The Trillion Dollar Coin? Thanks to Sen. Mitch McConnell and Conservatives….

I have been following the developments of the debt ceiling crisis and find the latest potential remedy something akin to a plot from a Robert Ludlum novel.

One ‘potential remedy’ to the dysfunctional political climate is to have the U.S. Mint strike a $1 trillion platinum coin. It would be minted within minutes at West Point and could be physically deposited at the New York Fed, that’s only a short helicopter ride away.

The Fed, once given the coin, would credit Treasury’s account with $1 trillion that would not count towards the national debt.

As I said, straight out of a Ludlum book.

The Washington Post writes this idea has been rejected.

As part of their internal review, White House officials have circulated internal memos with a range of untested theories should Congress fail to resolve the debt ceiling standoff, including the creation of a $1 trillion “coin” idea that has been popular among some liberals for years, the people said. But these options have been set aside as unworkable, the people said.

In the United States, Congress authorizes spending and sets taxing levels, and then separately sets a limit on how much the country can borrow. While Republicans like to spew over the debt ceiling matter, facts show Republican presidents have piled on more debt in the past 60 years than Democrats. They need to be responsible and increase the debt limit this week.

And the GOP should not think they are going to get some charm bracelet of goodies for simply doing their jobs! That behavior on the part of the conservatives will no longer be tolerated. Republicans need to get their hands dirty, too, and face up to the fiscal reality of the bills they have already passed. Like the moronic Trump tax bill that was an obscene giveaway to the wealthy.

Let us not mince words. A lack of increasing the debt limit would be a dramatic problem for the country! The international repercussions would send us into a recession.

So, would the government possibly consider the idea of a minted coin to stop the wreckage of the economy? Regardless of what has been stated thus far when the topic has been raised?

Paul Krugman wrote over the days in The New York Times his support for the idea.

Well, there’s a strange provision in U.S. law that empowers the Treasury secretary to mint and issue platinum coins in any quantity and denomination she chooses. Presumably the purpose of this provision was to allow the creation of coins celebrating people or events. But the language doesn’t say that. So on the face of it, Janet Yellen could mint a platinum coin with a face value of $1 trillion — no, it needn’t include $1 trillion worth of platinum — deposit it at the Federal Reserve and draw on that account to keep paying the government’s bills without borrowing.

Alternatively, Biden could simply declare that the 14th Amendment to the Constitution, which says that the validity of federal debt may not be questioned, renders the debt ceiling moot.

And there may be other tricks I don’t know about.

Would any of these approaches basically mean using silly gimmicks to avoid catastrophe? Possibly yes. But given the stakes, who cares if the approach sounds silly?

As for the thoughts of this blogger….well, the coin sounds supercharged with political and legal pitfalls. So perhaps we need to just pull the heads of the GOP from wherever and have them face facts.

Raising the debt limit has no direct impact on the size of the national debt. It has no impact either for more spending or freezing or restricting spending. The only thing that increasing the debt limit does is pay expenses previously authorized by presidents and Congress.

And so it goes.

List Of GOP Presidents And The Debt Ceiling Facts

Let’s be honest about what is happening in Washington regarding the debt ceiling.

Republican Senate Majority Leader Mitch McConnell and the entire GOP caucus are desiring to threaten the United States economy by not only refusing to increase the debt limit, but denying through a procedural method the Democrats from being able to vote for it.

The dangers of not increasing the debt limit have been written about often as of late. I have made it clear that the Republicans should not be able to hold the economy hostage during the increase process, so to extract something for just doing their jobs.

The absolute blarney that McConnell is spreading about why the Republicans are pouting in the sandbox makes us more aware of what he wishes the public not to know. Or recall.

The fact is that the majority of this country’s debt was incurred by Republican presidents. That is not my writing a partisan line, but rather one of those pesky facts Republicans wish to forget. The national debt is all those deficits accumulated, minus whatever we have paid off, regardless of which party the debt accumulated under. In other words, the GOP needs to act like adults.

Here then are the numbers…..the facts...from over the decades.

Lyndon Baines Johnson (D)
     Assumed office November 1963: $5 billion deficit
     Left office January 1969: $3 billion surplus
     Decreased deficit by $8 billion
Richard Nixon (R)
     Assumed office January 1969: $3 billion surplus
     Left office August 1974: $6 billion deficit
     Increased deficit by $9 billion
Gerald Ford (R)
     Assumed office August 1974: $6 billion deficit
     Left office January 1977: $54 billion deficit
     Increased deficit by $48 billion
Jimmy Carter (D)
     Assumed office January 1977: $54 billion deficit
     Left office January 1981: $79 billion deficit
     Increased deficit by $25 billion
Ronald Reagan (R)
     Assumed office January 1981: $79 billion deficit
     Left office January 1989: $153 billion deficit
     Increased deficit by $74 billion
George H.W Bush (R)
     Assumed office January 1989: $153 billion deficit
     Left office January 1993: $255 billion deficit
     Increased deficit by $102 billion
Bill Clinton (D)
     Assumed office January 1993: $255 billion deficit
     Left office January 2001: $128 billion surplus
     Decreased deficit by $383 billion
George W. Bush (R)
     Assumed office January 2001: $128 billion surplus
     Left office January 2009: $1.4 trillion deficit
     Increased deficit by $1.5 trillion
Barack Obama (D)
     Assumed office January 2009: $1.4 trillion deficit
     Left office January 2017: $665 billion deficit
     Decreased deficit by $735 billion
Donald Trump (R)
     Assumed office January 2017: $665 billion deficit
     Left office January 2020: $3.7 trillion deficit
     Increased deficit by $3 trillion

As the data proves from over the past nearly 60 years only Democratic President Jimmy Carter had a larger budget deficit in his last year in office than he inherited from his predecessor. Please note that all six Republican presidents had larger deficits in their last budgets than they were handed at the start of their term.

In other words, Republicans love to spend taxpayer money and then deny what they did in office in relation to spending. What is harmful at times like this, when debt ceiling action is required, is too many gullible voters have swallowed the GOP rhetoric that this is all somehow the fault of Democrats.

Such attempts from Republicans are simply factually wrong.

And so it goes.

Debt Ceiling Reaching 11th Hour: GOP Most To Blame, Data Shows, For National Debt

Here we go, again.

Needlessly.

The debt limit caps the total amount of allowable outstanding U.S. federal debt. For people reading along that took place back on August 1st. Since that time the Treasury Department has been taking as the newspapers remind us “extraordinary measures”. But that can only last so long.

As Treasury Secretary Janet Yellen reminded Congress today that if the debt ceiling is breached, “it is uncertain whether we could continue to meet all the nation’s commitments” after October 18th. In other words Congress and that also mean Republicans, need to be adults and either raise or suspend the debt limit or the Federal government will lack the cash to pay all its obligations.

That has never happened before.

What are front and center is the Republican desire to get something for their vote. Instead of just doing their job, the conservatives want to be bought off for their votes. As noted on this blog last week the Republicans mimic Ferengis on Star Trek.

Why we have every reason to be cranked with conservative Republicans is that raising the debt limit has no direct impact on the size of the national debt. It has no impact either for more spending or freezing or restricting spending. The only thing that increasing the debt limit does is pay expenses previously authorized by presidents and Congress.

But the Ferengis in Congress will fight and pontificate and try to force their way to get something before they will do what is simply the only logical action to take.

This week Steve Rattner, who loves to use charts to drive home the points the nation needs to know, made a perfect point at the time Senate Republicans are making markets jittery.

Republicans like to blame Democrats for all this borrowing. But the facts show otherwise. Five of the six presidents who incurred the most debt relative to the size of the economy in the past 60 years were Republicans. While Donald Trump faced the need to counteract Covid effects, his tax cuts and spending increases also played a major part. And Barack Obama had to deal with the financial crisis. But the fact remains that of the 57 percentage point increase in the debt to GDP ratio since 1960, 52 percentage points – all but five percentage points – were incurred with a Republican in the White House. (Note that Republicans and Democrats held the White House for roughly equivalent periods over these decades.)

What this blogger simply can not condone is the attitude expressed by Republicans that this issue is one to be played for partisan advantage. NO ONE would win if the nation defaulted on the debt. Look at how the markets have reacted to the high-wire act by conservatives.

As we know Republicans had a huge hand in amassing this debt. They must simply put the need of the nation before their playground antics.

And so it goes.

Former Treasury Secretaries Unite In Arguing Nation’s Economy At Stake Over Debt Limit Crisis

If you sense a note of alarm and panic in the words and actions of former United States Treasury Secretaries then you are reading the mood and tone of their language correctly. If you note the number of posts on this blog over the recent past about this issue you also know this matter impacts us all.

It was reported that former Treasury heads Hank Paulson and Steven Mnuchin made a concerted effort to steer Senator Mitch McConnell towards a sane path when dealing with the debt ceiling standoff. Since the nation is still at the edge of the cliff, and the hours are ticking off, we know that those conversations did not take hold with the senate majority leader. After all, there is a conservative political game to be played, and the Kentuckian will not miss his chance to score something in the process.

The meeting with the Majority Leader has made for some interesting reading in the newspapers today.

Paulson expressed in the meeting a high degree of concern about the dangers and likelihood of a federal default and its implications for the global economy, the people said. Paulson worked closely with McConnell and other lawmakers in 2008 to address the financial crisis.

After the discussion, Paulson told the Biden administration that McConnell is serious that Democrats must approve the debt ceiling hike on their own through the budget reconciliation process, given their control of Congress and the White House and their pursuit of a partisan spending package, the people said. Democrats have said the debt ceiling must be approved on a bipartisan basis — with GOP support — as it has been historically and given that the current national debt was created by spending approved by both parties.

What I find striking, once again since the debt limit issue arises into partisan affairs all too often, is the lack of awareness and concern for the business community, from the very party that always carries its water.

The business community is rightly concerned about the potential economic disaster that looms should the Congress fail to do its job by increasing the debt limit.

To underscore the resolve of the former secretaries to help force passage of the debt limit language most of them sent a letter to congressional leaders outlining the grave harm the partisan dickering over this matter will mean to the nation. Should the U.S. default on its debt or even if the partisan games continue to the 11th the impact on the economy could be “detrimental”.

Signing the letter was Michael Blumenthal, Robert Rubin, Timothy Geithner, Larry Summers, and Jacob Lew. It should be noted that Mnuchin, who served as Treasury secretary during the most unsettling term of Donald Trump, did not sign the letter.

The letter made the points Republicans need to heed.

“Even a short-lived default could threaten economic growth,” the group wrote. “It creates the risk of roiling markets, and of sapping economic confidence, and it would prevent Americans from receiving vital services. It would be very damaging to undermine trust in the full faith and credit of the United States, and this damage would be hard to repair.”

The U.S. has never defaulted. Not once. It must be clear to the Republicans in this session of Congress the damage they do to the nation, and themselves, should it happen on their watch. Giving the nation a historic financial crisis on top of the pandemic is a massive over-step, even for them.  

And so it goes.

Senate Republicans Acting Like Ferengis Over Debt Ceiling Passage

Anyone watching the markets on Monday can easily grasp the nervousness of investors. One of the pressing issues creating red is the all-too-real risks that surround the deepening standoff between Democrats and Republicans over funding the federal government and raising the debt ceiling.

At issue is what now has become the default action of Congress with the need to pass a short-term spending bill so to prevent a government shut-down. But also needing immediate attention is the passage of the debt limit measure. That our political dysfunction has deepened to such a degree that budgets are no longer able to be fashioned in an orderly process or the one line debt limit language not able to fly through Congress speaks volumes about how governing has come off the rails.

No sane person anywhere in the nation, or for that matter in the world, who understands the gravity of the debt limit discussion, thinks that not acting at once on this measure is a good idea. The government runs out of funding on September 30th.

But that has not stopped Senate Minority Leader Mitch McConnell from playing partisan football with the issue. He has insisted that his caucus will not cooperate with the passage of the debt limit. There is always an attempt from the GOP to get something for the very act of doing their job when it comes to increasing the debt ceiling.

The legal limit for what the federal government can borrow to avoid defaulting on its obligations should not be up for discussion but the Ferengi-like Republicans all try. Their desire to acquire something from every encounter makes them very much akin to the Star Trek creations.

Republicans have no leg to stand on as this is not about what the nation will spend, but rather paying for our debts which were accumulated over the years under both Democratic and Republican administrations.

Why this matters is that there is a clock ticking.

The Treasury Department issues bonds to fund spending approved by the president and Congress beyond what is covered by federal revenue. But when we reach the debt limit, the Treasury is no longer authorized to issue new bonds. At that point as it needs to be reported each time this happens Treasury must take “extraordinary measures” until the president signs a bill a new debt limit increase.

Why we have every reason to be cranked with conservative Republicans is that raising the debt limit has no direct impact on the size of the national debt. It has no impact either for more spending or freezing or restricting spending. The only thing that increasing the debt limit does is pay expenses previously authorized by presidents and Congress.

But the Ferengis in Congress will fight and pontificate and try to force their way to get something before they will do what is simply the only logical action to take.

Increase the debt limit.

The Republicans know they are playing with fire. And in the end, they will fold, as they must do. Our nation has never defaulted on its debt, and doing so would create an economic catastrophe on a global scale that would make Ted Cruz’s facial hair turn even whiter overnight.

How Republicans who tout their love of business and the bottom line can miss the point about the need to raise the debt limit is totally befuddling. Failure to do so could hurt America’s international standing and push up borrowing costs.

I write on this matter more than I wish were needed. When it comes to the debt limit there has never been any doubt as to where I stand. It would still be the soundest move to pursue a deal that would permanently remove the requirement that Congress repeatedly raise the debt ceiling. That would be good news for the nation. But Republicans, being the Ferengis they naturally are, would be most scornful of such an outcome.

After all, the GOP would then not be able to hold the nation hostage in the future.

And so it goes.

Trump Was Right…Once In 2017–About Raising Debt Ceiling, Fight Now Underway Again

No need to send emergency vehicles screaming down my street upon reading the first three words in the headline of this post. I am drinking coffee, alert, and able to make my own decisions. I still know where my car keys are located, and more importantly what they are for!

The fact is, however, that at one moment in Donald Trump’s time in the Oval Office he actually said something that made sense. I even made my readers aware of the event in September 2017. Republicans may not accept the fact, but I am a fair umpire when it comes to policy moves by politicians.

In a White House meeting with congressional leaders on Wednesday, he asked Republican and Democratic leaders why Congress needed to vote on the (debt ceiling) issue at all. 

There was a bipartisan discussion in the White House about eliminating the debt ceiling altogether. The debt ceiling is the legal limit on the total amount of federal debt the government can accrue. 

“There are a lot of good reasons to do that,” Trump told reporters in the Oval Office, acknowledging that the era of debt-ceiling drama could be nearing an end.

Obviously, the one idea that Trump had which made sense never came to fruition.

I write about this matter yet again as lawmakers missed a Saturday deadline to extend a two-year suspension of the nation’s borrowing limit, which was automatically reinstated at the beginning of August.  Once again a partisan fight will be waged over this matter. There are serious consequences if members of Congress do not act like adults with even a rudimentary understanding of Econ 101.

Raising the limit does not authorize the government to increase spending beyond the level Congress has approved. Rather, it allows the government to meet its existing obligations to citizens, vendors, and investors.

The shallow end of the legislative pool proves what the problem is when dealing with this topic. Senate Minority Leader Mitch McConnell said he doesn’t expect any Republican senators to vote to raise the debt ceiling. When it comes to just plain partisanship let it be recorded that McConnell ranks at the top of the list in the Senate. Meanwhile, let it be noted that Democrats joined three times during the Trump administration to do the responsible thing by raising the debt limit.

How Republicans who tout their love of business and the bottom line can miss the point about the need to raise the debt limit is totally befuddling. Failure to do so could hurt America’s international standing and push up borrowing costs.

As of Monday, the Treasury Department suspended reinvestments by a number of retirement funds for civil servants and postal workers. The funds will be made whole once the debt limit is either suspended or increased. The Treasury uses emergency accounting maneuvers to conserve cash so the government can keep paying its obligations such as to social security recipients, along with veterans and others. However, should those measures run out, the Treasury could begin to miss payments on its obligations. If that were to happen it could trigger a default on U.S. debt.

When it comes to the debt limit there has never been any doubt as to where I stand. It would still be the soundest move to pursue a deal that would permanently remove the requirement that Congress repeatedly raise the debt ceiling. That would be good news for the nation. But Republicans, being the scolds they naturally are, would be most scornful of such an outcome.

And so it goes.

Debt Limit Measure Will Be Done This Week

That we need to talk about raising the debt limit in congress, time and again, is a needless obstacle to governing.

House lawmakers expressed confidence that the two-year budget and debt ceiling deal will pass in that chamber though there is trouble within the Republican caucus.  It would be nice to have a strong bipartisan vote but there are always hiccups along the way.  And with the conservative element who are always wishing to put a stick in the spokes of governing the news this morning is not shocking.

Top Republicans believe only a fraction of their conference will support the legislation, hammered out during weeks of negotiations between Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin. GOP insiders estimate that as little as one-third of the 197-member GOP conference will back the measure.  What has the GOP bent is the allowance of an increase discretionary spending limits by nearly $324 billion over two years, compared to the strict current caps imposed under the 2011 law.

All this after Donald Trump put his small twitter fingers in support of the measure.  He may not be able to get his party much past 70 Republicans in support.  This will be interesting to watch play out.  And embarrassing for the leadership.

I have called for raising the debt limit permanently.

We all should be tired of the political games that are played with this measure that–at its heart–needed to raise the debt limit.   The GOP may hate the overall bill, and Democrats may detest the added monies for the Defense Department.  But we are here because the bottom line is the debt limit needed to be increased.

And so it goes.

Lets End Debt Ceiling Politics Once And For All

At a long dinner gathering last night with friends we all agreed that President Trump might actually do something positive for the country if he were to act on ending the way Republicans have used the debt limit for their narrow political interests.  The news this week concerning the debt limit is the most important political story that has taken place and results from the self-centered way Trump views his job.  But if Democrats can play to that weakness and as a result strike deals good for the nation–then lets play ball!  Over and over I have pressed the lunacy of playing politics with the debt limit.  Let hope Trump and Democrats can make a deal to end this problem once and for all.

Six years later, President Trump is poised to release the hostage that so bedeviled his predecessor. In a White House meeting with congressional leaders on Wednesday, he asked Republican and Democratic leaders why Congress needed to vote on the issue at all. The topic came up as Trump was agreeing to a proposal from Senate Minority Leader Charles Schumer and House Minority Leader Nancy Pelosi to lift the debt limit for three months as part of a deal in which Congress would also approve aid for states devastated by Hurricane Harvey and a continuing resolution to keep the government open through the fall.

At the meeting, Schumer seized on Trump’s question and floated the idea of eliminating the debt ceiling altogether, according to a person briefed on the discussion. Schumer and Pelosi resolved to talk through the possibility with their respective caucuses with an eye toward a final agreement in December, when Congress will next have to confront the debt limit and federal spending. “There are a lot of good reasons to do that,” Trump told reporters in the Oval Office, acknowledging that the era of debt-ceiling drama could be nearing an end.