Just as in the 2011 battle over the raising of the debt ceiling, President Barack Obama is again accusing Republicans in Congress of “risking default” unless they raise the debt limit before it is reached within the next two months. It was the Big Lie of 2011, just as it is now, in 2013. But once again, Republican leaders in Congress refuse to call out the chief executive for a threat that only he can make good on, whether the debt ceiling is raised or not.
Sadly, Chairman of the Federal Reserve, Ben Bernanke recently lent some credence to the Big Lie:
In remarks in Michigan on Monday on the ongoing fiscal battle between Congress and the White House, Bernanke said the debt ceiling has ‘got symbolic value,’ noting ‘essentially no other countries‘ make it part of their budget process, and that ‘I think it would be a good thing if we didn’t have it.’
‘I don’t think that’s going to happen and I think it’s going to be around,’ Bernanke added, ‘But I do hope that Congress will allow the government to pay its bills, not raise the possibility of default, which would be very, very costly to our economy.’ [Emphases added]
I wonder if one reason that “essentially no other countries” ever achieved exceptional American prosperity and power is because they had no Constitution that separated the power to borrow in a legislative body from the powers of their latest respective despots:
The Congress shall have Power…To borrow money on the credit of the United States… –U.S. Constitution, Article I, Section 8
The United States of America didn’t become the Arsenal of Democracy that saves other countries and The City on a Hill that their peoples risk death in rickety boats to reach with a mere “symbolic” rule of law. Soon after the British surrendered at Yorktown, many urged our first secretary of the treasury to ignore, default on, much of the Revolutionary War debt, as had too often been the practice of so many of the nations that they and their ancestors in Europe had fled.
Alexander Hamilton said no, and set America on the path that established the Full Faith and Credit of United States as the most dependable on Earth.
After the War Between the States, another war debt had to be paid by a war-torn America needing to borrow while half of its states faced reconstruction. The “Civil War Amendments” are best known for abolishing slavery and granting citizenship rights to freed slaves, but Section 4 of the Fourteenth Amendment made clear that no matter what other “obligations” or “bills” had been incurred by Congress, debts owed to creditors of the United States would be paid first and always:
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…
Reconstruction of the South wasn’t much started (much less completed) until a frequenter of Warm Springs, Georgia ascended to the White House three score and eight years after Appomattox, but the public debt of the re-united States always paid its bills.
Before WWI, the U.S. usually borrowed money by bond issues. But the open-ended nature of the war “over there” and the desire of Congress not to be employed as year-round accountants in the District of Columbia led to the passage of the first debt ceiling legislation. Before the welfare state was constructed to such heights after WWII, breaches of legislative debt limits weren’t so frequent, and thus the law wasn’t so often in need of amendment; and thus not nearly the political football as it has recently become under a Democratic president’s tripling of the budget deficits of his predecessor and a Democratic Senate’s refusal to pass a budget for four years.
Bernanke is right to suggest a certain redundancy for a Congress that authorizes all spending and taxing, to address the debt required to fill the gap with separate legislative authority. But since our laws are “executed” by a separate branch of government not authorized to be king, some variation of this procedure is necessary unless we wish to join one of either Red China, Cuba or the Euro Zone’s totalitarian models.
And when one-half of one-third of the government (Harry Reid’s) won’t even pass a budget, while one-third (Supreme Court) finds Obamacare constitutional, and the other third (chief executive) counts ending wars the same as “cutting” over $1.2 trillion over ten years, what is the other one-sixth to do?
Bernanke thinks that the House should surrender what remains of its borrowing power to Obama that it didn’t already surrender to the Fed decades ago. There has rightly been much ridicule directed at the notion of a post-debt ceiling breach production of a trillion dollar coin, and rightly so. Want to precipitate a financial crisis? It would begin at whatever foreign or domestic markets are open before In God We Trust is stamped near the required none zeros on its face.
Ben Bernanke, Tim Geithner, Jack Lew, Barack Obama and foreign creditors in China know that the United States collects more than ten times the revenue required to the pay interest on the public debt each month. No money ever needs to be borrowed to pay that interest. Bernanke knows that the only way the United States “raises the possibility of default” is if a president and his Treasury Secretary chooses not to pay a creditor, despite the availability of the funds.
President Obama could choose not to do that now, before the debt ceiling is reached. After the debt ceiling is reached he would still have plenty of money to pay interest payments, the armed forces and current Social Security beneficiaries. Yet, who does Obama threaten not to pay should he not be allowed to borrow the 40% of the current “budget” that could not be funded? Does he ask his staff to go without pay? EPA’s job-killing bureaucrats? School Lunch regulators? No.
Rather, he is using weasel language about “bills” to conflate the public debt owed to those that let the United States borrow, with any and all “authorizations” issuing from continuing resolutions and welfare state promises, whether of the Medicare, FICA or Food Stamp varieties.
A reckoning is coming because of the absolute size of the national debt. Our economy is at risk because of this debt. And one day an event will be cited as the precipitating cause of the next crash, and the acceleration of the fall of our American standard of living. But the cause of our calamity is the debt per se, and the calamity started years ago. Some of us have been living it for over four years, and this conservative suspects that it won’t be solved until the next crash causes more Americans to join us at the bottom on the abyss, and wouldn’t mind accelerating that date via showdowns with Obama over debt ceilings or government shutdowns upon the expiration of continuing budget resolutions.
Meanwhile, it would help if the man in control of our Fed money would be more precise with his language lest he be blamed for precipitating the crisis.
“One man with courage makes a majority.” – Andrew Jackson