Hostage-taking, cont’d

Why are Congressional Republicans and AEI fellows so damned unpatriotic?

Marc Thiessen of AEI bases his proposed negotiating strategy for the Republicans on one simple idea: that the President cares more about the country than they do. Therefore, if they threaten to besmirch the national honor and wreck the national credit by forcing a default – which is what not raising the debt ceiling means – the President has no choice but to give in to their demands.

Unlike with the fiscal cliff, Republicans have all the leverage when it comes to the debt limit. Today, Obama is perfectly willing to go over the fiscal cliff and blame the GOP for the resulting tax increases on the middle class. But when it comes to the debt limit, he does not have that luxury. He can’t default on our debt — the consequences are too catastrophic. So in the end he will cave.

Alas, I think Thiessen is right: most Republicans in Congress are substantially less patriotic than is the President, so that when they threaten to damage the country they’re proposing something that will hurt him more than it does them. And that’s why any resolution of the “fiscal cliff” problem involving any concessions at all on the President’s part must include a permanent resolution of the debt-ceiling problem.

In the meantime, reflect that America’s owning class and corporate apparatchiki – the people who support AEI – are willing to pay the salary of a man such as Thiessen, whose class loyalty is so much stronger than his national loyalty that he, too, is willing to damage the country as long as it serves the short-term selfish interests of those who pay him.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact:

51 thoughts on “Hostage-taking, cont’d”

  1. When you’re right, you’re right. He’s got a spot in hell reserved, down in the chorus with Cheney, Yoo, and Bybee et al.

  2. “He can’t default on our debt — the consequences are too catastrophic. So in the end he will cave.”

    Who is the “he” in this sentence? Mr. Barak Obama is not going to default on his debt. The United States of America is going to default on its debt. And last I looked, it’s Congress, not the President, that has the power to raise the debt ceiling. If the Congress chooses to cause the United States of America to default, that’s not Mr. Barak Obama defaulting on the debt, that’s Congress.

    1. Bloix is of course correct. How stupid is this guy, to say default is unacceptable and not to realize that undoes his own position?

      Guy comes home from hunting and finds his wife and friend in bed. Distraught, he raises his rifle to shoot himself – the terrified lovers suddenly relax and jeer at him. “Don’t laugh,” he says, “you’re next!”

      1. How stupid is this guy, to say default is unacceptable and not to realize that undoes his own position?

        Consider this: His main leverage lies in Democrats believing that Republicans are so evil or stupid that they will allow a default to occur. After all, if you don’t believe the kidnappers are willing to kill the hostage, you’re not giving them what they want, right?

        Kidnapper’s spooking you into believing that they are indeed willing may be many things…but “stupid” ain’t one of them.

  3. I’m not sure taking the full faith and credit of the United States hostage is enough for Thiessen. Thiessen won’t rest until we find a way to actually torture the full faith and credit of the United States.

  4. Those civic-minded people are such chumps! But it’s so frightfully amusing watching them scramble around trying to hold together what we want to destroy, namely the notion that government can and should actually work for the benefit of the majority of the people.
    /swirls brandy in snifter…

  5. I’m afraid all this talk of “default” is completely misplaced.

    There’s revenue, and there’s expenses. One of the many expenses is debt payments. It’s certainly a helluva lot less than total revenue.

    If the total expenses exceed the total revenue, we need to increase the debt or stop paying some of the expenses. But that sure don’t mean we need to specify the debt expenses as the ones to be unpaid.

    We can (a) stop paying the salaries of Congress. If that ain’t enough, we can (b) stop paying the military contractors developing the next generation of overpriced boondogle weapons systems. If it still ain’t enough, we can (c) stop paying farm subsidies. If it still ain’t enough, we can (d) furlough all the air traffic controllers and all the screeners, and close all the airports.

    See, there’s a lotta ost saving options afore we gotta default on our debt.

    Of course, there’s some powerful lobbyists might be upset by them other choices.

    Tough cookies. That’s a problem for Congress, not the Prez.

    1. “It’s certainly a helluva lot less than total revenue.”

      A bit less. But a pretty big chunk of it, actually, and getting bigger all the time.

      I do, however, agree with your general line of thought. Impoundment should definitely start with Congressional pay.

    2. Interest payments are about 8.5% of total revenue.

      Also, as I understand it, the 27th amendment may make it difficult or even impossible to withhold pay from members of Congress (though I suspect the DoJ should be able to conjure up a legal opinion saying otherwise, given that we’re already in extra-constitutional territory).

      1. I think the 27th amendment would preclude changing their salary, but not failing to pay it.

        “Gee, Speaker Bonehead, there’s not enough money in the bank. What do you want me to do, write a bad check?”

        1. I’m not saying that it can’t be done (see my comment about DoJ opinions above).

          However, as I understand it, that was already discussed during the last debt ceiling crisis, and the prevailing opinion was that it couldn’t be done (there was some confusion in that the Senate and the House actually tried to pass bills to that effect).

          My understanding of the situation is as follows (and I may be wrong there — even con law scholars seem to disagree on the details and I’m an amateur): The president has to faithfully execute the laws of the land, but if a regular statute conflicts with the constitution, the constitution takes precedence, and the president has to make a decision regarding the constitutionality of the law. The federal budget is such a regular statute. The guarantee of the federal debt under the 14th amendment, congressional pay under article I section 6 and the 27th amendment, and the Congressional prerogative to borrow money under article I section 8 are constitutional commandments; if a regular act of Congress conflicts with them, then that bill is unconstitutional, and the president has to only execute the parts that are constitutional.

          That means that the parts of the budget that are not protected by the constitution get slashed first.

          However, I suspect that both the president and members of Congress would very likely voluntarily return their salary to the treasury, because taking the money while regular government employees and the military are not getting their paychecks would be really, really bad for them come of the next election.

          1. I understand (and agree with) all the above points, except for a semantic distinction I think is crucial:

            The Constitution guarantees the salary of the Congress, but only the Treasury can guarantee their pay. If, as in your example, the Senate and House tried to pass a bill to the effect that representatives wouldn’t be paid, that would violate the 27th Amendment; it would be a change in their compensation. But if their rate of pay were left untouched, and the Treasury simply failed to cut the checks because the bank account was empty, that would not be a Constitutional violation.

            I think.

        2. Historically, the House Bank did precisely that for years and years and years: they allowed members to write bad checks, and honored them. Tom Foley was the Speaker who got hoisted on that petard, and Newt rode it to the Speakership, despite being a check-kiter himself.

  6. I thought the standard mechanism in the US for when Congress fails to come up with a budget was a government shutdown. Not pretty, but it’s not a sovereign default. How is the current ‘crisis’ different to the stunt Gingrich and co tried to pull in 1995?

    1. The crisis of 1995 was that the government ran out of authority to obligate funds. So it had to stop doing so. That meant neither employees nor contractors could keep working. But all the work already done could get paid for, out of previously obligated funds.

      Now the problem is that work has been done against properly obligated funds, and he bills will be coming in with no cash to pay them. It’s the difference between having your credit card declined, which is annoying, and having your checks bounce, which is disgraceful and which wrecks your credit even if you make the rubber checks good.

      Even if we keep paying interest on the debt, not meeting current obligations constitutes default.

      1. The differences:
        1. The 14th amendment guarantees the public debt absolutely, not the general liabilities of the government.
        2. The US and world financial system depends on the US government meeting its debt obligations of interest and capital redemption promptly and without question. It doesn’t depend in the same way on the US government paying retirees, hospitals, states and defence contractors promptly and without question.

        It would not, repeat not, be a good idea for the US government to default on its non-debt obligations. Inaddition to short-term chaos, it would mean higher prices and demands for upfront payment down the road, and a general loss of credibility. But Geithner’s reported panic last time only made sense in relation to the bonds and bills. Obama could tough it out for a month or so before the GOP crazies fold. It could be a recession, sure, but not a global financial catastrophe. IMHO, worth it to take this particular bomb away from the lunatics for good.

        1. James W: IMHO, worth it to take this particular bomb away from the lunatics for good.

          Your use of the word “lunatics” is telling. We have a two-party system in which one side is empowered by its ultra extremists. The other side no longer has “lunatics” shouting for the destruction of financial “Amerika”. I posit here: for a two-party system to work well, emotional forces must be equipoised. Imagine if lunatics on the right AND left were simultaneously calling for BIG GOV/AMERIKA to default and lose international standing. The situation would be emotionally stark. Teabaggers and SLAers standing naked together with fists upraised. The far left and the far right would be united in lunacy and the rest of the country would disavow their advice as two horns of the same extrema. “Normalcy” would trump polarity.

          On the “other hand”: One may argue I suppose, the fact that there is no Weather Underground countervailing is a sign that the left may actually be winning more than it realizes…

  7. Marc Thiessen says another strange thing in the same rant:

    If Obama refuses to compromise, pass legislation extending current tax rates for all Americans.

    Surely this is impossible? The GOP controls the House but only a blocking minority in the Senate. Tax bills have to originate in the House, but then get Senate approval. this would not be forthcoming. The legislation would never reach Obama’s desk.

    1. Technically, he only advocated that the House pass such a bill. This is certainly possible, but as you say, the Senate wouldn’t even take it up.

      1. Thiessen´s next sentence is: ¨Let Obama reject it and take us over the “fiscal cliff”.¨ It would be Reid´s fingerprints on the rejection, not Obama´s. Many low-information voters blame ¨Congress¨ for gridlock, not the President. Thiessen´s spittle is aimed at Obama, and misses.
        His heroic metaphor is misplaced too. Troops Surrounded by superior forces usually have to surrender or die – von Paulus at Stalingrad, Bazaine at Metz, Browning at Arnhem, Travis at the Alamo. Chusan and Bastogne are remembered because they were exceptional.

        1. “Many low-information voters blame ¨Congress¨ for gridlock, not the President.”

          A lot of conservatives seem to have trouble remembering that not everyone recognizes the fact that Obama is – figuratively, if not literally (although we’re not ruling that out) – the Antichrist.

    1. probably part of the tendency of mainstream media to present both sides of the argument even when one side is asking for an italian dinner and the other side is asking for tire rims and anthrax.

      1. One of the biggest criteria for appearing in the Post and many other newspapers these days is: is the column available for free or very, very cheap.

        Apparently, a lot of the rightist “think” places spend a lot of time and money placing no-charge op-eds.

  8. I’m ignorant on this point and would appreciate enlightenment: Is there any reason the administration couldn’t simply cut off all funding to everything in the districts of those members (in every sense) of the House who are playing chicken?

    1. Of all the possible responses the administration could engage in, selectively stopping federal spending in only the districts of members of Congress who cross the President is probably the absolute worst. Impeachment would be a certainty, and Republicans asking, “Do you want US doing this after the next election?” might even garner enough votes for conviction.

      1. Brett is correct here. It should also be noted that this argument actually extends (with slightly diminished force) to any platinum coin workarounds and 14th Amendment assertions. Should Mr. Obama attempt such workarounds he will be taunted/impeached for “acting the dictator”. (The force is diminished because he’ll be seen as merely a dictator rather than a mean dictator.)

        As much as I’d like to see this bomb diffused, I am beginning to suspect the only way out is to let it go off. And like I suggest upthread, it would be nice if we had a New Weather Undergound chanting for the bomb to go boom too. That way the ultra right could be paired with ultra left “communists” calling for the destruction of “Amerika’s” financial standing.

        Then maybe, the great unwashed center will reassert itself and sane gov. management will return…

        1. I think you want the defused, rather than diffused.

          Especially in the case of fuel-air explosives, diffusion is the very last thing you want.

          1. Accck! The BOMB defused.

            Can we pretty, pretty please have an edit function in the next iteration?

        2. And quite rightly so, because he WOULD be acting as a dictator. He’s already usurped enough power from the legislature that the charge has some validity, he’d best not over-reach enough they get pissed off about it.

        3. I think the force is considerably diminished with respect to the 14th amendment and platinum coin workarounds. Yes, the House will probably vote to impeach — but then you get to have a hearing in the Senate about how Obama heroically saved the economy from those insane Republicans, citing chapter and verse of the laws that support it, with the Republicans having to bring twenty-two Democratic caucus members over in order to remove Obama from office. I simply don’t see it happening, or moving any votes among people who aren’t already convinced that Obama is the Antichrist.

      2. Probably. That said, if you force the president into a situation where it is impossible for him not to break the law, you deserve whatever happens to you.

    2. I’m still wondering if there’s a legal reason this cannot be done.

      Of course, it wouldn’t have to be all spending. I’d be willing to see my congressional district have OSHA running but no flights out of our Air Force base. That might knock a little sense into Two-Term Timmy Griffin.

  9. For fun, one commenter at deLong´s blog proposes the platinum coin – but for $25 trillion, so the national debt is magically replaced by a large credit balance. You still have to pay the interest and redemptions on existing bonds, so nothing changes in the real world.
    If Mr. Bean, junior Treasury official, loses the coin, Obama just makes another one.
    Does the 14th Amendment prohibit making the public debt look ridiculous?

    1. Do you think that making a $25 trillion coin might be a bit inflationary? Hard to get change for too.

      1. It’s only really inflationary if they attempt to spend it. The government’s spending commitments don’t change just because it gets its hands on a huge pile of imaginary money.

      2. The coin is hand-delivered by Mr. Bean to the Fed, which enters it on its books as an asset and cancels an equivalent amount ot Treasury bills and bonds. As it currently only holds $1.65 trn of these, I would personally keep the coin at no more than $1.5trn. The transaction is not inflationary. The Fed has already swapped the bills and bonds for monetary base, with zero effect on inflation so far. In future, the Fed would have less scope for reversing the process if inflation does pick up, by open-market sales of bonds to reduce the monetary base. But it can achieve the same result by raising reserve requirements.
        Petty change? Just mint a few hundred $1m platinum coins.

        1. The coin is hand-delivered to the Fed. Hmmm …

          I’m a messenger, and the client gives me a thousand dollars to deliver to the bank. I will faithfully execute his delivery. After all, it would be foolish for me to sell out my job and my continued pleasant life in the USA for a crummy thousand dollar heist.

          Having proven my integrity to my client, he now entrusts me with a million dollars to deliver to his stockbroker. This is a closer call. Should I take the money and run? Well, I suppose it depends on how I evaluate my future prospects. A million may be enough to make me change my life plan, or maybe not.

          But a TRILLION? Hey, honesty has its limits!

          1. Katja, that’s a terrific story, which I had not previously red.

            But that narrative took place long before cable TV. Today, should I find myself in possession of a trillion dollar platinum coin, I would make for the Gold and Silver in Las Vegas. Rick Harrison would give me a nice price for it, I’m sure. I can just hear him in my mind’s ear, saying “I’ve never seen one of those before. I’ve just GOT to have it in my pawn shop.”

          2. But the whole point of it is that it’s not really a trillion dollars. Forget that it’s a small piece of platinum, for all practical purposes it might as well be a Monopoly bill with extra zeros scribbled on it, and the Treasury Secretary’s signature. Nobody is going to give you significantly more than the value of the specie for it, the Fed is simply charged in this scenario with pretending it’s worth a trillion dollars. Which they could equally do with the Monopoly money.

            So there’s no particular temptation to run off with it.

  10. I think a letter to every recipient of a government check, explaining what might happen because (Member of congress in recipient’s district or a nearby district) was refusing to let the government pay for spending that congress has already authorized by law would probably do the trick nicely. “This may be the last Social Security/contracting/whatever check you get because…”

    It would be purely informative, and necessary for the recipients to make plans.

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