Friday, July 29, 2011

If No Abolition, Then At Least Link Debt Ceiling Changes To Budget Passage

So, nobody at all is responding to my and Moody's call to abolish the debt ceiling, and probably nobody is going to follow up on the semi-wacko coining large platinum coins scheme either. So, while this will not avoid the current oncoming train wreck, if all these people want to hang onto this silly anachronism of a debt ceiling, then the obvious thing to do is to in the future tie changes in it to passing a budget. So, when Congress actually passes a budget, it should make sure that the financing for that budget is in place, either through taxes or borrowing. Part of making sure the latter is in place is to make sure the debt ceiling (if there is one) is high enough to accommodate that borrowing, preferably with some wiggle room for an unexpected deficit surge due to an unexpected decline of the economy. Why do we not see any politician proposing this obvious remedy for the future in the face of what Moody's predicted, a likely default due to "political gridlock in the Congress"? Mandating spending while witholding the ability to pay for it (or finance the paying for it) is the utter height of irresponsibility.

3 comments:

TheTrucker said...

My own _GUESS_ is that the Republicans and all of Wall Street want Obama to defy the squirrel crap congress so as to make that defiance the centerpiece of his defrocking. Meanwhile, Obama will not go for the bait and will allow the nation to default, or worse, allow the Republicans to manipulate the media and blame him for the failure of the economy. He will earn his name: "President Pushover".

When congress fails to create compatible laws such that the executive cannot "see to the faithful execution of the laws", then it falls to the president to create law by executive order. Why is this not the position of the president? The 14th amendment need not be invoked. And his executive order can be overturned by a congress that has the will to do so. They only need make laws that can be "faithfully executed". That should be the position of the president; ANY PRESIDENT. But it also seems to me that the 2011 budget "implicitly repealed" the debt limit law created by the previous legislature. Legislative entrenchment is unconstitutional, and new laws supplant old ones. And if this "implicit repeal" is the case then the old law is entirely toast. The constitutional bar against legislative entrenchment prohibits the previous congress from controlling the budget laws of the new congress. Every new legislature has the same power of repeal and modification and new law as any previous legislature. The only _LAW_ that cannot be altered by congress after an election is law in the constitution itself.

TheTrucker said...

But another comment worth consideration here is a the suggestion of Ron Paul agreed to be Dean Baker that the FED simply forgive some of the treasury debt on its balance sheet. As the FED burns its stock of T-bonds and T-bills in a furnace (with only the money fairy being adversely affected -- and said money fairy doesn't care) the total debt is reduced dollar for dollar. The Treasuries are on the books from quantitative easing and so long as the QE and the forgiveness do not cause inflation then the QE and the forgiveness should continue.

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