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Wed Dec 5, 2012, 04:40 AM

 

The Debt Limit Is the Real Fiscal Cliff (Republicans willing to force default?)

So if the fiscal cliff is a faux problem, why do we hear that industry and financial markets are deeply fearful of it? The answer is that there is a very real fiscal problem that will occur almost simultaneously Ė expiration of the debt limit. Much of what passes for fiscal-cliff concern is actually anxiety about whether Republicans in Congress will force a default on the nationís debt in pursuit of their radical agenda.

No less an authority than the anti-tax activist Grover Norquist, who basically controls the Republican Partyís fiscal policy, has said repeatedly that the debt limit is where the real fight will be over the next several weeks. In a Nov. 28 interview with Politicoís Mike Allen, he was asked about the leverage President Obama has over Republicans in the fiscal-cliff debate. Mr. Norquist replied that Republicans have vastly more leverage when it comes to the debt limit...

Currently, it is $16.394 trillion. The Congressional Budget Office estimates that given current spending and revenue trends, that figure will be reached before the end of the year. At that point, Treasury will have to take extraordinary and costly measures to avoid technically hitting the debt ceiling. But these measures provide only a month or so of breathing room. At some point, Treasury will lack the cash to pay the bills that are due and it will face nothing but unthinkable choices Ė donít pay interest to bondholders and default on the debt, donít pay Social Security benefits, donít pay our soldiers in the field and so on...

http://economix.blogs.nytimes.com/2012/12/03/the-debt-limit-is-the-real-fiscal-cliff/


It's not clear to me why to pubs would have more leverage on this matter.



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Reply The Debt Limit Is the Real Fiscal Cliff (Republicans willing to force default?) (Original post)
HiPointDem Dec 2012 OP
ZM90 Dec 2012 #1
democrattotheend Dec 2012 #3
democrattotheend Dec 2012 #2
DCBob Dec 2012 #4

Response to HiPointDem (Original post)

Wed Dec 5, 2012, 04:55 AM

1. Time for President Obama to invoke the 14th admendment. What has he to lose?

He already won reelection.

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Response to ZM90 (Reply #1)

Wed Dec 5, 2012, 08:57 AM

3. The White House looked into that option

But it wasn't clear that it was constitutional, since Article I gives Congress the power to borrow money.

Additionally, the president would probably face an impeachment attempt by the House if he does that. Yes, it wouldn't go through the Senate, but still, that's a pretty big blight on his presidency.

More importantly, borrowing under such legal ambiguity would not give lenders confidence in the bonds being issued, so interest rates might still be jacked up.

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Response to HiPointDem (Original post)

Wed Dec 5, 2012, 08:48 AM

2. I woke up thinking about writing something with almost the same title

I have been reading David Corn's book, and I am more concerned about the GOP using the debt ceiling to extort more crap even if the president wins on the tax cuts for the middle class and on raising them for the wealthy. The GOP can just insist that he either reinstate the cuts for the wealthy or cut the social safety net before raising the debt ceiling.

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Response to HiPointDem (Original post)

Wed Dec 5, 2012, 09:12 AM

4. If RW talk radio is any indication of where this is heading, the Repubs are going to back down.

Most of callers and commentary I have heard recently think the President has the upper hand and will get what he wants no matter what the Republicans do. Many are also tiring of the no raising taxes pledge and of the teaparty primary threats. I think when the dust settles there willl be a compromise deal with the GOPers giving in on taxes and the President giving in somewhat on entitlement reform.

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