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January 03, 2013

Comments

You honestly don't see any difference between the so-called "fiscal cliff" and the debt ceiling? Really?!!!

Perhaps that explains why you've seemed so out of step lately.

Sometimes I get the feeling you'd rather see Obama fuck up so you can say you're right than see him succeed and admit you've been wrong about him.

No I think there's a huge difference between the fiscal cliff and the debt ceiling. They are both in a sense artificially created but one is a hostage you can't shoot. And yes there are crazies who think you can but between the Democrats and the Republicans there is a large majority in congress who know this is true and this situation will produce forced bipartisanship while marginalizing the crazies at the same time. Brilliant strategy? No. Just the obvious one.

I tend to agree with you, Peter. First, I'm sure you grasped that my reference was to "tactical" differences (others' reading comprehension leaves much to be desired), which, when absent, rather unremarkably tend to be identical. Unfortunately, Obama's negotiation of the debt ceiling in 2011 and now his negotiation of the cliff (when he held virtually all the cards) make another ceiling negotiation more likely--and THAT could be the "forced bipartisanship" you mention: another negotiated hostage release.

But, wWho knows? No one knows. And that's what makes politics fascinating.
--PM

The current administration will do just fine on the new debt ceiling talks. PBO has learned his lesson that you can't negotiate with people who take completely unreasonable positions. Having appropriated and spent the money (both borrowed and taxed)Congress cannot now renege on the US Government's promises to pay.

PBO has a number of options, from declaring such a limit(in time of war)unconstitutional under the 14th Amendment (remember the 14th Amend. was a post Civil War measure), to minting trillion dollar platinum coins and handing them over to the Fed for a credit on the books. (Money is what the Fed/Govt says it is-hasn't everyone figured that out yet?)

PBO could also accuse Members of Congress who vote No to a debt limit increase to be aidng the enemies of the US under the Patriot Act--now that would be interesting! And throw them in the clink! Don't think it would come to that, the threat would be enough. All PBO has to do is hang tough...this time he says he will. I believe him.

I don't pretend to know either. I do think the nature of any negotiation on the debt ceiling if one even happens is going to tell us exactly where Obama stands on these entitlement issues. My hope is he stands fast. I do agree that it was a serious error to make those middle class tax cuts permanent. They will need to go sometime in the next two or three years if the government is to have the resources to do what it must do in the service of its polity. The fact that a barrier was broken in getting tax increases now is no guarantee that it will be something easily accomplished when it needs to be done. In fact it is going to be harder than hell. On the other hand restoring some semblance of rationality to governance in the US requires that a breach be driven between the extreme elements of the right and the recreation of a moderate Republican party is a noble goal in it's own right. My personal opinion is that gerrymandering has created so many safe districts for Republicans that you are all more or less stuck with extreme elements in the House for some time. A republican in those districts is going to win and the internal dynamics of the primary process keeps those districts farther to the right than the general population would like. If the Republicans had any sense at all they would do something about this themselves and change the rules by which they select candidates to yield a more flexible and less ideological conference. I'm not going to hold my breath waiting for that. I apologize in advance for my giant paragraphs. I cannot get them to break into paragraphs no matter what I write.

The trillion-dollar coin idea is too cute by half. If you're going to mint one to avoid raising the debt limit, why not mint a few more? The urge to do it again would become overpowering once the principle was set. Striking one might not, in the near term, be inflationary. But if they got away with it, they'd be sorely tempted to strike two dozen more. Theoretically, with all this "instant" cash reserve, the Fed could buy back all the debt, and PBO could spend broadly on infrastructure, prop up Social Security, fund Medicare, etc. with the rest. But wouldn't this set off a worldwide hyper-inflationary spiral? It's just too damn dangerous.

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