefore, this has to be done.

Could the “debt crisis” be at least postponed?  Apparently so:

According to The Bipartisan Policy Center, the Treasury will take in $172.4 billion in revenue next month. It only is obligated to pay $29 billion in interest on the debt. The Treasury also has to honor hundreds of billion in maturing securities. But for every security it pays off, the total debt the Treasury owes is reduced by an equal amount. So Treasury can borrow that money right back.

Meanwhile, the government has hundreds of billions in other assets. The U.S. owns $370 billion in gold. That would be more than enough money to cover all of the federal government’s scheduled $306.7 August spending. Geithner has refused to sell any of these assets. He told Congress that any sale of U.S. assets “would be damaging to financial markets and the economy and would undermine confidence in the United States.”

As damaging as not making interest payments on the debt?

Half-fast (or something like that) arguments have been offered that the president can just go ahead and pay the national debt unilaterally when and as due — without causing Geithner to have a conniption fit — because the Fourteenth Amendment gives him that power.  Arguments have been advanced here to counter them.

Left-wing pundits like Keith Olbermann (Current TV), Lawrence O’Donnell (MSNBC), and Katrina vanden Heuvel (Washington Post) practically drool at the recent claim that President Obama can unilaterally declare the debt-ceiling law unconstitutional, break off negotiations with Republicans, and order the Treasury secretary to borrow hundreds of billions of dollars without consulting Congress.

O’Donnell revels in the Eureka! moment as he realizes Obama doesn’t need to negotiate with stubborn Republicans, he can just dictate terms thanks to this “nuclear option.” Vanden Heuvel thinks the president should threaten to deploy it ASAP, “as a last resort,” to save those who have become dependent upon government for their comfort and care.

Claims that the Fourteenth Amendment authorizes the executive branch to ignore the debt limit are not only specious, they are ludicrous.  They are reminiscent of the famous biblical quotation whimsically said to demand fratricide: “Cain slew Abel….  Go thou and do likewise.”

The Fourteenth Amendment directive does permit the executive to do that if you read it upside down in dim light through a fog of silliness.  Even then, it permits it only upon the passage by the Congress of appropriate legislation.  The amendment provides, in relevant part,

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article. (emphasis added)

The Fourteenth Amendment vests authority in the Congress, by appropriate legislation, not the president unilaterally, to enforce its provisions.  Nor can such legislation be effective if vetoed by the president unless the Congress overrides his veto, just as the executive has no constitutional authority to enforce it without legislation.  Hence, the provisions of Article I respecting the powers of the Congress are not affected, including these:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; To borrow Money on the credit of the United States; … (emphasis added)

Although the Fourteenth Amendment is not inconsistent with, and therefore does not displace, Article I, it does displace all inconsistent provisions of the original Constitution as well as all inconsistent amendments ratified before it was.  Any amendment ratified subsequently to the Fourteenth, to the extent inconsistent with it, displaces the Fourteenth.  Statutes also displace previously enacted federal laws inconsistent with them, but not (of course!) provisions in the Constitution which, as many still recognize, is the supreme law of the land.

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2 Responses to “How Do You Solve a Problem like the National Debt?”

  1. Tom Carter |

    I’m really getting concerned about the impasse between the Democrats and Republicans over raising the debt ceiling. It’s especially worrisome to hear some Republicans, along with a majority of the people, say they don’t think it should be extended at all. I don’t have the technical knowledge to say for certain what all the bad consequences would be, but from everything I’m reading and hearing it would most likely be disastrous from the macro of the world financial system to the micro of my savings accounts.

    What these ridiculous politicians ought to do is reach some compromise (which means no one gets everything they want), raise the debt limit, and then fix our fiscal problems. I don’t think that can happen without tax reform, increased revenue, and serious reductions in spending.

  2. Dan Miller |

    Tom, I think you have hit on the problem: raise the debt limit, and then fix our fiscal problems. That sounds good and if honor abounded it might even work. However, after the debt limit has been raised why should we expect there to be either spending reductions or tax hikes? It’s been a very long time since even an annual budget was agreed on by both houses and signed by the President.

    All sides can shake hands, raise the debt limit and agree to agree on amorphous future undertakings. The Democrats can say, if you give us $X in new taxes for every dollar of spending cuts, we will agree to both. The Republicans can say, OK. Such “gentleman’s” agreements are not law and are not binding on anyone.

    In addition, even if reflected in appropriations legislation, those are normally for one fiscal year. A reduction in funding for the Department of Free Bread and Circuses for fiscal 2012 does nothing about later appropriations, and can be got around even for fiscal 2012 by “commonly accepted” accounting tricks methods. Taxes are a bit different. Unless enacted for specified, finite periods they go on and on until repealed. Repeal, of course, takes both houses of the Congress and the President’s signature.

    It’s a mess.

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