How It Ends

As GOPer terrorists in Congress continue to hold the world economy hostage with their non-negotiable and utterly absurd demands, there is great uncertainty about the outcome even among the chatterers who are usually way too certain about their opinions.  Despite the consequences, described by former Obama economic advisor Larry Summers when asked why people shouldn't want to see the debt ceiling maintained. "Because they don't want a version of the Lehman Brothers catastrophe for 2008 on steroids. Because they don't want to see the buck broken on money market funds and the ensuing financial panic. Because they don't want to live with the consequences for their purchasing power of a crash in the dollar. Because they don't want to live in a nation that is no longer a nation of law, that meets its obligations. For those reasons and many more, we all have an enormous stake in doing the elementary and the obvious thing and meeting our debt obligations."

So what are the alternatives?  The most obvious ones now seem among the least likely: there's a deal that nobody completely likes but that everybody can live with that attacks long-term deficits without stopping present recovery and the stimulus and tax policy attempts to get the economy moving faster, with special attention to Main Street and middle class jobs.  But nobody sees that coming.

Will it end with the GOPers or Obama completing giving in to the other side's requirements for a deal?  There's some thought--and some fear--that it's more likely that Obama and the Dems will cave, if for no other reason than Obama is the responsible figure in all of this, and the Rabid GOPers are counting on that.  He won't let them blow up the economy.  But on the other hand, the polls are on his side.  There is very strong support in virtually every poll for doing what the Dems require--raising some revenue by ending corporate jet and oil company tax loopholes, etc, and not touching Medicare coverage or Social Security benefits.  Perhaps even more telling, the latest NY Times poll shows that only 8% blame President Obama for the current economy.  Most blame effects of  Bush spending, and Wall Street.  This suggests that the President has a strong hand...if the GOPers are rational, even as politicians, let alone as Americans.

 So far the GOPers are resisting a deal in which they get almost everything they want, which suggests they don't want a deal.  So to me that means:

Resolution #1: Declare Victory and Go Home.  Both sides announce that a long-term deal is impossible now, because the Other Side is wrong and irrational, and Our Side won't compromise our principles.  So we're passing a clean debt ceiling bill, because after all we are responsible Americans and we don't want the economy to tank, and on all the other issues we're going to the voters in 2012.

  This is so far being proposed by exactly nobody but me.  The other possible solution being floated include:

Resolution #2: By a Thousand Cuts.  A set of cuts agreed to results in a temporary raise in the debt ceiling for a few months, when it all starts all over again.  Some folks think this is the best we can expect.

Resolution #3: The Fourteenth Amendment.  This is getting increasing buzz.  The 14th Amendment to the Constitution states: "The validity of the public debt of the United States...shall not be questioned."  Some say it was created for just this kind of situation.  So the solution is that President Obama simply invokes the 14th Amendment, disregards the congressional debt ceiling, and declares that the U.S. will pay its bills as usual.  Constitutional scholars say it could work, and they aren't sure that anyone even has the standing to take the matter to court.

So far the White House is discouraging the idea, and the Dem's designated firebrand of the moment, Senator Chuck Schumer, says it's a good idea but there isn't time to implement it this time around.  But that's the official word.  There's some feeling that the administration (Treasury in particular) would like to have this out there as part of the discussion--to let the GOPers know that the hostages might just escape.