Being Held Hostage

Andrew Sullivan writes about the debt ceiling talks going on in Congress:

What you probably cannot do is negotiate with economic equivalent of terrorists. What Cantor and Boehner are doing is essentially letting the world know they have an economic WMD in their possession. And it will go off if you do not give them everything they want, with no negotiation possible. That's the nature of today's GOP. It needs to be destroyed before it can recover.

It's insane that we've reached this point. To have a political party threaten national default if it doesn't get everything it wants is terrorism. It's what hostage takers do. I don't think the American people are taking this seriously enough. Want to know what happens when a country defaults on its debts? Chaos. Just looks at what happened to Latin America in the 80's. Or Mexico. Or Russia. Or Argentina. Bruce Bartlett better explains:  

Republicans are playing not just with fire, but the financial equivalent of nuclear weapons. Perhaps at one time when the federal debt was owned entirely by Americans we could afford to take a chance on debt default because the consequences would only be internal. But today, more than half of the privately held public debt is owed to foreigners; the Chinese alone own more than $1.1 trillion of Treasury securities. Moreover, many countries use Treasury securities as backing for their own currencies. Thus the impact of default would be felt internationally, disrupting finances and economic policies throughout Asia, Europe and Latin America.

Therefore, a potential debt default is far more than a domestic consideration; it is a matter of foreign policy. This is why Secretary of State Clinton and Navy Adm. Mike Mullen have warned that the public debt represents an important threat to national security. As attorney Thomas Geoghegan recently put it, “Where the validity of the debt is concerned, our national security is at stake.”

It's one thing to have a developing country default. It's another thing entirely when the largest, most interconnected economy in the world defaults. Perhaps we're numb to scare tactics. Or we just choose to look away as our bumbling politicians try to disarm a bomb that could kill all of us. I don't know. But luckily there is something Obama can do if Congress fails to act: Go over their heads.  Bartlett explains:

A more radical solution, Plan B, would be to simply disregard the debt limit altogether on constitutional grounds, an idea I suggested in The Fiscal Times on April 29. University of Baltimore law professor Garrett Epps made a similar suggestion in The Atlantic on May 4.

The essence of the argument involves section 4 of the Fourteenth Amendment to the Constitution, which reads: “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.”

In my view and that of Prof. Epps, this means that the president would have constitutional authority to take extraordinary measures to protect the public credit and prevent a debt default even if it means disregarding the debt limit, which is statutory law subordinate to the Constitution.

Perhaps we can avoid this crisis after all. I see no other way. Until GOP leaders break and accept compromise on a deal that includes tax hikes AND spending cuts, which has a snowball's chance in hell at this point, there is no other way. Ultimately the responsibility lies with the American people. We elected these children and they aren't doing their jobs. So instead of complaining about it, its time to do something and actually vote them out of office. Until then nothing will get done.