How The President Should Handle The Debt Ceiling

POTUS

The President has all the leverage in the debate, yet has failed to use it. It’s anybody’s guess as to why. It is wrong that the President and the Democrats are holding the nation hostage by demanding tax increases and it is wrong that the Republicans are holding the nation hostage by demanding spending cuts. The “Full Faith and Credit” of the United States is not something that should be played with for political gain. Congress already has a mechanism for debating spending – its called the budget process. If I were an advisor to the President, my advice would be the following:

Give Congress a deadline for a bill that eliminates the debt ceiling entirely (this leftover relic of the Gold Standard should not be available to use as leverage for political gain)

If that deadline is not met, instruct the Treasury to mint a coin with a face value equal to whatever spending requirements our nation has for the next 12 months and to place it on deposit with Federal Reserve

If the President did this he would accomplish a lot, even if there were no bill to eliminate the debt ceiling. He would demonstrate the stupidity of the debt ceiling and demonstrate how our current monetary system actually works (i.e. the government is not revenue constrained). It would force congress to actually spend time on something other than meaningless debt ceiling talks and force them to use the already established mechanism for debating taxes and spending. Finally, it would demonstrate to the world that the US can and will always pay its dollar-denominated obligations and that there is no possibility of a default (outside of political foolishness).

Will the above actually happen? Nope, but if congress actually worked for your best interest, it would. Fat Chance.

Scott Dauenhauer, CFP, MSFP, AIF

P.S. Yes, I know Martin Sheen is not the President of the United States

Kindle

3 thoughts on “How The President Should Handle The Debt Ceiling”

  1. Anybody’s guess…well here’s mine. The President has the dual task of getting himself re-elected AND tanking of our current economic system along with that pesky penchant we have for sovereignty, in order to replace it with a system that is more socialist and Euro-friendly…one that would interface more easily with a one world monetary system. He is by far the least competent but most self-satisfied President of my lifetime, including the fabled Jimmy Carter. This combined with the legislative gridlock produced by the leftest Dems and equally leftest establishment GOP may be the great undoing of our nation. I hope and pray not, but my faith is not invested any of the players in this 11th hour drama. Short of divine intervention, the road ahead will be a rocky one.

    1. Its not just the President who must get re-elected, so does Boehner and Bachman and Paul and every other politician. The only party that is risking our sovereignty is the Republican Party and quite specifically the know-nothing politicians from the Tea Party. The lack of economic sophistication within the Tea Party (and of course congress in general) is downright scary. If the Tea Party were truly interested in defending the constitution, they would never use a gimmick such as the Debt Ceiling as it is unconstitutional. The Tea Party and their presidential candidate Ron Paul want us to default and to go back to the Gold Standard. That would turn us into Greece, a country with no monetary sovereignty and turn a depression into a great depression. The President is just as clueless, but he isn’t part of the party that is pushing to have our nation’s locked into a monetary system with almost no flexibility – just ask the Greeks how that feels. What is surprising to me is that Obama is buying into the Republican game plan, if he was really as liberal as everyone says he is (I think he likely is, but just doesn’t understand monetary policy) he would not be advocated Austerity, but instead a new FDR works program. The nation is being held hostage by both parties, but only one sub-section of the Republican party is intent on actually causing a default and putting us into a depression, the Tea Party.

Leave a Reply