Sunday, January 13, 2013

No platinum coin option

Josh Marshall makes some very good points here on why the platinum coin option, for avoiding the default on America's obligations - which Republicans seem determined to force us into - would be a bad idea.

There have been a lot of people pushing the idea (including the artist who created that image above). Here, for example, is Nobel Prize-winning economist Paul Krugman, someone I really respect:
First of all, we have the weird and destructive institution of the debt ceiling; this lets Congress approve tax and spending bills that imply a large budget deficit — tax and spending bills the president is legally required to implement — and then lets Congress refuse to grant the president authority to borrow, preventing him from carrying out his legal duties and provoking a possibly catastrophic default.

And Republicans are openly threatening to use that potential for catastrophe to blackmail the president into implementing policies they can’t pass through normal constitutional processes.

Enter the platinum coin. ...

It’s easy to make sententious remarks to the effect that we shouldn’t look for gimmicks, we should sit down like serious people and deal with our problems realistically. That may sound reasonable — if you’ve been living in a cave for the past four years. Given the realities of our political situation, and in particular the mixture of ruthlessness and craziness that now characterizes House Republicans, it’s just ridiculous — far more ridiculous than the notion of the coin.

So if the 14th amendment solution — simply declaring that the debt ceiling is unconstitutional — isn’t workable, go with the coin.

That makes sense, doesn't it? Are we going to let Republicans hold a gun to our head again? And what's that going to do to our already-fragile economic recovery? (Note that I'd much prefer the 14th Amendment solution, because I don't think the debt ceiling is constitutional, but the Obama Administration has already ruled that one out, apparently.)

But I really like Josh Marshall's response at TPM. To me, this seems right:
Some people thought the White House was suggesting they might … might be willing to pursue the Platinum Coin option to resolve a debt default crisis. I didn’t think so. And I think I was right. Today the Treasury released a statement saying that the Treasury and thus the administration and thus President Obama do not believe that the relevant statute “can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit.” ...

One of the big problems with the debt-ceiling drama is that the vast majority of people don’t understand what’s being discussed. You hear relatively serious people on the news acting as though it’s Obama asking to spend more money or even unlimited money. So you have misunderstandings about what it means, compounded by tendentious misrepresentations and then simple inattention. But, as we’re already seeing on the standard misinformation sites, the second you start talking about the President minting a special trillion dollar quarter, people pop up and say, What the F#*% are you talking about?

In other words, the Platinum coin has the additional magic of making it look like the President is the one doing something reckless and totally crazy rather than Congressional Republicans who are the ones really doing it.

That’s a problem.

Next step: Congressional Republicans force the country into national default and at the last minute the President rescues the country with a Platinum coin. Okay, where are we on day two? The Republicans realize they’re outfoxed and immediately pass a debt limit hike? Really? That doesn’t make sense to me at all.

If anything, it’s removed all the political consequences of their recklessness and puts them on the search for some new point of leverage. But the big point is now we’re out into the wilds of Platinum Coin financing with no clear road back to actual real world financing of the national debt.

Again, that’s a problem.

What makes this a genuine national crisis is that there’s no good way of dealing with this — that’s why it’s bad to have people at war with the state at the center of government. So I totally get the Platinum Coin attraction. But I think what it actually does — or, would do — is allow Republicans to pull their latest destructive stunt without the consequences. It lets them off the hook in the grandest way and protracts, extends and deepens the country’s sojourn into a legal, constitutional and financial no man’s land.

I think this is what the White House means by not negotiating. No way out. The President is saying “we’re not going to play that game anymore.” We’re not going to engage or be co-opted by your attacks on the country.

The problem is you’re dealing with people who simply may not flinch. Who may happily break what generations of Americans have spend centuries — literally centuries — building.

That makes sense to me. Krugman is right that Republicans might present America with only two alternatives, "one that’s silly but benign, the other that’s equally silly but both vile and disastrous," but I'm not sure how benign this option really is. Politically, it might not be benign at all.

Of course, is it worse than defaulting on what we owe, with the horrible consequences resulting from that? That's a valid question.

But sometimes, you have to accept the terrible consequences of refusing to pay kidnappers, just to stop future hostage-taking. If holding a gun to your head gets you to pay, you'll never stop paying. That gun will come out regularly after that (literally, in some cases), if it proves to be a politically successful tactic.

And no democracy can function if that becomes the norm. We are doomed as a nation if we let this work. Republicans lost the recent election big-time (and they might lose the ability to stop all progress in the Senate, too, if Democrats finally grow a spine and institute real filibuster reform), but the GOP is still searching for a way to force their views on the rest of us, the majority of Americans.

It would be disastrous if Republicans refuse to let America pay its debts (our debts). But it would be worse if they discover that blackmail works. It would be worse if they realize they can just hold a gun to our head whenever they want, to get anything they want. This has to stop here!

And that's what Barack Obama is saying, although I don't know if Republicans believe him. Heck, I'm not at all sure I believe him. After all, he's always caved in the past. And I know that Congressional Democrats are a very weak reed to rely on for support. (Apparently, they still haven't decided whether or not to reform the filibuster, as crazy as that sounds.)

Democrats have always caved before, so Republicans expect them to cave again. Well, it's a reasonable expectation, don't you think? If you've always given in to bullies, you've established a pattern which is likely to make your opponent very confident.

It's possible that Democrats have finally grown a pair - especially after their resounding election victory- but I wouldn't put money on it. Leopards don't usually change their spots. And Republicans know this as well as anyone else.

Unfortunately, if Barack Obama can't convince the Republicans that he really means it, this time, things could get pretty nasty. And a default wouldn't be something we could go back on. Once we default, just because our political system has become that dysfunctional, it will worry investors for a long, long time, even if we come  up with a compromise later.

Note that this is much, much worse than the so-called 'fiscal cliff.' That wasn't a cliff at all. We could have gone over that 'cliff' and then stepped back from it afterwards, no problem. Not so with the debt ceiling. If Republicans are crazy enough to take us over that, the results won't be good.

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