In less than a month, the United States of America—the most powerful nation in the history of the world and a leader in global affairs for over a century—will default on its debt, a catastrophe that will likely send the domestic (and possibly global) economy into a full-scale meltdown. Treasury Secretary Timothy Geithner has said that the country has until August 2nd to strike a deal to raise the debt ceiling and avoid this fiscal nightmare, and President Obama has gone on record saying that he wants a deal to be cut by July 22nd so that the legislation can safely make its way through Congress. With less than 3 weeks to go until crossing that red line, Congress still seems incapable of solving this problem, even if it wanted to. To make matters worse, if President Obama tries to take the situation into his own hands, he may just get impeached for his troubles.
For those who don't know the history of the issue, the debt ceiling is the amount of money that the U.S. is legally allowed to borrow in order to fund government operations. Prior to the Second Liberty Bond Act of 1917, debt was issued in the form of war bonds in set amounts of several billion dollars at a time. With the passage of this legislation, though, the Treasury was given the authority to issue debt whenever necessary, so long as the debt did not exceed a set amount.
Fast forward to today: the debt ceiling is currently set at $14.294 trillion and we're about to fly past that number. Republicans in Congress (and governors throughout the country) have succeeded in making deficit reduction the main priority of this legislative session, but no intelligent observer actually expects the U.S. to go from a trillion-dollar deficit to a balanced budget on a dime (haha, monetary puns). This means that even taking into account the most austere Tea Party-inspired budget, the U.S. needs to raise the debt ceiling, or it will be unable to pay the bills.
In spite of impending financial doom, Republicans (and some Democrats) in Congress have said that they will not vote to raise the debt ceiling unless it is accompanied by a serious deficit reduction plan. Last week, though, Republican House Majority leader Eric Cantor and Senate Minority Whip Jon Kyl walked away from deficit reduction talks, arguing that Republicans would refuse any tax increases, even though Democrats had already agreed to over $1 trillion in spending cuts. Cantor also said that President Obama needed to personally step in and negotiate a budget deal.
Either Leader Cantor is thinking hard about how to solve the debt crisis, or he really needs to pee.
Before I go any further, let me just say that Cantor's excuses are the reason why everyone and their mother hates Congress—and indeed the American legislative process. The deficit reduction talks were the best chance the parties have had in months at actually stopping this crisis before it hits, but Cantor decided that it was better politics to back out and call President Obama a coward because he wasn't personally in the room. Instead of getting to a solution or even attempting to compromise with Democrats, who are willing to make the exact same deal that Republicans called for months ago, Cantor and the Republican party's leadership are betting that their electoral chances in 2012 will be improved by a default on the nation's full faith and credit.
But, I digress. The point is that the two sides are not close to a deal and the clock is ticking. President Obama has entered into the fray and today hosted a meeting with Republican leaders, but if progress comes, it won't come quickly. The prospect of financial doom has led some observers to argue that Obama should take drastic measures: namely, that he should declare the debt ceiling unconstitutional under the 14th amendment to the Constitution. That amendment states, among other things, “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.” However, Article I, Section 7 of the Constitution expressly states that “all bills for raising Revenue shall originate in the House of Representatives.” Debt bonds raise revenue—hence, declaring the debt ceiling unconstitutional and ordering the Treasury to issue debt anyway might in itself be unconstitutional.
Your head is spinning, I know. Stay with me.
Could President Obama really be impeached for trying to prevent a fiscal disaster? TIME Magazine's political blog argues that it not only could happen, but that it would be the best possible scenario for House Speaker John Boehner, who is facing criticism from his own party over being too conciliatory. Tea Party Congressman Tim Scott (R-FL) has already said that if Obama were to ignore the debt ceiling, it would be an impeachable offense. The Obama administration, for its part, has said that it doesn't anticipate the argument getting that far and that they hope that a solution will emerge soon. If it did come down to an impeachment battle, it's very possible that the Republican-controlled House would vote for impeachment, but next to impossible that the Democrat-controlled Senate would vote for conviction. Nonetheless, it's a less than ideal scenario for the president, to put it lightly.
There you have it: Washington—the only city in the world where doing everything you can to get your job done will probably get you fired. And as for the debt ceiling crisis, if I sounded like Chicken Little in this post, it's because failing to raise the debt ceiling would be one of the most unthinkable catastrophes to happen to this country in recent years. It would completely destroy our standing in the world and send a message that investing in the U.S. economy is no longer safe, likely sparking another recession. Politics and snark aside, if Congress doesn't do something about it, and soon, we're going to have a massive problem on our hands.
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1 comments:
Great blog! I read this not knowing much about the debt ceiling but it was a great look into what many people think, were stuck until they decide to finally do something about this mess!
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