Biden can, and should, ignore the GOP’s debt suicide attempt

BY ROBERT HOCKETT AND LAURENCE TRIBE, OPINION CONTRIBUTORS - 05/18/23 9:00 AM ET

Conservative commentators have undertaken to pen apologetics for radicals. The subject? Our latest adventure in Republican-threatened financial suicide.  

The results are surprising. And because these are likely the best spokespeople Republican extortionists will find, the attempted arguments call for engagement.    

Take first, then, this remarkable would-be assurance: A minority of “House Republicans’ insistence on negotiations [about raising the debt ceiling] is not hostage taking,” but, “t is the ordinary stuff of politics.”  

It is hard to fathom how anyone not either blissfully or willfully unaware of American budgetary history since 1974, not to say contract law and the U.S. Constitution, could so much as suggest such a thing.    

For one thing, threatening default upon debt incurred by your own — that is Congress’s own — already legislated current budget in order to gain leverage you don’t democratically have over next year’s budget is anything but “ordinary.” It is overtly threatening the contract rights of literally millions of innocent people, not to mention our own Constitution and prior budget legislation. And it is doing so simply to get your way when you cannot convince your congressional colleagues of the merits of your own budgetary druthers.

For another thing, this isn’t just “politics” — it is uniquely Republican fiscal kidnapping for ransom. No other party does this. And indeed none but a tiny MAGA faction of ultra-right conservatives within the House (not Senate) Republican caucus itself, to whom Speaker Kevin McCarthy (R-Calif.) apparently considers himself more beholden than he is to our constitutional republic, its laws and its contractual creditors, ever seriously do it. (Remember House Majority Leaders Newt Gingrich (R-Ga.) in 1995, or Eric Cantor (R-Va.) in 2011?)

Next consider these astonishing claims: The 14th Amendment does not, “authorize the president to borrow more money,” and its purpose is “barring the repudiation of debt, not authorizing the means of repaying debt.”  

In this case, only a jaw-dropping want of awareness — again willful or otherwise — of how federal budgeting works, what the debt clause of the 14th Amendment is for and how federal debt is legally incurred, issued, managed and redeemed, could account for assertions so spit-takingly false.

Start with the debt clause. President Lincoln and Congress had to grow the national debt 80-fold to put down an insurrection by slaveholding Southern oligarchs aiming to obliterate our republic from without, when they commenced military actions against Fort Sumter and other federal facilities, one month after Lincoln took office in 1861. After that rebellion had been quashed at the unprecedented expense of both “blood and treasure,” worries grew that the same oligarchs who’d orchestrated it would now attempt to obliterate our republic from within, by defaulting on the very debt we had had to incur to put down their revolt.

Default on the national debt would have undermined the Union from within by destroying the very binding agent that our great Founder and first Treasury secretary, Alexander Hamilton, had ingeniously hit upon nearly 100 years earlier. The debt clause of the 14th Amendment was our response to the Southern oligarchs plotting, and indeed, boastfully proclaiming, even as the amendment was still being drafted, their intention to dissolve our federal Union by destroying its credit.  

It is more than a little ironic, against this backdrop, that the very (ironically named) rump Republicans now holding our national debt hostage hail principally from the same Jim Crow precincts that spawned the Confederate would-be defaulters whose threats prompted the ratification of the debt clause in the first place. Those who rub shoulders with white supremacists today are no more to be honored in their attempts to force a “national divorce” than were their slave-holding forebears 150 years back.

But wait, there is more.

We said that conservative claims betrayed an unawareness or willful elision of federal budgeting and debt incurring as astounding as their assaults on the 14th Amendment. How so, you might ask?

In 1974, Congress took charge of the federal budgeting process in a way it had not done before. The precipitant was “The Imperial Presidency” of Richard M. Nixon, who had developed a worrying penchant for regularly impounding — that is, refusing to spend — funds that Congress had appropriated for specifically authorized federal programs. In effect, Nixon had been flouting both Congress’s Article I “power of the purse,” of which some commentators make pointlessly heavy weather, and the Constitution’s own Article II “take care” clause, pursuant to which the president must “take care that the laws be faithfully executed.”

Congress’s response was the Congressional Budget and Impoundment Control Act of 1974, pursuant to which Congress, with the president’s signature, legislates in detail: federal expenditures, federal taxes, and hence, federal debt issuance to cover gaps between expenditures and taxes. This, of course, means that debt obligations are fully congressionally legislated — as precisely and as fully as federal taxes and spending themselves are congressionally legislated. The federal budget, in other words, is its own ”debt ceiling” — and indeed floor.  

There is, thus, simply no role, since 1974, for the old Liberty Bond Act of 1917 — the source of the ersatz debt ceiling that Republicans now routinely wield like a weapon — to play any longer. It is a children’s toy, not a real gun, and it’s high time the Senate and all reasonable Republicans in the House called the bluff.  

Lest there be any doubt on this score, we suggest that conservatives note how the current incarnation of the no longer meaningful (since 1974) Liberty Bond Act of 1917 is a would-be freestanding ceiling whose disregard leaves in place all sections of Title 31 that authorize needed borrowing — per the U.S. Code Subchapter I, sections 3102 through 3106. Conservative critics are accordingly dead wrong again, be it deliberately or inadvertently, in suggesting that we and others are proposing the president borrow without congressional authority. 

This takes us to the final irony in one remarkably radical apologetic. For all of the puzzling 17th-century obsession with “the Stuart Monarchy,” the “Glorious Revolution” of 1688 and the congressional “power of the purse” as a response to all that, none of it is of any relevance to the current hostage crisis. Article I, Section 8, let alone the Kings Charles and James, are simply not in dispute here.  

Why do we say that?

We say it because this isn’t about “Biden versus Congress,” or even about “Biden versus the MAGA faction of the House Republican Caucus,” at all. It’s about that minority faction versus … Congress itself.  

Again, the debt that our country owes has already been legislated by Congress. The moment it budgets for federal expenditures and federal taxes, Congress also budgets for U.S. Treasury issuance to cover any gaps between the two. And this includes Treasury issuances to cover past-debt redemptions as they come due — debt repayment and servicing themselves being budget line items.  

We’ve no idea how conservatives miss this one — can they really be that ignorant of how Treasury redemptions, debt servicing and their place in the federal budget all work?  

Why, then, do conservatives and the Republican House minority keep trying to make this about Biden? Biden, after all, is merely trying to do his constitutionally and legislatively appointed duty.  

He is trying to “take care” that the congressional budget be faithfully executed as required by the aforementioned 1974 Act, by the “take care” clause and by Train v. City of New York interpreting the same. He is trying to avoid calling into question the congressionally legislated national debt as the 14th Amendment prohibits and the first default in our nation’s unblemished fiscal history would do. He is trying to avoid exercising a line-item veto — that is, ”prioritizing” repayments as some MAGA Republicans have demanded — since that would violate the “presentment clause” as interpreted by Clinton v. City of New York. And so on.      

Perhaps rightwingers really have overlooked all of this. But it strikes us as equally likely that, obsessed as they seem to be with “the Stuart monarchs,” seemingly aspiring dictators and other “strong men,” they’re simply hoping that the public will think this is all about “Dark Brandon” and ”White House tyranny” rather than Capitol Hill schizophrenia, as it is.  

And this they hope — notwithstanding, that it would be by ignoring our congressionally legislated debts, not by honoring them — that President Biden would be usurping Congress’s power of the purse.

Let’s cure this schizophrenia now. President Biden, Leader Charles Schumer (D-N.Y.), Minority Leader Hakeem Jeffries (D-N.Y.) and all reasonable Republicans should kindly call the MAGA conservatives’ bluff. Simply ignore the 1917 vintage debt ceiling, which is now null and void, and abide by the 1974 budget law. You will be vindicating our Constitution and preserving our constitutional republic in so doing.  

Robert Hockett is the Edward Cornell Professor of Law & Public Finance at Cornell Law School and Cornell University, adjunct professor of Finance at Georgetown’s McDonough School of Business and senior counsel at Westwood Capital, LLC. He has formerly worked at the Federal Reserve Bank of New York and the International Monetary Fund.  

Laurence Tribe is the Carl M. Loeb University Professor at Harvard University and professor of Constitutional Law, Emeritus, at Harvard Law School. He is the author, most recently, of “To End a Presidency: The Power of Impeachment” and has advised three presidents on constitutional issues involving the separation of powers and the 14th Amendment.

https://thehill.com/opinion/finance/4009101-biden-can-and-should-ignore-the-gops-debt-suicide-attempt/

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Biden should IGNORE the debt ceiling: Don't declare an X-date. Keep paying the bills. Don't default.

If McCarthy and House Republicans don’t like it, let them take him to court
ROBERT REICH
MAY 22, 2023

Friends,

I want to start today with a bit of history that sheds some light on what’s happening in Washington this week, and what Biden should do about the debt-ceiling crisis created by Kevin McCarthy’s Republican House.

On October 22, 1985, Treasury Secretary James A. Baker III told congressional leaders that if Congress failed to raise the debt ceiling by the end of the month, the Reagan administration would pay the nation’s bills by taking back Treasury securities in which Social Security had invested.

I remember being stunned at the time. It was an extraordinary move. It meant Social Security would lose interest paid on its funds.

If Congress still didn’t raise the debt ceiling, Baker said the administration would borrow from the railroad retirement and military retirement trust funds.

And if the impasse continued, the administration would begin selling gold from the U.S. gold reserve “even though that could undercut confidence here and abroad based on the widespread belief that the gold reserve is the foundation of our financial system,” Baker said.

Baker’s point was that the Reagan administration would continue to find ways to pay the nation’s bills, come hell or high water.

An agreement was finally reached after the Reagan administration had begun raiding Social Security but before it took any other measures.

The Comptroller General of the United States later found Baker’s raid on Social Security technically illegal but concluded nonetheless that Baker “did not act unreasonably” under the circumstances.

I recount this history to give you some perspective on the current debt-ceiling crisis, and what I believe should be Biden’s next move.

First, showdowns over the debt ceiling have been going on for a long time.

Second, they have often been fueled by soaring national debts due to Republican tax cuts for the wealthy and big corporations. (The 1985 standoff involved a refusal by senate Democrats to support a balanced budget, even though Reagan’s mammoth spending on the military and huge tax cut had doubled the national debt in less than five years.)

Finally, fights over the debt ceiling have required Treasury secretaries to do extraordinary things to keep paying the nation’s bills — sometimes technically illegal.

Hence, there have never been “X-dates” at which time the Treasury runs dry. There are just ever more extreme government bookkeeping measures.

And there is no end to the measures the Treasury might use to keep paying the bills. Although their legality of some might be dubious, who is to complain? Who is to say a Treasury secretary acted unreasonably in paying a lawful claim on the U.S. government?

This standoff is different in one respect. Previous standoffs have been carefully-crafted dramas in which both sides demonstrate their commitments to their position, knowing full well how the play will end — with the debt ceiling lifted.

This time, though, gonzo lawmakers like Marjorie Taylor Greene and raving nut-jobs like the current Republican frontrunner for president have considerable influence.

And unlike Bob Dole in 1985, these players have no real commitment to cutting the government debt. (Were that their goal, presumably they wouldn’t have supported the massive 2017 tax cuts for the wealthy and big corporations that fueled the debt, or would now urge its repeal. And they certainly wouldn’t demand cuts in staffing for the IRS, which House Republicans are also now doing.)

Their only commitment is to power — gaining dominance over, and submission from, Democrats, progressives, putative “coastal elites,” and so-called “deep state” bureaucrats.

For them, this is not play-acting. It’s not for show. It’s for real. If they don’t get their way, they’re prepared to blow up the economy.

In fact, as the so-called X-date appears to loom ever closer, their demands have escalated. And as Biden appears ready to give in to some of those demands, the demands will continue to escalate.

Which is why it’s critical for Biden to stop negotiating.

Meanwhile, he should continue paying the government’s bills and Treasury Secretary Janet Yellen should continue using every bookkeeping scheme imaginable to find the means to pay those bills.

And they must never declare an “X-date.” And must never default.

If Kevin McCarthy and his band of radicals don’t like this, let them take the Biden administration to court.

Let House Republicans argue in the courts that the 1917 act establishing the debt ceiling has precedence over Section 4 of the 14th Amendment, which requires that the “the validity of the public debt …. shall not be questioned.”

Let them claim in the courts that the 1917 debt-ceiling act takes precedence more recent acts of Congress which require the president, for example, to pay interest on the federal debt, distribute Social Security benefits, and pay bills from defense contractors and everyone else who has relied on the full faith and credit of the United States.

Let McCarthy and House Republicans argue that they have standing to sue Biden for having the audacity to pay the government’s debts as they come due.

Finally, let McCarthy, Marjorie Taylor Greene, and the other loonies demand openly and publicly in court that Biden not honor the full faith and credit of the United States — with the predictable results that the cost of borrowing skyrockets, bond markets crash, the stock market plummets, the global economy is in turmoil, the dollar’s status as the world’s major currency is up for grabs, America is plunged into a deep recession, and millions of jobs are lost.

In other words, let McCarthy and House Republicans seek to enforce their dangerous nonsense about the debt ceiling — so that Americans can see clearly what they’re up to.

What do you think?

https://robertreich.substack.com/p/the-case-for-why-biden-should-do

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The president can only pay debt already incurred. The 14th section 5 makes it perfectly clear who has the authority to invoke the 14th as well as other powers constitutionally detailed in section 1 and articles 1,2, and 3. If this were in the least way feasible... you know Obama would've done it.

Republican Debt Ceiling Lies

Today’s X-Date: GOP members insist they’re worried about the national debt. It ain’t true.

By Ryan Cooper

During the whole of the ongoing hostage negotiation over the debt ceiling, Republicans have repeatedly claimed that they’re demanding massive spending cuts because the government is borrowing too much. "They actually want to spend more money than we spent this year," Speaker of the House Kevin McCarthy recently claimed about Democrats. "We can’t do that. We all know how big this deficit is."

As McCarthy’s Republican colleagues make clear, this is, ad nauseam, the party line. "I have said since I first ran that I would not vote for a debt ceiling increase apart from the cuts in spending that would put us on a path to fiscal responsibility," said Rep. Bob Good (R-VA) some months ago. "The point is that this current debt crisis has been created solely by reckless Democrat policies and out-of-control spending," said Freedom Caucus chair Rep. Scott Perry (R-PA).

Rep. Ken Buck (R-CO) said he voted against the House Republicans’ plan because it didn’t cut the debt enough. "The Republican plan yields $53 trillion in debt, and $53 trillion in debt is unacceptable to me. We go off the cliff at some point," he said.

But all these are bald-faced lies. Republicans do not care even slightly about the national debt. The last time they had the run of the federal government, they passed laws that required tremendous borrowing. If and when they get control once more, they will do the exact same thing.

One obvious piece of evidence here is that the Biden administration has proposed numerous revenue-raisers as part of the negotiations, only to be dismissed out of hand. Jeff Stein reports at The Washington Post: "On a phone call last week, senior White House officials floated about a dozen tax plans to reduce the deficit as part of a broader budget agreement with House Republicans, including a measure aimed at cryptocurrency transactions and another for large real estate investors, two of the people said. They were all swiftly rejected by the GOP aides on the call, the people said."

If one were legitimately concerned above all with budget deficit, then it makes no sense to categorically rule out reducing it with more taxes rather than benefit cuts. A dollar is a dollar either way—and especially at a time of historically gigantic corporate profits, one would think deficit scolds would conclude that soaking the rich at least a bit should be part of the program. But one would think wrong.

A supporting piece of evidence here is that Republicans’ ransom demands include rescinding the additional $80 billion in funding for the IRS passed in last year’s Inflation Reduction Act. Funding the IRS not only greatly improves the agency’s customer service—thanks to that money, phone response time fell by 84 percent during the 2023 tax season—it will also more than pay for itself. The Congressional Budget Office estimated that the new funding will produce a net revenue increase of $124 billion over a decade.

The reason is that chronic IRS underfunding has led to a collapse in the audit rate, and hence an enormous "tax gap" of unpaid taxes, largely among the rich. "Three fifths of the tax gap is due to underreporting of income by the top 10% of taxpayers, and more than a quarter comes from the top 1%," writes Vanessa Williamson at the Brookings Institution. "Audits of millionaires have dropped 61% in less than a decade. For those making more than $5 million, the audit rate has dropped 87%."

One would think that even for people who don’t favor tax increases as the best way to cut the deficit, making sure that the wealthiest pay what they actually legally owe would be a good deficit-cutting idea. But—again—one would think wrong.

The most convincing piece of evidence that Republicans are lying has to do with the Trump tax cuts. These were basically the only piece of major legislation the GOP passed under Trump (he did sign the pandemic relief bills, but they were designed and written by House Democrats), and despite the usual predictions that they would pay for themselves through supply-side magic pixie dust, they blew up the deficit.

House Republicans didn’t include extending the Trump tax cuts in their debt ceiling ransom note, but Rep. Vern Buchanan (R-FL) sponsored a bill in February to make them permanent, as many of their provisions will expire in 2025. At least 72 other House Republicans joined as co-sponsors, including the Freedom Caucus’s Rep. Perry. McCarthy isn’t on that list, but he did endorse the idea in October of last year.

So it’s interesting that the Congressional Budget Office recently estimated that making the Trump cuts permanent would increase the national debt between 2024 and 2033 by a whopping $3.5 trillion. Sounds like a lot!

It goes without saying that this report did not change any Republican views whatsoever. It’s absolutely certain that if Republicans win control of Congress and the presidency in 2024, they will make the Trump-era cuts permanent, and probably add some more.

This is just the latest in a long pattern of Republican behavior. When a Democrat is president, they scream and cry about budget deficits, demanding sweeping spending cuts, and shut down the government or take the debt ceiling hostage to get them. Those unpopular cuts typically harm the economy, for which the president and Democrats are blamed. Then when it’s Republicans’ turn, they take all the budget headroom created by the austerity and immediately hand it to their oligarch benefactors in the form of tax cuts for the rich, blowing the deficit back up. We saw this cut-and-inflate pattern during the Clinton and Bush administrations, and again during the Obama and Trump administrations. We’re seeing it again today.

Increasingly, the beneficiaries of this duplicitous two-step include Republican members of Congress themselves. Buchanan is a wealthy man, and personally benefited from the Trump tax cuts to the tune of an estimated $2.1 million. That may be the reason why on the very day the law was signed, he went and bought himself a multimillion-dollar yacht.

There are many reasons for President Biden to consider executive action to abolish the debt ceiling once and for all. But a big one is to get rid of one way that conservatives can punch the American economy in the solar plexus so they can hand millions of dollars to their donors and themselves.

https://americanprospect.bluelena.io/index.php?action=social&chash=1f36c15d6a3d18d52e8d493bc8187cb9.2061&s=34f0205ac009f98c65e762729e0c4049

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'Tax Scam': Republicans Follow Debt Ceiling Fight by Proposing Tax Cuts for Wealthy

"If House Republicans were actually serious about the deficit, they would demand wealthy corporations pay their fair share in taxes," one advocate said.
OLIVIA ROSANE

Jun 10, 2023

After threatening to force the government into default over the debt ceiling, Republican lawmakers Friday introduced new tax cuts that could add at least $21 billion to the national deficit over the next decade.

Three new GOP-backed bills would cut taxes for large companies, small businesses, and individual families while reducing clean energy tax incentives to pay for it.

"It's Republican clockwork," the ranking member on the Ways and Means Committee Rep. Richard E. Neal (D-Mass.) said in a statement. "Not even a week after their manufactured default crisis and it is back to tax cuts for the wealthy and well-connected."

"Not even a week after their manufactured default crisis and it is back to tax cuts for the wealthy and well-connected."

"This stoops to a new low even for them: retroactive corporate tax cuts, next-to-nothing for the most vulnerable children and families, and sneaking in favors for Big Oil," he continued. "Make no mistake about it, they are laying the groundwork for even bigger cuts in 2025, and the only way they will ever achieve a balanced budget is by sticking seniors and working families with the bill."

The cuts come in the American Families and Jobs Act*, introduced Friday by Ways and Means Committee leader Rep. Jason T. Smith (R-Mo.). That act is comprised of three different bills.

The first, The Washington Post explained, would reinstate corporate tax breaks related to spending on interest, equipment, and research for a limited time.

It would also roll back some provisions of the Inflation Reduction Act (IRA) by limiting tax credits for electric vehicles, barring tax payers from using those credits for used vehicles, ending tax credits to incentivize clean energy production and investments, and repealing a tax on toxic chemical waste sites.

The elimination of the green energy tax credits are expected to pay for $216 billion of the tax cuts' $240 billion price tag over the next decade, POLITICO reported.

Neal pointed out the ironic timing of the proposed swap, noting that, "while Americans are sheltering inside to avoid the fallout of climate-spurred wildfires, Republicans think now is a good time to repeal the largest climate investment in our history to pay for their corporate handouts."

"While Americans are sheltering inside to avoid the fallout of climate-spurred wildfires, Republicans think now is a good time to repeal the largest climate investment in our history to pay for their corporate handouts."

The second and third bills would increase deductions for families making less than $400,000 over the next two years and get rid of a requirement that taxpayers report Venmo or similar transactions over $600, a measure aimed at small businesses, The Washington Post explained.

"These policies will provide relief for working families, strengthen small businesses, grow jobs, and protect American innovation and competitiveness," Smith said in a statement.


However, White House spokesperson Karine Jean-Pierre called them a "tax scam," as Reuters reported, adding that the GOP's "priority isn't reducing the deficit or out-competing the world, their priority is giving handouts to rich special interests and corporations at the expense of everyone else."

Exactly how much Republican plans would add to the deficit is a matter of debate. The nonpartisan Join Committee on Taxation calculated a total of $21 billion over the next 10 years, The Washington Post reported.

However, the bills extend Trump tax breaks for businesses through 2025, but Republicans have said they would like to make them permanent. If they succeeded, it could cost the government a little under $500 billion, the Tax Policy Center said, and the dividend would largely go to high-earning Americans.

"If House Republicans were actually serious about the deficit, they would demand wealthy corporations pay their fair share in taxes," Liz Zelnick, director of Accountable.US' Economic Security & Corporate Power, said in a statement responding to the new bills. "Instead, they're giving billions in wasteful tax giveaways to greedy corporations, instead of making critical investments in American families and communities."

https://www.commondreams.org/news/republicans-follow-debt-ceiling-fight-with-tax-cuts-for-wealthy?link_id=10&can_id=1b54be4c01232388704f6dbb31c47a1c&source=email-fox-admits-trump-indictment-is-extremely-damning&email_referrer=email_1951937&email_subject=trump-falls-off-deep-end-in-first-post-indictment-speech

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