Friday, July 15, 2011

Use of the Debt Ceiling to Force Debate

I have seen some commentary questioning the temerity of Republicans in holding out for spending cuts through the debt limit ceiling debate. The argument goes like this, the Congress passed the entitlement laws, budgets and tax code that led to this mess, how dare they withhold funding for these items. The obvious problem with this argument is that the debt limit acts as a constitutional prerogative of the Congress to limit the cumulative effects of such budget decisions on the balance of the Treasury of the United States. One might question the constitutionality of the "debt limit ceiling" as the means of the Congress expressing its will regarding the debt, but the fact of its authority is clear. Article 2, Section 8 grants to Congress these powers:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

So that seems fairly clear.

The other objection is that Republicans are "hostage takers," and that entitlements are somehow solemn obligations that cannot be changed. Again, this is not so, in Fleming vs. Nestor, the Supremes ruled that
"To engraft upon the Social Security system a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustment to ever changing conditions which it demands." The Court went on to say, "It is apparent that the non-contractual interest of an employee covered by the [Social Security] Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits is bottomed on his contractual premium payments."
Since increasing the debt ceiling is a piece of legislation, then that same legislation can cut entitlements or any other spending, with the possible exception of interest on the national debt, by amending entitlement law. The real problem today is that these entitlements are sacrosanct monuments in the Democratic party's pantheon of heroes, primarily FDR. Reforming them undermines the very meaning of the party in the eyes of most of its core supporters and office holders.

However, in the din of the news on the negotiations, what is being cut has not been specified in the news. For the life of me, I can' t find a decent summary of where the cuts are coming from. This is why it looks like kabuki to me as well as W.C and Leslie.

In the meantime, what's to be done? Obama himself called for means testing Medicare, which his lefty base opposes. That's why I have been warming to the idea of means testing all entitlement programs. Jared Bernstein (H/T DailyKos), left side pundit, makes my case:
I understand the appeal and it certainly makes sense to ask for more for a program facing a tight budget from those who can afford it. But the history of social policy leads me to worry about this: once you shift a program from universal coverage to means testing, it’s increasingly vulnerable to deeper means testing until it eventually becomes a poverty program which everyone wants to get rid of.
Thank you for the clarity, except, that medicare and social security as currently enacted are actually poverty programs in stealth mode when one dives into the actual details. Conservatives oppose these changes because means testing will initially harm the elderly of the middle class, and it isn't a very conservative idea. But we need to get creative, think long term, because as entitlements grow out of control pretty much the world over, they have the power to destabilize the national government, much like Greece. (Joke I heard: What's a Grecian Urn? I didn't know they worked.) Since these programs are already poverty programs, conservatives and libertarians should get behind making that explicit.

By the way, search for this: what are republican "specific budget cuts" debt ceiling debate and see if you get results like this in a news search.


  1. I always love the use of the word Temerity.

    100% right on...the GOP is going to have to do a hell of a lot better than this. I don't think anyone is fooled into thinking they've done any actual work on solving this issue. Bare minimum.

  2. It's more than a Democrat/Republican issue. This is now beyond economic reality. Great post by Jeff Cox on NetNet @ CNBC on Friday showing Kennedy's response to similar situation in the 1960s. Maybe our dear leader should take a page from one of his heroes.

  3. Our ignorance of the situation as a whole seems to be the primary driver of our continued decline. The mind of Americans seems to stay in the tiny little sphere of what comes out of the television. The discussion never goes beyond the TV directed herd and our prosperity is slaughtered from this TV induced infowar on our minds. The problems we have are easy to solve the only hard part is getting the ego centric TV watcher to realize how intellectually lazy they actually are.

    I challenge everyone to go to
    and review every government department and agency functions, budgets, history of their existence, and the actual men and women who run these departments. You will quickly realize how out of control the entire government is and see the game for what it actually is; a cesspool of crime and corruption. There are so many departments that are unconstitutional and worse than just bad but actually criminal in function that the whole situation is totally mind blowing. It would be easy to make huge cuts across the board byjust shutting down departments that almost no one even knows exists but this is not on the agenda. The people who work for many of these unheard of functionless departments are armies of bureaucrats who are paid supporters of past and current campaigns of tweetle dumb or tweetle dumber candidate who enacted the 'legislation' to create the department as pay back for their support. How about we simply fire 50% of the government bureaucrats from all the agencies that we have never heard of who are not working but being paid? How about we end the unlawful wars bring the military home and set a new foreign policy agenda of no entangling alliances and reduce the military by 50% and make official US policy defensive military actions only?

    The cuts are easy to identify but since no one wants to be responsible for sustaining their own life we will continue to decline. Since people can't support the themselves and their very life is sustained off a criminal enterprise we will see all the different groups who are depending on a system that is not sustainable scrambling to protect themselves. Everyone will divide into protecting their own little part of the criminal system and fight with everyone else. The bankers are now laughing as their plan to bring America to its knees is carried out exactly to their published specifications. In the end the military will swear their allegiance to the world government bankers as America cannibalizes itself because we couldn't figure out that the monetary system is mathematically guaranteed to fail and correct the problem at its source; ending debt based currency and accepting self responsibility for one's own existence.

    Responsibility doesn't mean finding a good job, it means actually producing value from your own efforts and being responsible for finding truth in a world of deceptions. There is NO safety net except for the one create yourself. Most Americans cannot handle the thought of actually having to be responsible for their own actions, hence you see so much about putting blame on politicians, the right, the left, terrorism or some other phantom outside source of the problem other than looking in the mirror and accepting responsibility for being deceived into a fraudulent system of irresponsibility . Stop contracting with them and support yourself. Unplug and then watch the fall of the irresponsible into all out cannibalism. Raising the debt ceiling is a distraction from the real problem.

  4. Entitlements are sacrosanct, you are correct, but so becomes any entitlement program, irrespective of the sustainablity. So let's go after the big dog, get on with the fight of unsustainable programs.

    Anon makes good sense with doing battle against the functionless departments that are armies of bureaucrats. We need to find them and gut them like the cancer they are.

  5. The logic of the Left seems to be this: Now that we've jacked spending up totally out of control, you need to raise taxes to compensate! To me, that asymptotically approaches socialism. That's good in what way?

  6. Why entitlements are sacrosanct?

    Its not that they are sacred to 'our heros'

    its that they are generally popular. If you remember the cynical 'big-government hands off my medicare' idgitry of health care reform, people have a sense of ownership of social security and medicare, something they've specifically paid for. It isn't regarded as a 'government program' but more like a possession. Best of all, programs like social security actually function pretty well (as such things go). Democrats know this and thus use it as a wedge issue, (whether the democratic center actually gives a damn is another story)

    and K T Cat, check your facts before you repeat GOP talking points about 'out of control spending' I could make similar, and more accurate comments concerning 'starve the beast' designed specifically to bring about such 'crises' Taxes are the lowest they've been since Herbert Hoover.


  8. Calivancouver,

    "...people have a sense of ownership of social security and medicare, something they've specifically paid for. It isn't regarded as a 'government program' but more like a possession. Best of all, programs like social security actually function pretty well (as such things go)."

    So, you are suggesting that they are privatized accounts? You know how well that went over when President Bush proposed a little more ownership back in '05?

    Nope. People very much like to think of SS as govenrnment program. As the general freak-out wrt to Bush's plan to privatize a whole 10%! proved, people are quite content with the paternalism inherent to SS.

    But I do agree with you regarding it's performance. Ponzi schemes don't usually last this long. Especially when this myth of the "trust fund" or "lock box" went up in smoke when the Prez let the cat out of the bag last week by threatening to withhold SS checks. Not too tactically shrewd, is he.

  9. Dean, thanks for responding on my behalf. I would add that we have changed the retirement age for social security in the past, so its present incarnation is not so sacrosanct. Adding means testing would probably cause the average American to yawn, if the initial threshold were set high enough.
    Calivancouver, With regards to KT's comment, are you going to deny that Democrats didn't make the debt problem worse through various stimulus bills?