IOU Nothing

I won’t waste much time on this. A new alternative has been proposed to the $1 trillion coin that is, if anything sillier. It’s that the government should just issue IOU’s. Seriously:

Congressional Republicans have said they will demand immense cuts to popular government programs in exchange for agreeing to raise the nation’s authorized borrowing limit of $16.4 trillion.

Stop right there. I highlighted this sentence in just to show you the author’s delusions. The GOP is not proposing immense cuts. All programs will grow over the next decade. And they are even trying to weasel out of those cuts. I realize the Left thinks we don’t have a spending problem. But when real-term spending doubles over a decade, most rational people think spending might have something to do with our present woes.

Anyway, continue.

However, there is a plausible course of action, one that the president should publicly adopt in the coming weeks as his contingency plan should debt-ceiling negotiations falter. He should threaten to issue scrip — “registered warrants” — to existing claims holders (other than those who own actual government debt) in lieu of money. Recipients of these I.O.U.’s could include federal employees, defense contractors, Medicare service providers, Social Security recipients and others.

The scrip would not violate the debt ceiling because it wouldn’t constitute a new borrowing of money backed by the credit of the United States. It would merely be a formal acknowledgment of a pre-existing monetary claim against the United States that the Treasury was not currently able to pay. The president could therefore establish a scrip program by executive order without piling a constitutional crisis on top of a fiscal one.

To avoid any confusion with actual Treasury debt, and to be consistent with the law governing claims against the United States more generally, the scrip would not pay interest in most cases. And unlike debt, it would have no fixed maturity date but rather would become redeemable in cash only when the secretary of the Treasury was able to certify that there’s enough money available in the Treasury’s general fund to cover it.

Finally, the scrip would be transferable, allowing financial institutions to buy it at a high percentage of its face value, knowing that the political crisis would almost certainly be resolved before long.

He cites California as an example. But California is not the federal government. What he is essentially calling for is the President to create a new currency that is not backed by the full faith and credit. Oh yes. I’m sure that the Republican party, who have promised legal fights over the 14th Amendment Option and the Coin, will will look at that and say, “Oh, Jeez. He’s got us now!”

Look, the President has been given two contradictory instructions from Congress. They have passed spending bills, instructing him to spend more money than we are taking in. And they have not passed a bill authorizing him to borrow money to cover the difference. They haven’t told him to make bricks without straw. They’ve told him to make bricks out of thin air.

The President has two options: break one of those laws or default. It’s that simple. And if he’s going to break the law on the debt ceiling, just break the law on the debt ceiling and issue more bonds. That way we’re in a plain old constitutional crisis instead of a constitutional crisis and an absurd legal battle over a God-damned coin.

A … I just … OK. You might want to skip the rest of this post because I’m going to lose it.

Good God, liberals, do you even hear yourselves?! Are you so far up your own asses that this is sounding anything short of absurd?! Platinum coins? IOU scrips? 14th Amendment? For God’s sake, if the Republicans suggested something like this — if Michele Bachmann suggested something like this — you’d go nuts! You’d be lampooning it as a sign that the GOP has finally gone off the deep end. Hell, Stephen Colbert called you out on it the other night.

Stop this silliness. Stop it right now. Every moment you spend on these absurdities is a moment you’re not spending working the actual problem we are facing. Yes, the GOP is crazy to contemplate hitting the debt ceiling. But these absurdities within absurdities only provoke more craziness. You’re not helping. You’re patting yourselves on the back for your own perceived cleverness.

Here’s something you could do: get Harry Reid to pass a damned budget. It has been over 1000 days since the Senate last voted on a budget. A budget usually includes a debt ceiling hike to cover the authorized spending. Maybe … just maybe … if we return to an actual budget process, we can organize spending, taxation and debt in an organized systematic regular way — the way we’re supposed to — rather than this perpetual series of crises and cliffs. I know that sounds insane to budget the way we did for two centuries. But it’s so crazy it just. Might. Work!

I realize that wouldn’t give you a West Wing moment where you finally beat those damned GOP bastards and the credits roll. But credits don’t roll in real life. Budget tricks have consequences and legal fights. Fixing the budget won’t be as satisfying as a coin trick. But it might help save the country from the perilous fiscal path we have been on since the millenium.

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  1. Hal_10000 *

    Looks like both the WH and the Federal Reserve are saying no to the coin, the IOU, the 14th Amendment and the partridge in a pear tree.

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