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Why Congress Might Abandon the Debt Ceiling

Dec. 3, 2012 12:00pm Guest Post

[Editor’s note: The following is a cross post by John Carney that originally appeared on CNBC.com]

Ezra Klein points out that Senate GOP Minority Leader Mitch McConnell proposed chucking out the debt ceiling in the summer of 2011. I hadn’t known this before but it is not at all surprising.

Of course members of Congress want to shirk their responsibility for the debt. It would be far preferable, from their points of view, to avoid having to take responsibility for the debt by affirmatively voting to increase the debt ceiling.

McConnell’s plan, which sounds identical to the one Treasury Secretary Tim Geithner has proposed, is a masterpiece of shirking.

It would permit the president to unilaterally raise the debt ceiling unless congress affirmatively votes against it. It then gives the president veto power over this act of Congress, requiring a supermajority to overturn the veto.

The practical effect of this would be to allow a majority of lawmakers to get away with voting against accumulating more debt without taking any responsibility for what would happen if the debt ceiling wasn’t raised.

By making a vote against raising the debt ceiling entirely symbolic, this reform would promote anti-debt voting. Within a year or two of the passage of this reform, I predict Republican lawmakers will start making pledges to always vote “no” on raising the debt ceiling.

This is very likely to lead very quickly to a situation in which the president must use his veto to overcome the anti-debt majority. The result of that will be the issuance—for the first time ever in American history—of debt issued by the United States government in direct defiance of a congressional majority.

It’s not beyond reason to suppose that a Congress that saw its will defied on the debt ceiling might attempt to attack the debt in other ways. Lawmakers could, for instance, instead refuse to authorize interest payments on counter-majority debt. In other words, we’d wind up having a very public fight over the debt anyway. Only this one would be far more dangerous, since we’d be arguing about whether we should make payments on bonds already issued rather than about whether to issue more bonds.

Very many bright people say that by authorizing spending in excess of taxes collected, congress is implicitly authorizing the issuance of debt. This isn’t technically true, since the U.S. government is the supplier of its own currency and doesn’t need to find that currency in the debt market in order to finance its operations. Congress could, for example, authorize the Treasury to spend newly printed dollars. Accumulating debt is always a policy choice for the U.S. government.

It’s also unsound to assume that implicitly authorized debt is exactly the same thing as explicitly authorized debt. Throughout the history of our Republic, all debt issued by the United States government was explicitly authorized by an act of Congress. Moving to implicit authorization is a major change.

Would investors feel that this kind of debt was as safe as debt explicitly authorized by congress? We don’t know. We’ve never tried it. But it doesn’t seem like the kind of thing we should risk.

Nonetheless, I won’t be surprised if Congress attempts to abandon the debt ceiling. Lawmakers hate being saddled with the responsibilities the Constitution assigns them. If the president wants unilateral debt authority, Congress will probably give it to him.

–

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Comments (64)

Sicialian Eyeball
Posted on December 3, 2012 at 1:14pm
2+2 equals 4 always has,always will. Guess they dont teach that at Harvard anymore.

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- The-Monk
  Posted on December 3, 2012 at 1:25pm
  Harvard is too busy with their new S&M club……
  
  Report this comment
- michaelmoron
  Posted on December 3, 2012 at 1:46pm
  “This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President Wilson signs this bill, the invisible government of the monetary power will be legalized….the worst legislative crime of the ages is perpetrated by this banking and currency bill. From now on, depressions will be scientifically created.”
  – Charles A. Lindbergh
  
  “Invisible Government” ????? very interesting.
  
  Now check this !!!
  
  “Behind the ostensible government sits enthroned an INVISIBLE GOVERNMENT owing no allegiance and acknowledging no responsibility to the people. To destroy this INVISIBLE GOVERNMENT, to befoul the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of today.”
  ― Theodore Roosevelt
  
  ~~~~~
  
  “The real truth of the matter is that a financial element in the large centers has owned the government since the days of Andrew Jackson.”
  – President FD Roosevelt
  
  “The Federal Reserve is one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this Nation is run by the international bankers.”
  – Congressman Louis T. McFadden
  
  These Banksters have made your Country a Corporation, and consider YOU to be an asset OWNED by that Corp !!!!
  http://www.youtube.com/watch?v=EYLe02uld_0
  
  I believe that the “INVISIBLE GOVERNMENT” is the United States Corporation !!!
  
  Report this comment
- michaelmoron
  Posted on December 3, 2012 at 2:11pm
  Hi Monk.
  
  ProbIemSoIver says Hi. Wordpress won’t let him post for some reason. lol.
  
  Hmm. I wonder.
  
  Report this comment
- naughtycal
  Posted on December 3, 2012 at 2:31pm
  Every member of Congress that votes to abandon their CONSTITUTIONAL OBLIGATION by abandoning them should be removeds by the people and new elections should be held to replace them. Fact is it’s time for the people to rise up and drag these elitist into the streets take taking away all theur titles,estates,and assets for placing the tax payers 16 trillion into debt.
  
  Report this comment
- The-Monk
  Posted on December 3, 2012 at 4:29pm
  Hi Michaelmoron,
  
  He can’t post here? Why is that?
  
  Report this comment
- dmerwin
  Posted on December 3, 2012 at 10:54pm
  In effect there really hasn’t been a debt ceiling, every time we get close congress votes for more debt. The answer is not to get rid of the debt ceiling, but rather to ENFORCE it.
  
  Report this comment
- gbrittain
  Posted on December 3, 2012 at 11:22pm
  They were just tied up that day and couldn’t get to class.
  
  Report this comment
- Wolfgang the Gray
  Posted on December 3, 2012 at 11:39pm
  2+2=4, but Obama & the left are pushing for the 2+2=5 rule. Tell a lie long enough & people will believe it. Tell the lie that Capitalism is evil, that fiscal conservatives (Americans – Not those in Congress) are racist, & that it is the job of the government to provide for everyone with free Obamaphones for all.
  
  This is the way that liberty dies.
  
  Report this comment
- Secret Squirrel
  Posted on December 4, 2012 at 9:26am
  .
  We lost control when we stopped tar and feathers.
  Face it, the GOP is done, they’ve merged with the democrats.
  Time for a new conservative party.
  
  Report this comment
michaelmoron
Posted on December 3, 2012 at 1:07pm
This is a Bipartisan issue and has everything to do with the fact that our “government” (A corporation)
is insolvent and has to turn to the Federal Reserve for another loan with interest to stay afloat.

You can call it QE 1, 2, 3. You can call it Jobs stimulus, TARP, etc. It is all LOAN PACKAGES with interest from the PRIVATE BANK. They accept T-Bonds in exchange for their paper.
Our T-Bonds are AMERICA’s ASSETS !!!! They are seizing America’s Assets since we can not pay.

They have been doing this for a very LONG TIME !!!!!

China has purchased 2 Trillion dollars worth of AMERCA’s ASSETS via T-Bonds since we can not pay back in Fiat money, unless we devalue the dollar to the point of 20 Dollar a loaf bread !!!!!

To Save America we must QUIT the UN and breach the legal “contract” established at Bretton Woods.

We also MUST PRINT OUR OWN MONEY FREE OF DEBT !!!!

“If the nation can issue a dollar bond, it can also issue a dollar bill. The element that makes the bond good, makes the bill good, also. The difference, between the bond and the bill, is that the bond lets the money-broker collect twice the amount of the bond, and an additional 20%. Whereas the currency, the honest sort, provided by the Constitution, pays nobody, but those, who contribute in some useful way.”
-Thomas Edison

To save America we must reinstitutute JFK’s Executive Order 11110
http://www.youtube.com/watch?v=qYVCIdrcS6k

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Mr Sanders
Posted on December 3, 2012 at 1:03pm
Yes, yes….. let’s just throw that pesky ‘accountability’ issue away! We don’t need any reminders, undue stress, or benchmarks to keep US in line, do we now?!

Maybe if we don’t keep tabs on or be ‘in the know’ on the countries fiscal health, mayb we can get something done, aey?!!

Yeah, this is pathetic…. I wish I could ignore my credit card bill every month too…. as it gets bigger, and bigger, and bigger, and bigger……

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RANGER1965
Posted on December 3, 2012 at 12:54pm
Take the hit.

Declare Bankruptcy and tell all creditors that they will get 5 cents on the dollar and that over 20 years.

Service the above debt, slash everything to the bone.

Expect hard times for at least a decade.

Increase productivity across every sector by slashing payroll taxes.

Increase production of energy resources, become energy dependent by the end of the decade.

No foreign entanglements, or treaties that do not have anything to do with a direct threat to national security.

Close the border, and give general amnesty to everyone here now.

Put in a Constitutional Ammendment that classifys to classes of US people. Resisdents, and Citizens. Citizenship is earned through military service, and one must pass a test equivalent to a GED to qualify.

Only citizens vote or hold public office.

The above will take care of about 80% of our problems.

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- michaelmoron
  Posted on December 3, 2012 at 2:26pm
  I agree with some of what you said, but we actually have been bankrupt since 1933:
  http://www.youtube.com/watch?v=IlCs7u1ihws
  
  Also, There should be NO income tax. That was established in 1913 due to the contract with the Federal reserve PRIVATE BANK !!!
  
  Sales taxes are more efficient, and are an equal % for all income levels.
  
  Also, In America, Nothing is Mandated. Military service included. I don’t want to be in any “club” like a union.
  
  I am an individual sovereign of America with inherent inalienable rights.
  
  I am not a “citizen” of a social group.
  
  We have Nukes to protect us from the Big Boys, and our Second Amendment Rights to protect us from the Underwear-Bombing Clowns. We don’t need a mandated military regime.
  
  An GED to attain “citizenship” is unrealistic and Unconstitutional.
  
  Report this comment
MrKnowItAll
Posted on December 3, 2012 at 12:54pm
Fred Sanford would have showed them all! Oh! Wait? He DID!

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chucksue351
Posted on December 3, 2012 at 12:50pm
congress seems to heading for the day when they only do what they do best, namely, the naming of post offices

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cloudsofwar
Posted on December 3, 2012 at 12:47pm
a blank check for obama. yeah thats what the country needs. if the repub control congress does that it will be a dem control congress in 2014. then burn the consitution and obama will write a new one and make himself prez for life.

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biohazard23
Posted on December 3, 2012 at 12:46pm
Can I get a Nordstrom credit card, max it out, tell them I’m arbitrarily increasing my credit limit, then tell them to send the bill to someone else because I’m not paying?

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Insanityrules
Posted on December 3, 2012 at 12:45pm
Perhaps I should try this with the internal revenue service and see how far I can get.

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forthepeople
Posted on December 3, 2012 at 12:45pm
Buy Gold & Silver ! and for the doubters …. Two silver dollars filled up the tank of my car in the 50′s and still fills my car up today , rest my case . It might not make money but Dam well keep you from loosing it ( worth ) !

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KeithOlberdink
Posted on December 3, 2012 at 12:42pm
The only thing I care about now is my right to my weapon…. I’m ready to die for it.

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ArmedAndReallyPissed
Posted on December 3, 2012 at 12:39pm
Salary of retired US Presidents ………….$180,000 FOR LIFE

Salary of House/Senate …………………..$174,000 FOR LIFE — This is stupid

Salary of Speaker of the House ………….$223,500 FOR LIFE — This is really stupid

Salary of Majority/Minority Leaders ……. $193,400 FOR LIFE — Ditto last line

Average Salary of a teacher …………… $40,065

Average Salary of Soldier DEPLOYED IN AFGHANISTAN ……. $38,000

I think we found where the cuts should be made!

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- KeithOlberdink
  Posted on December 3, 2012 at 12:50pm
  You sir are my kind of American.
  
  Report this comment
- Polarized America
  Posted on December 3, 2012 at 12:52pm
  .
  and it was the French who invented the .. Guillotine ……go figure
  
  Report this comment
- Polarized America
  Posted on December 3, 2012 at 12:55pm
  .
  btw…what about ” double dipping ” ..a Military pension & a Gov’t pension
  
  Report this comment
- AmericaMustBeFree
  Posted on December 3, 2012 at 12:57pm
  I agree, I am always shocked at what little money a soldier makes and they put the life on the line everyday! Yet these idjits in Washington pay themselves very well even after they are gone. Oh, and their medical would never be Obamacare also! The real criminals are in Washington, serving American’s a heap of crap!
  
  Report this comment
- bekhiet
  Posted on December 3, 2012 at 1:28pm
  and thats just salary and not their “extras”.
  
  Report this comment
- Jackson843
  Posted on December 3, 2012 at 6:34pm
  If they want to try and start balancing the budget, every member of the House, Senate, Executive and Judiciary should take a 15% paycut …. indefinitely. They could concentrate on passing a new law that restricts pensions to no more than 20% of salary and have them all join medicare.
  
  Report this comment
BlackCrow
Posted on December 3, 2012 at 12:29pm
Worthless! Send people to Washington to control the Government and this is what we get, COWARDS! No budget in four years, continuing resolution after continuing resolution, debt ceiling increase after increase and hand power to Odumber on a silver plate. Shut it down!

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- soybomb315_II
  Posted on December 3, 2012 at 12:36pm
  shut it down…. or vote only for Constitution candidates
  
  Report this comment
soybomb315_II
Posted on December 3, 2012 at 12:27pm
“It would permit the president to unilaterally raise the debt ceiling unless congress affirmatively votes against it. It then gives the president veto power over this act of Congress, requiring a supermajority to overturn the veto.”

Makes total sense….The democrats want to enslave you and the republicans just want to hold onto power. The republicans run on a platform of small government, but when they get to Washington – they do everything possible to avoid tough decisions and real reform.

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- mikem1969
  Posted on December 3, 2012 at 12:39pm
  Soy, that is all politicians these days. We need true conservatives in washington and the minute they vote yes on any non-conservative bill then they need to be booted out of the party. America is done for unless there is a true revolution. But these days there are far to many cowards that just want their handout.
  
  Report this comment
Insanityrules
Posted on December 3, 2012 at 12:22pm
No debt ceiling? Sounds good to me. I think I’ll try that with my income tax.

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Chromo200
Posted on December 3, 2012 at 12:20pm
THe RINOs have no class .. They shirked their responsibility for many many years. most Senators have no idea of what is going on outside of Wash. D.C. They come back to their states, tell us lies and go back to their comfortable offices.

The GOP will not get a penny from me nor will I knock on doors for them. If the person is a Tea Party Member I will support .. I doubt if McConnell knows the State of Kentucky except for their country clubs.

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- grampdad
  Posted on December 3, 2012 at 3:24pm
  Face it, the willing participation in this mess is from our spineless leaders. When truth is compromised (i.e. to obo’s version) then we can come up with a budget. But, truth compromised is no longer truth. In a former conservtaive group that I once participated in 70% were Christian the 30% non believers all insisted on gay marriage, abortion, amnesty and the only issue that we could agree on was gun control. Too often the basic foundational values are dismissed as old fashioned. We are not heading for a fiscal cliff, we are in freefall.
  
  Report this comment
Gary_K
Posted on December 3, 2012 at 12:18pm
People, wake the hell up, we are losing our country if we havent already.

These greedy communists want everything for them and are going to kill off most of the worlds population so they can achieve their greedy goals. Tragedy of unknown proportions is in the making.

WAKE UP !

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Maji
Posted on December 3, 2012 at 12:16pm
That’s funny! I mean judging by past actions,they’ve
done exactly that already.

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biohazard23
Posted on December 3, 2012 at 12:16pm
Oh, what the hell. Just keep spending like a drunken sailor. The press will never pin it on Dear Leader anyway (even though it’s clearly his economy now but whatever) and will blame the GOP no matter what so screw it.

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AmericanStrega
Posted on December 3, 2012 at 12:14pm
The poop just keeps getting deeper and deeper.

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Snowleopard {gallery of cat folks}
Posted on December 3, 2012 at 12:14pm
They will give it to Obama, or he will seize it under pretext he cited in the last sequestration/debt limit battles under false interpretations of the Constitution. The Congress who gives it to him are guilty of allowing a dictator to arise: they have passed their duty onto another and thus become irrelevant at that point.

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TheVOR
Posted on December 3, 2012 at 12:14pm
WAF’d

it’s kinda like WTF, only the A stands for Are

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doomytram
Posted on December 3, 2012 at 12:13pm
These people in Washington DC have destroyed this country and Obozo and his supporters are calling everything racism. It’s about time for everyone on this site to just pack up and got off of these sites. The district of corruption isn’t going to do anything but kick the can down the road and remained blinded by the sunlight of the spirit. This PC Leftist stuff is just too much for me to take. It’s ridiculous these leftist.

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RANGER1965
Posted on December 3, 2012 at 12:11pm
Accountability is the antithesis of corruption.

Once the media were the watchdogs of the public. The fear of being exposed, reduced corruption among politicians. Now that this watchdog is gone, and the media have become propogandists, there is no limit to what evil those in power will do.

In time all powers and systems devised to keep men in power from becoming tyrants will be done away with. it is the nature of things. A nature which our founders warned us about repeatedly.

“The Constitution is NOT an instrument for the government to restrain the people,
it is an instrument for the people to restrain the government
lest it come to dominate our lives and interests.”

- Patrick Henry

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- michaelmoron
  Posted on December 3, 2012 at 12:34pm
  Its real simple folks.
  
  QE 1,2 and 3 = Loans to our “government” with interest from the FEDERAL RESERVE PRIVATE BANK
  
  TARP = Loan to our “government” with interest from the FEDERAL RESERVE PRIVATE BANK
  
  Jobs Stimulus = Loan to our “government” with interest from the FEDERAL RESERVE PRIVATE BANK
  
  Raise Debt Ceiling = Allow more Loans to our “government” with interest from the FEDERAL RESERVE PRIVATE BANK .
  
  The PRIVATE BANK takes Treasury Bonds backed by the faith and credit of our “government” in turn for their PAPER with interest attached = INSANITY !!!!!
  
  ~~~~
  
  “People who will not turn a shovel of dirt on the project, nor contribute a pound of material, will collect more money, from the United States, than will the people, who supply all the material and do all the work. This is the terrible thing about interest… But here is the point: If the nation can issue a dollar bond, it can also issue a dollar bill. The element that makes the bond good, makes the bill good, also. The difference, between the bond and the bill, is that the bond lets the money-broker collect twice the amount of the bond, and an additional 20%. Whereas the currency, the honest sort, provided by the Constitution, pays nobody, but those, who contribute in some useful way. It is absurd, to say that our country can issue bonds, and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the people.”
  – Thomas Edison
  
  Report this comment
- michaelmoron
  Posted on December 3, 2012 at 12:52pm
  @Ranger965
  
  Nice quote.
  I didnt meant to post on your comment. I wanted the top of the thread :p
  
  I agree with you. The same group of men that pull our puppet’s strings now own 90% of America’s media:
  http://www.technewsdaily.com/4423-6-companies-control-90-percent-media.html
  
  These are the same men that own the Federal Reserve PRIVATE BANK !!!
  
  “This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President Wilson signs this bill, the invisible government of the monetary power will be legalized….the worst legislative crime of the ages is perpetrated by this banking and currency bill. From now on, depressions will be scientifically created.”
  – Charles A. Lindbergh
  
  “Invisible Government” ????? very interesting.
  
  Now check this !!!
  
  “Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people. To destroy this INVISIBLE GOVERNMENT, to befoul the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of today.”
  ― Theodore Roosevelt
  
  ~~~~~
  
  “The real truth of the matter is that a financial element in the large centers has owned the government since the days of Andrew Jackson.”
  – President FD Roosevelt
  
  “There is not a man within the sound of my voice who does not know that this Nation is run by the international bankers.”
  – Congressman Louis T. McFadden
  
  Report this comment
UNALIEN
Posted on December 3, 2012 at 12:10pm
Meh, there is no debt ceiling, it is a false construct to create the illusion of accountability with the purpose of giving credibility to the ponzi financial system

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- soybomb315_II
  Posted on December 3, 2012 at 12:30pm
  Agreed – the immoral banking system is the main culprit…… but at least with the debt ceiling they have to pretend to care about once a year. Now they want to do away with that….When will people around here realize that they are being led by wolves in sheep’s clothing
  
  Report this comment

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