Delay is the enemy
Let there be no mistake: Republicans are forcing the current debt ceiling crisis for political purposes. It is not about fiscal responsibility. If it were, the Republicans would not have cavalierly raised the debt ceiling three times during the Trump presidency, thereby pumping up the debt by about $7 trillion. The Republican debt ceiling hostage-taking is calculated to push the economy south sufficiently to undermine Biden’s economic policies through the 2024 election. If the result is a recession or a depression does not matter that much to them, as long as it creates economic pain and thereby gets votes in 2024. True conservatives—the Party siding with rich people and corporations—would prefer it be only a recession, but if driving the economy over a cliff is what is required to boot Democrats out of power, they’re on board The MAGA Republicans who have contrived the deficit dilemma really have no political philosophy apart from fear and detestation of the federal government, and a concept of individualism bordering on anarchy. So they don’t care either way. These are bad people who cannot be counted on to act in good faith.
These bad people—either by extreme action or through the tacit threat of extreme action to include physical violence—are the ones driving the debt ceiling crisis. Their main strategy is intimidation. This strategy of intimidation is what stayed Merrick Garland’s hand in pursuing Trump and Trump henchman over the stolen documents case back in 2021 and continuing into 2022. It is also delaying President Biden’s hand in his fight with House Republicans over the debt ceiling.
Let there also be no mistake regarding House Speaker Kevin McCarthy’s shows of negotiating with the White House: the MAGA Republicans are capable of, and willing to, sabotage any compromise between McCarthy and the President at the last minute.
We are now nearing the last minute before the country’s default on its debt if the debt ceiling is not raised. That the debt ceiling itself is no more than a tool in the hands of obstructionists makes little difference: it’s the unfounded belief in its legitimacy on both sides of the aisle that has Biden in a terrible bind.
It’s time for the administration and its friends in the House to go on the offense. Further delay almost certainly guarantees a bad outcome: default on the debt itself, or a shredding of Biden’s economic agenda as well as much of the existing social safety net.
Options are risky, but less risky than a default
A default could quickly precipitate a deep recession or depression at home, send shocks through the global financial system, shatter the international trust in U.S. securities, and deter foreign investment in the United States indefinitely.
Time, it appears, to break glass in case of emergency.
There are two principal options available to the administration to cut through the debt ceiling impasse, and either will incur some legal wrangling, all the more reason to act quickly: (1) Section 4 of the 14th Amendment; (2) trillion dollar coin.
1. Section Four of the Fourteenth Amendment
If you’ve been paying attention, you are probably full up with talk about Biden invoking Section 4 of the 14th Amendment, so I’ll refrain from discussing it here. Just a couple of links to first the arguments in favor, and secondly the argument against:
In favor of the president invoking the 14th Amendment
Against the president invoking the 14th Amendment
2. Minting a trillion dollar coin
The $1T dollar coin idea sounds wacky, but it follows from the U.S. government’s ability to create money by virtue of having a sovereign currency. It has been written into law. The mint can create a platinum coin of any face value that could be used by the Fed to cancel out the debt that exists in the form of U.S. Treasuries.
For a case in favor of the $1T coin, read Juliana Kaplan and Ayelet Sheffey in Business Insider. Also see this discussion on NPR
For a deeper discussion, check out this podcast on Marketplace. The latter goes into the broader picture of how money works in the U.S overall.
The minting of the $1T coin would, like invoking the 14th Amendment, be challenged in court by the bad people who like having President Biden hoisted on the horns of the debt ceiling dilemma. Therefore, just as with the 14th Amendment, it’s time either to do it or threaten to do it and see how the Republicans react. It’s time to push back rather than continue negotiations which the Speaker of the House is lukewarm on.
Note that both President Biden and Janet Yellen are loathe to take either of the options above. Whether Federal Reserve chairman Jerome Powell would accept the $1T coin is in doubt, but if that’s the only way to solve the debt ceiling crisis it would be extremely tempting. Biden and Yellen argue either measure could get tied up in court beyond what is now determined to be the default tipping point in early June. Getting a decision by the U.S. Supreme Court would require expediting the case with unprecedented speed. But this is an unprecedented time. The battle over the debt ceiling in 2011 is not an apt comparison to what is happening today, because while the Republicans pressing their case early may have been militant and mean-spirited, they were at least sane to a degree that cannot be said of MAGA members of the current House of Representatives.
Unfortunately, President Biden has a faith in institutions and traditional legislative process that induce him to stick with ostensible “negotiations” rather than step out of the box as would Donald Trump in the same circumstances. You can be sure in the same situation with the legislature reversed Trump would be brandishing both the 14th Amendment and the $1t coin as sticks to cow the legislature. Trump did know the effectiveness of discarding norms, and that’s one ugly lesson President Biden needs to heed.