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Does the Debt Ceiling Have to Be Raised?

letsgetitdone's picture

Lately, the word out of Washington, DC from the plugged in people is that there will be no debt ceiling crisis coming up before the election. Politico says so, and so does the National Journal. MSNBC also agrees.

But not so fast, says the Washington Post, echoing the Wall Street Journal provided the House Republicans can agree on “. . . an extortion demand.” If they can, then we wll have another debt ceiling crisis.

Here's a statement from Dave Johnson at the Center for the American Future (CAF) characterizing the possible crisis from a “progressive” point of view.

“Republicans voted for a budget that caved in to many of their economy-sabotaging, hostage-ransom austerity demands. Now the “debt ceiling” has to be raised in February so the government can pay for that budget that Republicans voted for. Republicans are saying no way without a new ransom. Or they’ll blow up the economy. Even hinting at this is economic sabotage.

This is a false statement. The false part of it is the flat unqualified claim that the debt limit must “…be raised in February so the Government can pay for that budget the Republicans voted for.”

By now it's common knowledge that the President can order the Treasury to mint platinum coins with very high face values to fill the Treasury's spending account with seigniorage. It's also somewhat less well-known that the Treasury can use consols, a type of security whose principal never needs to be paid back by the Government to generate revenue violating the debt limit. There are other probably less effective options the President might use to avoid breaching the debt ceiling too. Seven options are evaluated in this series and one or more of these options are proposed in many other places and have been discussed for a few years now. There's no excuse for Dave Johnson not to know about these alternatives. Yet he's characterizing the crisis falsely, unless we think he can show that none of these other options can work, and certainly he didn't even attempt to do that in his post, and has never considered them anywhere else.

Johnson goes on:

Treasury Secretary Jack Lew has announced that Congress must increase the debt ceiling by late February. Extreme measures that the Treasury takes to put off the need to sell some bonds to pay bills (authorized by Congress) will be used up and the country will no longer be able to honor its obligations.”

And this is another, at least misleading, statement, since there are other “extreme measures” left for the Treasury to use, including the previously mentioned platinum coin seigniorage and consols. Treasury has not used these measures, but an analysis of the situation that ignores them and leaves the impression that ALL “extreme measures” will shortly be used up is at best incomplete; at worst, misleading; and also lets the Administration off the hook when they do have alternatives to either letting the Republicans push the Government into default; or giving in to or compromising with them on their demands.

Over my last few posts, I've focused on “progressives” mis-characterizing fiscal issues rather than on Republicans or conservatives doing so. Why is this important? Because the only chance for change that helps the 99% is for people who care about them to get the education right and tell them the truth. I don't know if Washington villagers aren't doing that because they're ignorant, or bought, or are afraid they'll look silly if they tell the truth, or are just trying to put forward short statements about issues that they think must inevitably oversimplify the landscape of thought about issues. But whatever the motivation is for their very filtered communication, its systematic nature, with all the denizens of DC, with the exception of Chris Hayes avoiding certain subjects since the President declared them “off the table”, even at the cost of factual errors in their statements, is unacceptable because it damages democracy by unduly limiting the frames and alternatives that they “broadcast” to people; damaging their ability to learn and to make their own personal choices about what they will think.

It's one thing for conservatives to do this, because they believe in Plato's noble lie anyway. But for progressives it's simply a travesty and must stop now. Bloggers at CAF must know by now that there are such things as platinum coins and consols and governments that, even without further debt issuance, cannot run out of money unless they deliberately choose to do so. To believe otherwise is to believe that they live under a rock. They need to begin recognizing these possibilities in their writing, because the progressives they are writing for need to go beyond taxing, borrowing, and spending, when they think about fiscal policy and our spending limits.

(Cross-posted from New Economic Perspectives.)

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Submitted by lambert on

"Does the Debt Ceiling Have to Be Raised? "Progressive" weasels say Yes, but they're lying, as usual"

The "progressives" are just as invested in this discourse, and have as many rice bowls at stake, as the "conservatives."

letsgetitdone's picture
Submitted by letsgetitdone on

What does CAF lose if it starts spouting MMT to get support for Trumka's favorite projects?

Submitted by lambert on

They're not funded to deliver on policies; they're funded to perform political theatre that nails the Overton Window shut on the left.

Maybe something like "I'm Only Trying To Help You":

I'M ONLY TRYING TO HELP YOU Thesis. This game may be played in any professional situation and is not confined to psychotherapists and welfare workers. However, it is found most commonly and in its most florid form among social workers with a certain type of training. The analysis of this game was clarified for the writer under curious circumstances. All the players at a poker game had folded except two, a research psychologist and a businessman. The businessman, who had a high hand, bet; the psychologist, who had an unbeatable one, raised. The businessman looked puzzled, whereupon the psychologist remarked facetiously: "Don't be upset, I'm only trying to help you!" The businessman hesitated, and finally put in his chips. The psychologist showed the winning band, whereupon the other threw down his cards in disgust. The others present then felt free to laugh at the psychologist's joke, and the loser remarked ruefully: "You sure were helpful!" The psychologist cast a knowing glance at the writer, implying that the joke had really been made at the expense of the psychiatric profession. It was at that moment that the structure of this game became clear.

The worker or therapist, of whatever profession, gives some advice to a client or patient. The patient returns and reports that the suggestion did not have the desired effect. The worker shrugs off this failure with a feeling of resignation, and tries again. If be is more watchful, he may detect at this point a twinge of frustration, but he will try again anyway. Usually he feels little need to question his own motives, because he knows that many of his similarly trained colleagues do the same thing, and that he is following the "correct" procedure and will receive full support from his supervisors.

If he runs up against a hard player, such as a hostile obsessional, he will find it more and more difficult to avoid feeling inadequate. Then he is in trouble, and the situation will slowly deteriorate. In the worst case, he may come up against an angry paranoid who will rush in one day in a rage, crying: "Look what you made me do!" Then his frustration will come strongly to the fore in the spoken or unspoken thought: "But I was only trying to help you!" His bewilderment at the ingratitude may cause him considerable suffering, indicating the complex motives underlying his own behavior. This bewilderment is the payoff.

Legitimate helpers should not be confused with people who play "I'm Only Trying to Help You" (ITHY). "I think we can do something about it." "I know what to do," "I was assigned to help you" or "My fee for helping you will be. . . ." are different from "I'm only trying to help you." The first four, in good faith, represent Adult offers to put professional qualifications at the disposal of the distressed patient or client; ITHY has an ulterior motive which is more important than professional skill in determining the outcome. This motive is based on the position that people are ungrateful and disappointing. The prospect of success is alarming to the Parent of the professional and is an invitation to sabotage, because success would threaten the position. The ITHY player needs to be reassured that help will not be accepted no matter how strenuously it is offered. The client responds with "Look How Hard I'm Trying" or "There's Nothing You Can Do to Help Me." More flexible players can compromise: it is all right for people to accept help providing it takes diem a long time to do so. Hence therapists tend to feel apologetic for a quick result, since they know that some of their colleagues at staff meetings will be critical. At the opposite pole from hard ITHY players, such as are found among social workers, are good lawyers who help their clients without personal involvement or sentimentality. Here craftsmanship takes the place of covert strenuousness.

In other words, "progressives" do not actually wish to "progress" (even given their own vague notions of progress). And they react with great hostility when the people they are trying to "help" don't accept their advice, point out flaws, etc.

Cujo359's picture
Submitted by Cujo359 on

I'd put it a bit more simply than lambert has. As I mentioned the other day regarding Richard Trumka, these guys don't want to stick their necks out. I see no obvious direct relationship between CAF based on what I saw at their site, but Van Jones is on the board of directors, and one of the directors was one of the big cheeses at HCAN. They may not be in the veal pen, but they're lunching at the same trough at least once in a while. None of that sounds good if you're looking for people to call the Democrats liars or incompetents, and if you're telling folks that the Democrats are overlooking something that would make a lot of problems go away, then that's pretty much what you're doing.

letsgetitdone's picture
Submitted by letsgetitdone on

Cujo, Leo Girard's on the Board, and I believe the AFL-CIO provides funding to CAF.

Cujo359's picture
Submitted by Cujo359 on

Good to know, though what I was halfway through writing in that sentence before a shiny object distracted me was:

I see no obvious direct relationship between CAF based and the Democratic Party on what I saw at their site,

I don't expect it makes much difference, though. The unions still seem to think they need a working relationship with the Democratic Party. What they should be doing is making that relationship transaction-oriented, as in "what have you bums done for us lately", but they clearly don't do that, and the link I cited before is to an article that demonstrates this. Why? I suspect it's because when you follow conventional wisdom, no one blames you when things go badly, where if you do something unconventional and things go bad, you're to blame. Supporting Democrats is orthodoxy for unions. I wish I knew how to change that, but I don't.

letsgetitdone's picture
Submitted by letsgetitdone on

I agree that there's no obvious relationship, but that tie to Trumka through Girard is important for CF funding. In addition, the HCAN group,in which Roger Hickey was so involved, was very much connected to some of the Democratic Party funders who also fund CAF. That organization is very seriously veal pen. They're intended to represent the left wing of the Democratic Party spectrum. But that left wig is much closer to the Center for American Progress (CAP) type of Democrat than it is people like ourselves who are fed up.

I agree with you that the position of labor toward the Democratic Party ought to be transactional. The default ought to be to field their own candidates and to force the Ds to bid for the support of union people and supporters.

jo6pac's picture
Submitted by jo6pac on

cut dod by 2/3 close nsa/motherland insecurity & break down wall street banks and the problem goes away. We might even have a few $$$$ left around to help people.

I do agree that the so-called professional progressives are just another part of the problem and are only passing onto us little people the info that their puppet master want them to.

Alexa's picture
Submitted by Alexa on

Which is "why" these 'professional progressives' deserve to be repudiated!

Heard a panel discussion (C-Span) about the somewhat peculiar breakdown between the two legacy parties--by "class."

The great divide between the two main groups of the Dem Party make it particularly easy to manipulate a large swath of the Dem Base (especially the poorest and minorities).

Julie Mason mentioned this week, on TPP, that several recent polls show huge numbers of African Americans and Hispanics "favoring" Social Security reform.

Now, why would that be?

Bowles-Simpson's Chairman's Mark contains only one very flawed (intentionally so, IMO) proposal that would give a boost to lower income earners--BUT ONLY IF THEY HAD YEARS AND YEARS OF CREDITABLE WORK EARNINGS. [I've seen both a 30-year and a 35-year creditable work record requirement--so I'll just cite the range.]

And there are a couple of major reasons that the intended category of people that this proposal purports to help, will NOT be helped by this proposal.

First of all, the target group earns SO LITTLE MONEY, that their earnings for much of their working life will be insufficient to count toward qualifying for Social Security.

Additionally, at least one CBO analysis has demonstrated that many (IIRC, it was the vast majority) of our poorest Americans have "spotty" work records.

This is not due to "character flaws," but due to barriers to obtaining child care, reliable transportation, medical services when ill, access to a working [or in-service] landline or cell phones, etc., etc.

Clearly, if so many desperately poor and vulnerable people are "wanting" reform that will harm them, the so-called "professional progressives" must be succeeding in propagandizing this faction of the Base. [IMO, this would include the ecumenical crowd, especially influential in the African-American community.]

This is mind-boggling: How is it that this cohort is literally "cheering on" the Democratic Party in its efforts to lead on dismantling the social safety net?

Apparently, the fact that the Fiscal Commission has recommended a CPI Index increase, an increase in the ERA and FRA, the cutting of Social Security benefits across-the-board at barely FPL by "adjusting" bend points,etc.--must not be making it into many poor ethnic communities.

So, the question remains: How do you reach people who are working 2-3 minimum wage jobs, and therefore don't have time to lounge around, and sip on a latte while they read progressive blogs, or even mainstream print media? Or who are unemployed, but so poor that they have no access to media, much less the internet?

I really wish that I had an answer for that one . . .