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The Way Out of Shutdown Shenanigans

letsgetitdone's picture

Today I received an e-mail from the Friends of (the very popular with progressives) Senator Bernie Sanders. In it the Senator says:

I'm joining with the members of Progressives United to send a clear message to President Obama that we will stand with him when he vetoes Republican legislation that attacks the well-being of the struggling middle class.

Join me and members of Progressives United to urge the president to VETO any Republican legislation that attacks working families.

NO to cuts in Social Security. NO to cuts in Medicaid. NO to converting Medicare into a voucher program. NO to new trade legislation that sends our jobs overseas and hammers our middle-class workers. NO to cuts to nutrition programs, education or environmental protection.

YES to raising the minimum wage. YES to a massive jobs program rebuilding our crumbling infrastructure. YES to transforming our energy system away from fossil fuels. YES to pay equity for women workers. YES to overturning Citizens United.

We already know what "compromise" will mean from a Republican Congress: their way or the highway. In order to win in the future, President Obama must stand strong for the American middle class, and we must support him.

Tell President Obama: Standing firm is the only option, and that means committing to VETO legislation that attacks working families, and fighting for legislation that defends their needs.

This is a fine message for progressives, and we know that the President can say NO to the things the Senator wants him to say NO to. But how can he say YES to the things the Senator lists, when the new Republican Congress is sure not to even seriously consider, much less pass, the things Bernie wants him to say YES to? The answer is that he can't unless these things somehow get through the Congress.

The Prospects

But what are the prospects of that? Just about nil for the rest of the President's term, and just about nil for the four years after that if either a Republican or Hillary Clinton is elected in 2016, and the Republicans retain control of one House of Congress, which is a pretty good bet right now. This outlook could be changed, of course, but only if there's a major economic catastrophe that can be pinned on the Republicans or a major change in the background of political expectations, and only if Hillary loses the nomination to a much more progressive candidate who has the stomach to follow through on her/his commitments. Also the third eventuality may be dependent on a major change in the background of politics.

In the absence of such a major change in the background of political expectations, there's more than a fair likelihood that the next two-plus years of national politics will again be punctuated by periodic threats of shutdowns, and/or debt ceiling/default crises followed by negotiations in which the President will not say no as Bernie advises, but will see a compromise of some sort hurting middle class and poor people as the lesser of evils compared to financial default of the US, or a long-term government shutdown.

The expectation in Washington right now, is that Republicans will not shutdown the Government when December 11th arises, and instead the House will pass a new continuing resolution without further cuts in spending, which the Democrats will then agree to. However, what the Republicans will try to do in March 2015, after they've taken over both houses of Congress is a different matter. I think the debt ceiling negotiations then will be difficult for progressives, and that the President will agree to a damaging compromise if he sees himself as without options other than to say NO to the Republicans.

There is a way out of this blackmail and compromise pattern which Senator Sanders hasn't called upon the President to use, which would strengthen his positioning to say NO, and also change the political context enough that it may be much harder for the Republicans to say NO by way of blocking proposals in Congress that the President may say YES to. From time to time I offer the way out of this pattern, though always to deaf ears. Nevertheless, I will propose it again here, because the President can use it, and also because the progressives and Senator Sanders ought to be urging him to do so.

The Way Out

The way out is for the President to use High Value Platinum Coin Seigniorage (HVPCS). Under authority provided by Congress in 1996, the Treasury can have the US Mint issue platinum coins with face values specified by the Secretary. So, for example, the Mint should issue a $100 Trillion coin; deposit it at the Fed, where the reserves credited to the Mint’s account for this legal tender would eventually wind up in the Treasury General Account (TGA).

The immediate promise of HVPCS for America, of course, is the end of austerity politics, periodic debt ceiling crises, fiscal cliffs, sequesters, and budget crises. HVPCS directly ends debt ceiling crises, because the debt is no longer relevant except as a constantly shrinking obligation that will be paid off as it falls due.

As for fiscal cliffs, sequesters, and budget crises, their justification is primarily in the false claim that the US is running out of money, and must slow the growth of the national debt enough to allow the debt-to-GDP ratio to shrink, so that we can't afford to implement the deficit spending that may be necessary to create full employment, pass Medicare for All, and do other things that a majority of the population and Senator Sanders supports heavily, but does not insist upon in the face of supposed budget problems. But it's hard to make a credible claim that “we're running out of money” when we 1) have between $90 Trillion and $100 Trillion in the TGA, and 2) when the President has just demonstrated that the Federal Government can create reserves to fill the public purse at will.

I’ve discussed the technicalities, history, economic, legal, and political aspects of HVPCS, and the many objections to it, in my e-book on the platinum coin solution for “fixing the debt”, and will leave the details for you to read there. But it's very important to emphasize the essential role of the President in getting over the initial hysterical reaction that would ensue if he uses HVPCS. After using it and getting immediate credit for the face value of the platinum coin from the Federal Reserve, he must then make a crisis speech informing the country about the action he's taken to fill the public purse and why he found it necessary to do that and change the American way of debt repayment and deficit spending.

Following that crisis speech he must go on tour, carrying his message to the people and emphasizing the new freedom of the Government to pay down and eventually pay off the public debt, while, at the same time being able to “pay for” any deficit spending Congress might choose to enact for a very long time to come. He needs to explain that using HVPCS is fiscally responsible since it ends the Government's borrowing back its own currency and eliminates any possible justification for “austerity” as long as we have less than a full employment economy. He also needs to emphasize that HVPCS will not cause any more inflation than present policies and why he thinks that is true.

In conveying this message, repetition and mobilization of all Administration resources is essential. He must not give any ground to austerians and Republicans who, while constantly complaining about the public debt, will hate the HVPCS solution to the problem. In other words he must not compromise on this at all, but must implement HVPCS, make filling the public purse a fait accompli, and then go on with the more positive politics of using the policy space created by a full TGA to decrease inequality in the US and create the greater prosperity for the middle class and the poor that he says he wants.

Remember, there would be no fiscal cliffs, sequesters, or budget crises, without the claim that there is a Government Budget Constraint (GBC). Once we dispel that claim with HVPCS, these things will be gone with the wind, and the policy space will be there for the President and others in Congress to propose a range of policies to restore middle class prosperity without the inevitable objections that such policies will either increase the debt, or lead to higher taxes.

The Republican Congress won't want to pass these policies, so the President may still not have a chance to say YES to the measures Senator Sanders calls for. But Congresspersons and Senators who want to vote against them won't be able to plead Federal Government poverty, or “fiscal responsibility,” not with between $90 Trillion and $100 Trillion in the Treasury's bank account at the time of the new policy proposals. So, when they employ obstructionism without any perceived good reason for it, they will open the way for Democrats to regain the Congress, which, if the Democrats will only get rid of the the filibuster, will cut the legs off obstructionism, and make it possible to pass the policies the American people and Senator Sanders want the President to say YES to, anyway.

Alternatively, assuming the coin is minted, the Republicans may, over the next two years, buckle to the pressure imposed by the rapidly decreasing debt obligations of the United States, and the collapse of their debt-based austerity rationale. Then, they will, perhaps consider giving the President a chance to say YES to at least the minimum wage increase, and a substantial infrastructure-based jobs program, as well. After all, they will have seats to protect in 2016 and without their debt terrorist weapon it will be hard for them to show that there is any good reason for them to stonewall all progressive economic measures when the Treasury has $90 Trillion or so sitting in its spending account.

(Cross-posted from New Economic Perspectives.)

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blues's picture
Submitted by blues on

You MUST Be Kidding. You really can pretend that we can fix the export of American productional capacity by "minting" a magical $100 trillion coin?


That will bring back the Michigan steel mills and the Detroit auto industries? And we will begin making TV sets once again? How about if I just start spelling my name in all-caps? Sovereign citizenship would solve everything?

Here's a much simpler solution:

We just abolish the two-party "system." It's that simple. No more two-party insanity, and things will get better very quickly!

Why not try that?

Submitted by lambert on

Please see the links at Proof Platinum Coin History, where the proposal -- and the many who agree with it -- are clearly shown.

Please also use search to find letgetitdone's work on IVCS -- Interactive Voter Choice System.

I don't want to sound cranky, but it's really not cool to come in and lay about with your vorpal sword if you don't do the basic work on the issues, much of which has been performed here.

letsgetitdone's picture
Submitted by letsgetitdone on

We can't do that because it will take many millions of voters to decide to do that, and it will take years to get them to do that, if they will do it at all. On the other hand, it only takes one person to get that platinum coin minted and that is the President of the United States who can command his underlings to do all the things that must be done to make this happen. With his decision, the United States and the world can change in one day, if he wants to change it, and has the wit and the courage to do so. I write this column in hopes that its appeal will spread to Bernie Sanders and eventually to that one person who will act on my proposal. The chances are very small that what I want would be done over the next two years, but they are still far greater than the chances of your proposal coming to pass.

letsgetitdone's picture
Submitted by letsgetitdone on

Also, I never said that the coin would bring back those industries by itself. It cold have that effect if foreign nations react to the minting the coin by ceasing to want dollars in return for their products. But if that doesn't happen and they keep wanting to sell us things more cheaply than we can make thee these industries won't be coming back and we will have to develop new ones. So, what? We're perfectly capable of doing that, and in the meantime, the formerly unemployed can work on many thousands of community development projects and develop a legacy that at least matches that of the New Deal. The coin means that we can fund those projects and high unemployment means that the people to staff a Government Jobs program at a living wage will surely be available while everyone waits for the private sector to offer people jobs at higher wages and better benefits than a federal Job Guarantee program has to offer.

nippersdad's picture
Submitted by nippersdad on

but what he invariably ignores is that there is a consensus between the legacy, corporate owned Parties which is virtually never ignored. O doesn't "say yes" to the vast majority of these things because O does not want to say yes, and the R's collude with him by making their own former policies out to be "communism" so they can move that ball on down the field. The winks and nods are really quite obvious to all who are not soaked in spittle at this point.

I hope that Bernie will run, if for no other reason than that this type of stuff: will actually make it into our public conversation. Relying on O or the Democratic Party to do it for us at this point is really quite a ludicrous proposition.

nippersdad's picture
Submitted by nippersdad on

It would just be great to see something like in the public sphere. It has been a long time since anyone attempted to address the needs of the public at large; it will be a breath of fresh air were we to see it at the debates.

Vermont is not far from Maine, I wonder if Bernie the pussycat stands in need of a lions advice? Maybe Lambert could be prevailed upon to become an advisor to the campaign?

Submitted by lambert on

... and my ability to interact with insitutional structures.

However, I am coming to conclusion that I need to start posting on the 12 Points exclusively. It's the daily grind, or that, and the 12 Points are in essence book length and need to be book quality. That Sanders' proposals are seen as even potentially the left end of the Overton Window is pathetic. What do you think?

nippersdad's picture
Submitted by nippersdad on

where you can be what you want to be and do it as you like; you have a documented presence/persona with a lot of useful connections, and there would be no real need for you to stretch any more than you wanted to in such an endeavor.

Bernie wants to run, and you can advise him. You already have your ideas in place, tested over time with the demographics he is seeking to speak to, whereas he is just now putting out talking points without any real structure. He is kind of pathetic, most of the Washington bubble people are, but he clearly wants to be more. Why else would he run? It takes a special form of insanity to even consider it.

He has a high profile, some money and a need, you have a background in policy debates and a deep knowledge of the internet vehicle to meet both your ends. And you wouldn't be the only one serving in that capacity; you wouldn't be alone. Get Yves to help out too! I don't think this is a bad idea and it might even be some fairly lucrative short-term fun.

Seventy percent of the eligible electorate did not vote in the last election. There is a need out there for something different. Just something to think about.

nippersdad's picture
Submitted by nippersdad on

I think that if one wants to change the conversation, to make room for new topics not of the concensus RIGHT NOW, the best way to do it would be to shock the conscience of wide swaths of the electorate, across the political divide. Put ads in the WaPo and NYT calling out proponents of the new trade deals as traitors and follow up with a lawsuit naming anyone who ever supported TTIP, TTP, any way, shape or form.

The Constitution specifically forbids any law superior to itself, to pass such would be to cede sovereignty to an unaccountable power outside the ability of the electorate to change. That is, literally, treason. I don't think that could be easily thrown out of court.

Attack the consensus where it lives by pushing a coalition lawsuit (ACLU, NAACP, CCWA.....) which would delegitimize the corporate concensus actors in both Parties over a long period of time. Drip, drip, drip....Such a strategy would soon bring the national conversation you seek.

Just ask General "Betrayus" how he liked his ads,

letsgetitdone's picture
Submitted by letsgetitdone on

But I don't have the money. Do you?

nippersdad's picture
Submitted by nippersdad on

However, MoveOn and other orgs may not be. Think they were too badly burned last time to try it again?

Submitted by lambert on

... I changed the money I had into concrete things, like insulation, as rapidly as I could.

However, the idea will never propagate unless it is propagated. That, I can do.