Having just heard President Obama’s press conference, I have an intuition of where he’s heading if Congress fails to raise the debt limit.
He’s prepared to take unilateral action to keep/get us out of default. (My advice would be to GET us out, after there’s been enough of an earthquake for the American people to understand just how reckless the Republicans have been.)
I draw this conclusion from what I saw the President doing in that press conference that leads me to that belief. Interestingly, some are interpreting his remarks as “dismissing” those possibilities, or ruling them out. That’s not how I saw it.
Here’s what the President actually said:
I know there’s been some discussion, for example, about my powers under the Fourteenth Amendment to go ahead and ignore the debt ceiling law. Setting aside the legal analysis, what matters is is that if you start having a situation in which there’s legal controversy about the U.S. Treasury’s authority to issue debt, the damage will have been done even if that were constitutional because people wouldn’t be sure. It would be tied up in litigation for a long time. That’s going to make people nervous.
So a lot of the strategies that people have talked about, well the president can roll out a big coin, or he can resort to some other constitutional measure. What people ignore is that ultimately what matters is, ‘What are the people who are buying treasury bills think?’
And he went on to talk about how someone would hesitate to buy a house, or require some kind of premium, if there were some uncertainty about the owner’s having title to the house.
So what is President Obama doing here? It’s true that he’s expressing dissatisfaction with the presidential-rescue solution, but he’s not ruling it out.
He’s saying that it would be far better for the Congress to raise the debt ceiling and remove all uncertainty about default. He’s saying there’s a cost –the premium we’d have to pay to compensate for the uncertainties that buyers of U.S. debt may feel– if the debt ceiling were to be raised by means that could face a constitutional challenge. (“It would be tied up in litigation for a long time. That’s going to make people nervous.”)
By this means, he keeps the pressure on Congress to raise the debt ceiling. And rightly so.
Rightly, first, because that pressure is politically appropriate. No good would come of his showing, while the burden rests on Congress, any readiness to rescue the nation from the Republicans, and thus the Republicans from the consequences of their recklessness. (For that reason, I’m glad to see commentators interpreting his remarks as “dismissing” the presidential-rescue option.)
And rightly, second, because Congress passing an increase in the debt ceiling is in fact better for the American and world economies, and for the American polity, than his having to take an action that would likely be challenged and thus create some financial uncertainties as well as political distractions.
But the same argument also sets up his taking such action if Congress fails to respond appropriately to that pressure, and to act responsibly on the “full faith and credit of the United States.”
Uncertainty may be bad, but the certainty of disaster is even worse.
So if the choice is between “FOR SURE the United States defaults NOW” and “MAYBE the United States defaults IN A FEW YEARS” (if the Supreme Court somehow were to uphold the Congress’s right to destroy the country and not the President’s right to protect it), it is clear which is the better option.
With this presentation, I think President Obama has gone as far as he’s going to go –or should go– prior to Congress’s actual failure, to open the door for his rescuing the country. But he’s gone far enough to set the stage for taking that action and then defending his action in court if or when it’s challenged.
No concessions. And a readiness to act unilaterally. That’s the combination I recommended in 2011, and again in recent months. After today’s press conference, I’m feeling more confidence that before that this is the policy President Obama has embraced.