The so-called deadline to raise it isn't one at all. Lots of ways can resolve it. Prioritized spending can keep government operating. It can prevent default.
From October 1, 2013 through September 30, 2014, an estimated $3 trillion in revenue will be collected. The Treasury can mint trillion dollar coins if needed.
The Fed monetizes debt by buying Treasuries. It's purchasing about $1 trillion annually. It can double the amount if it wishes.
Doing so, of course, is madness. What can't go on forever, won't. Massive monetization debases dollar value. Doing so is back door defaulting. Short-term, nothing prevents it from continuing.
Technically the debt ceiling is unconstitutional. The 14th Amendment Section 4 mandates paying public debt obligations. It states:
"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."
"But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void."
Defaulting violates the Constitution's "general welfare" clause. Article I, Section 8 states:
"The Congress shall have power to provide for (the) general welfare of the United States."
Having power means using it when most needed. It means doing so for the good of the country and everyone. It requires keeping government operating. It requires funding its obligations.
The so-called debt problem is an accounting one. The Treasury can issue any amount it wishes. The Fed can buy it all if needed.
It can cancel debt it owns. It can simply forgive it. It's a bookkeeping entry. It's money Washington owes itself.
Doing it creates lots of wiggle room. It would end the current standoff. It would prevent default.
It won't happen whether or not the so-called deadline is passed. Bet on it.
Here's where things now stand. An hour from now they may change. According to Defense News.com:
Senate Democrat and Republican leaders "are close to finalizing a debt-ceiling deal."
It buys time. It gives Congress and Obama three more months to resolve differences. It averts new defense sequestration cuts.
Senate majority and minority leaders Harry Reid (D. NV) and Mitch McConnell (R. KY) respectively agreed on 2011 Budget Control Act (BCA) funding levels.
If House Republicans concur, government reopens. It continues operating until January 15. It provides time to resolve differences.
Reid and McConnell are close to a deal to raise the debt ceiling until mid-February. In weekend talks, Democrats introduced a sequester replacement plan. Republicans balked.
Reid and McConnell agreed on $986 billion additional spending. It'll end in mid-January without a sequester replacement deal in the meantime.
According to Senator Mark Pryor (D. AK), both leaders agreed on what 13 Republican and Democrat senators proposed. Passing a continuing resolution (CR) would keep government operating.
Doing so requires House and Senate approval.
At 9:56 AM EDT time today, The New York Times headlined "House Outlines Plan on Spending Debt Limit," saying:
Doing so "would end the government shutdown and raise the debt limit into next year, but would also make some changes to the health care law."
Their plan mandates Obamacare coverage for congressional and high-level administration staffers. It excludes them from receiving government subsidies.
It suspends the medical device tax for two years. It reopens government. It funds it through January 15. It increases the debt ceiling until February.
Other House and Senate Democrat and Republican proposals were floated. They're being considered. So far, nothing is resolved.
At 11:30 AM EDT today, The New York Times headlined House "Republican Leaders Back Off New Plan," saying:
"Republican leaders walked back from a plan that had emerged this morning. Speaker John A. Boehner told reporters there are 'no decisions about what exactly we will do.' "
"We're trying to find a way forward in a bipartisan way that would continue to provide fairness to the American people under Obamacare."
House Republicans have different ideas on how to do it, he added.
According to The Times, they "appear intent to extract at least one concession."
They want congressional members, Obama, Biden, and high-level administration staffers excluded from federal health insurance subsidies. They want them bound under the same Obamacare provisions as everyone else.
House Majority Leader Eric Cantor calls it "our provision of fairness. No special treatment under the law."
Stay tuned. Ongoing toing and froing has a ways to go. Debt default won't follow. Whatever happens, ordinary people will be harmed most.
A previous article explained. Squabbles mask Washington's longstanding class war. Neoliberal harshness explains it.
Bipartisan complicity demands it. Destroying social America is planned. Brinksmanship is theater. It masks what's really going on.
Expect resolution to hammer ordinary people hard. It'll hurt America's most disadvantaged hardest. It'll come incrementally.
It'll eliminate social protections too vital to lose. It'll leave growing millions increasingly on their own sink or swim.
It'll reveal more than ever America's dark side. It reflects heart of darkness wickedness writ large.
Expect the worst of all possible worlds ahead. It's baked in the cake. Both parties agree.
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|Allen L. Jasson|