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“Fundamentally Stupid And Dangerous”: The GOP Debt Ceiling Strategy Is “Hostage Taking”

Paul Krugman on Sunday accused the Republican leadership of holding the country hostage.

The Nobel-Prize winning economist and New York Times columnist argued that congressional Republicans are “threatening to blow up the world economy” if they don’t get their way in the debt-ceiling debate. After a difficult fiscal cliff battle, President Barack Obama said he would not negotiate over the debt ceiling, but Republicans have said they won’t authorize an increase in the country’s spending limit without major spending cuts.

“We should not allow this to become thought of as a legitimate or normal budget strategy,” Krugman said on ABC’s “This Week.” “This is hostage taking.”

Krugman has made similar statements in the past, particularly when defending the idea of minting a trillion-dollar platinum coin to avoid the debt ceiling crisis — a loophole the White House ruled out Saturday. In a blog post earlier this month, Krugman argued that Obama should be ready to mint the coin because it offered a “silly, but benign” solution to the crisis. The alternative: Putting the nation’s ability to meet its financial obligations at risk, an option that Krugman described as “both vile and disastrous.”

“The debt ceiling is a fundamentally stupid but dangerous thing,” Krugman said on “This Week.” “It’s incredibly scary, this is much scarier than the fiscal cliff,” he added later.

If Congress does nothing to raise the debt ceiling, the U.S. could lose its ability to meet its financial obligations by as early as February 15, according to a recent report from the Bipartisan Policy Center. Republican leaders and the White House came to an agreement earlier this month to address the so-called fiscal cliff, a combination of tax increases and spending cuts that economists warned could have plunged the country into recession.

 

By: Jillian Berman, The Huffington Post, January 13, 2013

January 14, 2013 Posted by | Debt Ceiling | , , , , , , , , | 3 Comments

“An Inane Idea”: With A Trillion Dollar Coin, President Obama Can Fight Dumb With Silly

A trillion dollar platinum coin? Really? Has our politics really reached a point where such an obviously inane idea is gaining traction? Well, yes. When your capitol has become Clowntown, U.S.A., you sometimes need to fight bad ideas with silly ones.

The idea, if you haven’t heard, is for President Obama to defuse the forthcoming debt ceiling crisis Republicans are busily manufacturing by directing the Treasury to mint a platinum coin worth $1 trillion. With an extra trillion on the books, the debt ceiling would no longer be an issue. While the Federal Reserve ordinarily is in charge of printing money, there’s a law on the books allowing the Treasury secretary to produce platinum coinage of whatever value s/he sees fit.

Sure, the purpose of the law was to permit the Treasury to issue commemorative coins. But so what? The purpose of the debt ceiling wasn’t to give one party the leverage for a global, economic hostage crisis. Were the debt ceiling not raised, the Washington Post’s Ezra Klein writes, “the damage to the economy would be tremendous, and it would occur at every level, from individuals looking for a loan to buy a house to hedge funders trying to play the markets.” His full article on what happens if we breach the debt ceiling is worth a read.

So when one political party is acting like a political version of a James Bond villain (“Give in to my demands or I will wreck the world economy!”) maybe the answer is for the president to channel his inner Dr. Evil (“One trillion dollars.”)

Again, it all sounds silly but some very serious folks are lining up behind it, including the New York Times’s Paul Krugman, who has a Nobel Prize lying around his office. New York Rep. Jerrold Nadler is also a fan. And despite some suggestions that none of this is legal because it’s not what the law was intended for, Philip Diehl, a former director of the Mint, told Klein that it’s perfectly legal.

So is it a silly idea? Yes. But Republican extremists have brought us into an age of political asymmetrical warfare, passing off crazy, dangerous ideas as serious. Why should the president unilaterally disarm on that front?

 

By: Robert Schlesinger, U. S. News and World Report, January 9, 2013

January 10, 2013 Posted by | Debt Ceiling, Politics | , , , , , , , | 1 Comment

“Highlighting GOP Duplicity And Hypocrisy”: How President Obama Should Open The Debt-Ceiling Negotiations

In the last few days, a number of outlets have started giving serious thought to the “platinum coin” option in the debt ceiling fight. In short, thanks to a loophole, the Treasury could mint a $1 trillion platinum coin to temporarily pay down the national debt until the debt-ceiling standoff has passed.

Defenders of this idea, including Bloomberg’s Josh Barro and my Post colleague Greg Sargent, point out that it is not as absurd as threatening default on the nation’s debts to force policy changes. But they also admit that, fundamentally, this is a gimmick; while the White House might be wise to be ready to mint the coin if absolutely necessary, it would look silly publicly threatening to do so. (And it would hand lovers of “pox on both houses” punditry an easy way out of chiding only Republicans.)

But that doesn’t mean the White House is helpless when it comes to framing the debate — far from it. The best idea remains one that Post columnist Matt Miller proposed last month: Raise the debt ceiling “just by the amount it would take to accommodate the debt Republicans voted for in Rep. Paul Ryan’s budget last year — $6 trillion over the next decade.”

As Miller wrote during the “fiscal cliff” standoff, the idea that Republicans actually care about the deficit is “demonstrably, laughably, even shockingly false.” The party showed absolutely no interest in controlling deficits during its six years in control of Congress and the White House. Several GOP moves since then have only confirmed that Republicans are interested only in using the national debt to try and scare people into adopting their unpopular policies.

After all, the failure of John Boehner’s “Plan B” tax proposal showed House Republicans’ determination to vote down debt solutions that didn’t conform to their tax ideology. The GOP has clung to pushing “chained CPI” as its favorite Social Security reform in this round of negotiations, since it cuts benefits without the politically dangerous headlines of “GOP cuts benefits,” but the Congressional Budget Office has found it’s actually one of the least effective policy options for extending Social Security’s solvency. And on Medicare, Republicans’ (and, unfortunately, some Democrats’) idea of raising the eligibility age would only lead to minimal savings, while hurting minorities hardest.

Given that Republicans’ priorities are their policies first, the debt a distant second and the health of our economy an even more distant third, Miller’s idea should be at the center of the White House’s strategy on the debt ceiling. Remember, the GOP caucus has repeatedly backed Ryan’s budgets, the latest of which, to repeat, adds $6 trillion in debt over 10 years. By continuously highlighting Republican duplicity and hypocrisy, the White House can give itself the most room to make the best deal for the American people.

By: James Downie, The Washington Post, January 8, 2013

January 9, 2013 Posted by | Debt Ceiling | , , , , , , , , | 1 Comment

   

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