To the chagrin of some, the White House and the Treasury Department has taken off the table "minting the coin" - an idea that would let the Secretary of Treasury simply mint a platinum coin, give it any value (say, a trillion dollars), deposit it in the Federal Reserve Bank, and draw against it to pay our obligations, essentially rendering the debt limit a moot point. Given that the president has already rejected that the 14th amendment could legally be used to override the debt limit, one could jump to the conclusion that he is nudging ever so closely to another showdown on the debt limit with Congressional Republicans.
Only, he isn't. Listen carefully to the president's answer to Chuck Todd in yesterday's news conference:
Here's the transcript of the relevant portion. Read it carefully.
Chuck Todd, NBC.Just as the president says, I also understand the impulse to find an easy way out of this and render the Republicans irrelevant in the debt ceiling. But this president and his team think 20 steps ahead of nearly everyone else in Washington. The president does not want to make the Republicans in Congress irrelevant in this conversation; he wants them to come to their senses - or more likely, to their knees - and raise the debt limit without being able to keep their hostage. As the president said in his opening remarks, the Republicans "will not collect a ransom in exchange for not crashing the American economy."
Q Thank you, sir. As you know, the Senate Democrats, Harry Reid sent you a letter begging you, essentially, to take -- consider some sort of executive action on this debt ceiling issue. I know you’ve said you’re not negotiating on it. Your administration has ruled out the various ideas that have been out there -- the 14th Amendment. But just this morning, one of the House Democratic leaders, Jim Clyburn, asked you to use the 14th Amendment and even said, sometimes that’s what it takes. He brought up the Emancipation Proclamation as saying it took executive action when Congress wouldn’t act, and he compared the debt ceiling to that. So are you considering a plan B, and if not, why not?
THE PRESIDENT: Well, Chuck, the issue here is whether or not America pays its bills. We are not a deadbeat nation. And so there’s a very simple solution to this: Congress authorizes us to pay our bills.
Now, if the House and the Senate want to give me the authority so that they don’t have to take these tough votes, if they want to put the responsibility on me to raise the debt ceiling, I’m happy to take it. Mitch McConnell, the Republican Leader in the Senate, had a proposal like that last year, and I’m happy to accept it. But if they want to keep this responsibility, then they need to go ahead and get it done.
And there are no magic tricks here. There are no loopholes. There are no easy outs. This is a matter of Congress authorizes spending. They order me to spend. They tell me, you need to fund our Defense Department at such and such a level; you need to send out Social Security checks; you need to make sure that you are paying to care for our veterans. They lay all this out for me because they have the spending power. And so I am required by law to go ahead and pay these bills.
Separately, they also have to authorize the raising of the debt ceiling in order to make sure that those bills are paid. And so, what Congress can't do is tell me to spend X, and then say, but we're not going to give you the authority to go ahead and pay the bills.
And I just want to repeat -- because I think sometimes the American people, understandably, aren't following all the debates here in Washington -- raising the debt ceiling does not authorize us to spend more. All it does is say that America will pay its bills. And we are not a dead-beat nation. And the consequences of us not paying our bills, as I outlined in my opening statement, would be disastrous.
So I understand the impulse to try to get around this in a simple way. But there's one way to get around this. There's one way to deal with it. And that is for Congress to authorize me to pay for those items of spending that they have already authorized.
And the notion that Republicans in the House, or maybe some Republicans in the Senate, would suggest that “in order for us to get our way on our spending priorities, that we would risk the full faith and credit of the United States” -- that I think is not what the Founders intended. That's not how I think most Americans think our democracy should work. They've got a point of view; Democrats in Congress have a point of view. They need to sit down and work out a compromise.
The president knows, as well as Republicans, that there is no there, there to the Republican threats to hold the economy hostage to the debt ceiling. As Newt Gingrich pointed out, this is not a hostage Republicans are prepared to shoot. And that's not from a sense of any great patriotism. It's because their corporate masters won't let them. If the Republicans crash the economy - the global economy - by not raising the debt limit, the following credit crunch will affect the biggest businesses, not just your small potatoes. And as much as Republican politicians may be cowed by Teabaggers in their base, they are more beholden to corporate donations - hell, the Tea Party as a "movement" is deeply dependent on their corporate overlords.
In addition, the immediate consequences will also be disastrous to GOP's core constituencies. If the government is left without the ability to pay its bills, seniors will suddenly stop getting their social security checks on time. Who's going to be holding the Tea Party signs when old white southern men stop receiving their social security checks? Defense contractors will stop receiving payments in time. You think they won't break a few necks in Congress to make sure that doesn't happen?
What the president has done here is pitted right wing ideologies against financial interests of those same people. Better yet, he has pitted the interests of ideologues against the interest of their funders. Guess who wins that fight? The truth is with the president's refusal to take their bait to negotiate, Republicans are not fighting this fight with the president. They are fighting it among themselves. That's the dirty little secret, and the president knows that.
Republicans will not be able to hold this hostage, and they will certainly not be able to shoot it. With all the huffing and puffing by the Republicans shutting down the government over the debt limit - in reality, it will be much more catastrophic than a simple (!) government shutdown - everyone is forgetting that if Republicans were able to shoot financial hostages like this, it would have been much easier for them to shoot the fiscal cliff hostage. They couldn't even do that. They folded like a cheap wallet on the tax portion of the deal, and had their wings clipped when they agreed to separate the tax and spending cut portions of it. This, by the way, is one of the reasons the president engaged with Boehner on the debt ceiling in 2011 - it was his way to set them up to lose the big war on taxes and spending.
The economic consequences of failing to raise the debt limit will be far more severe than raising taxes on everyone and taking some pretty tough spending cuts, which is what we would have had there been no deal on the fiscal cliff. The Republicans are so splintered and so lost, they couldn't even hold their own on that. What makes any Washington pundit think that they would be able to shoot the debt ceiling hostage is beyond me.
Bottom line: Congress will have to give the president a clean debt limit increase (at least relatively so) at the end of the day. This is why the Republicans are trying to draw the president into a mudfight, and that's why the president isn't having any of it. He knows the Republicans will have to come to their knees, and he's expertly closing off easy outs that believe it or not, even some Republicans would secretly want him to take so they don't have to have a big fight within their own party. The president knows that if he takes the easy outs off the table, there will be no choice but for the Republicans to have to let the entire Congress work its will, and not just the majority of the House Republican majority. That will of course cause a lot of discord within the party, set the nutjobs' hair on fire, and force the Republican party to deal with - or abandon - its nutjobs.
The Republicans, for four years, tried to handicap this president for political gain. Well, you know what they say about payback. The political victory in this for the president is obvious. But I do not believe that he is doing it simply for a political victory. I think that he earnestly believes that for us to have an open debate about the big issues, and be a governable country, the Republican party must deal with its fringe and marginalize it first, so that compromises can be forged to move the country forward.
So, we're not going to mint the coin. We will instead watch the Republican party come to its knees once again as they are left with no other choice. And we will see an internal fight among the GOP that will be explosive. Grab some popcorn. This thing is about to get interesting.