We're facing a problem that's worse than the fiscal cliff (which we are going over
): In February, Congress must raise the debt ceiling or the economy will shatter. Senator Lindsay Graham says that he will destroy the economy
if he doesn't get his way on Social Security. He wants to see the retirement age raised, and he also wants chained CPI, along with some other nasty stuff.
This is blackmail, pure and simple.
Fixing Social Security is easily done: Just raise the cap. Republicans won't contemplate that approach, alas, so they are going to force through utterly unpopular "solutions." It's clear that they want any change in the retirement age to occur under a Democrat's watch.
I don't see what can stop Graham and his cohorts from accomplishing this goal.
So what we’re probably looking at over the next few months is an epic confrontation. Maybe Obama wimps out — in which case he’s effectively surrendered the presidency to Grover Norquist; maybe GOP leaders back down, but then face a civil war within their own party; or maybe we’ll have a vast, rolling crisis that won’t truly be resolved until the 2014 elections.
What to do? What to do?
Quite a few people (including our friends at Corrente
) have flirted with the "trillion dollar coin"
notion. But there are a lot of reasons to take a skeptical attitude
toward that solution.
The Trillion Dollar Coin is the name given to a proposal that would enable the US Treasury to avoid the restrictions legally put in place by the congressionally mandated debt ceiling. The idea behind it is disarmingly simple: If you don't have the money, and you can't borrow it, just make it up! Rather than adhere to long-established and institutionalized procedures for issuing debt when the government's projected outlays exceed its revenues (which would increase the debt beyond the debt ceiling), it is proposed that the Treasury seize upon a legal loophole that would enable it to spend unlimited amounts of money without having to suffer the inconvenience of incurring debt.
I agree that this is a risky, drastic, downright absurd measure. But if Congress refuses to pay our debts, what are our options?