Thursday, June 09, 2011

The Default Specter as Political Theater

From CounterPunch, former Reagan economist Paul Craig Roberts on the debt ceiling and raw power:

However, regardless of whether the debt ceiling is raised, the US government is not going to go out of business. Why does anyone think that the President, who does not obey the War Powers Act, the Foreign Intelligence Surveillance Act, US and international laws against torture, or any of the laws and procedures that guard civil liberty, is going to feel compelled to obey the debt ceiling?

As long as the US is at war, the American President is a Caesar. He is above the law. The US Justice (sic) Department has ruled this, and Congress and the Courts have accepted it.

Moreover, the Federal Reserve is independent of the government. In its approach to regulatory matters and bailouts, the Fed has ceased to follow its own rules. Regardless of the debt ceiling, the Fed will continue to purchase the Treasury’s bond issues, and the Treasury will continue to fund the federal deficit with the proceeds. If Goldman Sachs is too big to fail, certainly the US government is.


If the President can declare on his own authority, without statutory basis and in defiance of the US Constitution, that he can assassinate US citizens who he considers to be a threat to national security, he certainly can declare that default is a threat to national security and that it is within his powers as commander-in-chief to ignore the debt ceiling.

More here.

I don't know that Obama actually has the balls to do this, to push back against outrageous GOP demands to dismantle the New Deal and throw the poor and elderly out in the street, to hang tough instead of all that usual bullshit "compromising" he likes to do. What will probably happen is that he'll consent to some godawful cuts in social spending and get the Senate to go along. That's how he's governed the whole time he's been in office.

On the other hand, he really has embraced all the new executive powers amassed by his predecessor as far as "The War on Terror" goes, which is just horrible. But it is nice to know that he could probably get away with what Roberts is suggesting if he wanted to. At the very least, we can sleep easy knowing that the total economic disaster a federal default would cause will most likely not happen.

Either way, though, this is all fucking depressing.