The Debt Limit Option President Obama Can Use

[Pryderi]

http://www.thefiscaltimes.com/Columns/2011/04/29/The-Debt-Limit-Option-President-Obama-Can-Use.aspx

Republicans are playing not just with fire, but the financial equivalent of nuclear weapons. Perhaps at one time when the federal debt was owned entirely by Americans we could afford to take a chance on debt default because the consequences would only be internal. But today, more than half of the privately held public debt is owed to foreigners; the Chinese alone own more than $1.1 trillion of Treasury securities. Moreover, many countries use Treasury securities as backing for their own currencies. Thus the impact of default would be felt internationally, disrupting finances and economic policies throughout Asia, Europe and Latin America.

Therefore, a potential debt default is far more than a domestic consideration; it is a matter of foreign policy. This is why Secretary of State Clinton and Navy Adm. Mike Mullen have warned that the public debt represents an important threat to national security. As attorney Thomas Geoghegan recently put it, “Where the validity of the debt is concerned, our national security is at stake.”

The president would be justified in taking extreme actions to protect against a debt default. In the event that congressional irresponsibility makes default impossible to avoid, he should order the secretary of the Treasury to simply disregard the debt limit and sell whatever securities are necessary to raise cash to pay the nation’s debts. They are protected by the full faith and credit of the United States and preventing default is no less justified than using American military power to protect against an armed invasion without a congressional declaration of war.

Furthermore, it’s worth remembering that the debt limit is statutory law, which is trumped by the Constitution which has a little known provision that relates to this issue. Section 4 of the 14th Amendment says, “The validity of the public debt of the United States…shall not be questioned.” This could easily justify the sort of extraordinary presidential action to avoid default that I am suggesting.

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CAN YOU IMAGINE THE TEABAGGERS REACTION???

[MannyGoldstein]

1. But Obama won't waste this opportunity to be taken hostage

Imagine... to "save us from default", he can be "taken hostage" to implement his own "Deficit Commission's" vote to cut lifetime Social Security benefits by 22%. I can't fathom that he'd miss an opportunity to do that.

[Pryderi]

2. Or, do the repugs want him to do it so that Obama can take complete blame?

[bluestateguy]

3. I have long advocated this position

A default is just too dangerous to play around with and if it means cutting corners on the Constitution so be it.

The House could impeach him, but Harry Reid would not even let it come up for a vote in the Senate.

[Pryderi]

4. I just wanna hear the repugs squeal like stuck pigs.

[notesdev]

5. Debt is slavery

"Therefore, a potential debt default is far more than a domestic consideration; it is a matter of foreign policy."

If that is true, whoever then accumulates debt, and thus hands control of our policy to foreign nations, is a traitor by the strictest definition.

"The president would be justified in taking extreme actions to protect against a debt default. In the event that congressional irresponsibility makes default impossible to avoid, he should order the secretary of the Treasury to simply disregard the debt limit and sell whatever securities are necessary to raise cash to pay the nation’s debts. "

It's not actually necessary to sell any securities at all to pay the nation's debts. However, it is necessary to continue to do so to spend at the rate we are spending. Arguing that there is a Constitutional obligation to spend twice our national income is an extraordinarily weak argument and smacks of desperation.

[hansberrym]

6. Can't Congress simply require China to buy more of our debt? Afterall....

"Economic Decision-Making Is an Activity Subject to Congress’s Commerce Clause Power"