This time, Republicans, who control the House, are seeking a reported $1.2 trillion in budget cuts in exchange for raising the debt limit. Obama insists he’s not going to play the GOP’s game, stressing that lawmakers “will not collect a ransom in exchange for not crashing the American economy.”
“Raising the debt ceiling does not authorize more spending — it simply allows the country to pay for spending that Congress has already committed to,” Obama said. “These are bills that have already been racked up and we need to pay them. So while I’m willing to compromise and find common ground over how to reduce our deficits, America cannot afford another debate with this Congress about whether or not they should pay the bills they’ve already racked up.”
Republicans remain equally adamant. Senate Republican Leader Mitch McConnell, of Kentucky, has vowed to include budget cuts in the discussions.
“Avoiding this problem will only make it worse, which is why many of us view the upcoming debt limit debate as a perfect opportunity to face up to Washington’s spending,” McConnell said.
In a recent letter to Obama, four high-ranking Senate Democrats, led by Senate Democratic Leader Harry Reid, of Nevada, urged him to, if necessary, raise the debt ceiling without congressional approval.
“In the event that Republicans make good on their threat by failing to act, or by moving unilaterally to pass a debt limit extension as part of an unbalanced or unreasonable legislation, we believe you must be willing to take any lawful steps to ensure that America does not break its promise and trigger a global economic crisis — without Congressional approval, if necessary,” the group advised.
Lawmakers supporting unilateral presidential action cite the 14th Amendment to the Constitution, which says in part, “the validity of the public debt of the United States, authorized by law, shall not be questioned.” But Republican lawmakers insist any such effort would be unconstitutional, noting that the framers granted the power of the purse to Congress.
“Democrats in Washington are falling all over themselves in an effort to do anything they can to get around the law — and to avoid taking any responsibility for Washington’s out-of-control spending,” McConnell said.
The White House has said it does not plan to invoke the 14th Amendment.
TRILLION DOLLAR COIN
During the 2011 debt limit showdown, John Balkin, a professor of constitutional law and the First Amendment at Yale Law School, used his blog, Balkinization, to offer a unique way out of the mess.
A loophole in federal law allows the government to mint platinum coins in any denomination it chooses. Balkin suggested, whimsically at first, that the U.S. Mint simply produce a couple platinum coins with a value of $1 trillion each, which would be legal tender. The Mint would deposit the coins in its account at the Federal Reserve. The president could then direct the Federal Reserve to transfer the money to the Treasury. The government could then afford to pay its bills without relying on Congress to raise the debt limit. And since the money would only be used to maintain federal spending at existing levels, inflation wouldn’t be a problem.
Republicans dismissed the proposal as a gimmick.
“Rather than offering any plan to break the spending habit that’s causing the problem, Democrats are looking at everything from the ridiculous — printing a trillion-dollar coin — to outright abdication of Congressional responsibility,” McConnell said.
The Treasury has put the kibosh on the proposal, claiming the law was intended to produce platinum coins as a substitute for raising the debt limit.
“There are only two options to deal with the debt limit — Congress can pay its bills or it can fail to act and put the nation into default,” said White House Press Secretary Jay Carney.