What Next? I Can Only Guess
Surely, the United States will not be obliged to default on its debts a week and a half from now? These clowns in Congress can’t be serious? Or can they? And if they force the President’s hand, what will he do?
What would I do if I were President? What would you do?
The Constitution states flatly that the debts must be paid.
But if the Tea Party controlled House of Representatives refuses permission to raise the debt ceiling, where will the government get the money to pay those debts?
I don’t see the President or the Senate dumping the health care act to appease the Tea Party. I don’t see the Tea Party accepting anything less.
So what happens when the government can’t borrow any more?
If I were in the President’s shoes, I would simply get the Treasury to produce the money needed to meet the government’s obligations. There’s a statutory limit on the amount of paper money the US can have in circulation at any one time, but no such limit on coins. So I would get the US Mint rolling. It might sound silly to talk about trillion-dollar coins, for example, but they would ne quite legal.
That would be a risky thing to do, of course. The value of the dollar would be compromised. And the flood of new money would probably destabilize the global economy and trigger widespread inflation.
There are other means for the government to raise the cash needed to meet its obligations. As Professor Jack M. Balkin explains in a recent CNN opinion piece:
The government can also raise money through sales: For example, it could sell the Federal Reserve an option to purchase government property for $2 trillion. The Fed would then credit the proceeds to the government’s checking account. Once Congress lifts the debt ceiling, the president could buy back the option for a dollar, or the option could simply expire in 90 days. And there are probably other ways that the Fed could achieve a similar result, by analogy to its actions during the 2008 financial crisis, when it made huge loans and purchases to bail out the financial sector.
Of course, if the President took that kind of action to avert a debt default, the radical right would accuse him of exceeding his Constitutional powers.
But if he fails to find a way to pay America’s debts, what then?
The radical right would surely accuse him of causing an economic catastrophe at home and abroad.
Either way, it looks as if the Republican radicals will get their excuse to try and impeach the president. They’ve been itrching to do that for years.
And if the impeachment effort fails, as it did with President Clinton, what then?
Will the right-wing militias rise up and seek to overthrow the Obama Administration by force?
Why wouldn’t they? What else are they arming and training for?
Of course it would be crazy! But the radical right looks crazy to me already.