"Extraordinary measures" — tediously complicated gimmicks for massaging the debt limit — are a well established part of American budgetary tradition. Premium bonds are the new gimmick we need now.
To be clear, the fights about how much we spend are totally legitimate. It's just that once the fight is over and the money is mandated to be spent, then the debt issuance should be automatic.
Josh outlines a very boring, institutional defence here. It's fantastic. What's also needed is a boring, pork-barrell offence. The House members most likely to blow up the negotiations are not exactly policy wonks. We need personal engagement driven by narrow interests. Low stakes corruption to grease the wheels, like the kind Canadian politics is famous for.
Matt Gaetz, for a couple weeks before the deadline, we need you out of town on a delegation addressing Haitian refugees coming to Florida. Naturally the conference is set up at a resort in the Dominican Republic. Since you don't speak French, here's a dossier of approved translators we can hire, who may or may not be high end escorts. Refuse and the TSA might proceed with this unruly passenger complaint, and put you on a secondary screening list that makes your checked baggage come out last on the carousel.
I think the easy Republican sound byte here is “look the Democratic administration is resorting to paying 15% interest on bonds!” They can frame it as adding even more to the debt even though that’s false.
I've been thinking about this more and as much as I want to give a huge middle finger to GOP Congress via the platinum coin (I was thinking Trump's face should go on the coin, but now I am wondering if George Santos would be better - maybe it should be a 2-headed coin), Josh is correct that would be bad.
But, the kind of debt machinations here will be recdeived as a middle finger by Congress. And, some Republican groups will file a lawsuit in front of a hand-picked judge Texas judge who will strike the program down and leave us at the mercy of the crazy 5th circuit.
To momentarily defend the trillion dollar coin, my understanding of the proposal is that after depositing in the Fed, it's then used to retire a trillion dollars of debt from the ~$5.5 trillion that's currently on the Fed's balance sheet. That then lowers the outstanding debt and lets the Treasury continue to issue bonds as usual. (AKA it's just another accounting gimmick)
So it's not particularly inflationary in the short term, it just lowers the room the Fed has to perform Quantitative Tightening and therefore probably leads to slightly higher interest rates in the long term.
However this just re-enforces the major criticism of minting the coin - that it requires an extraordinary amount of co-operation from the Fed, and there's many opportunities in the process for some judge in Texas to enjoin the whole thing.
We need some way to tie mandated spending to debt limit rather than make them into separate performative fights.
To be clear, the fights about how much we spend are totally legitimate. It's just that once the fight is over and the money is mandated to be spent, then the debt issuance should be automatic.
Perhaps the treasury can mint a Platinum limited addition Charizard Pokemon trading card. No law against that.
Josh outlines a very boring, institutional defence here. It's fantastic. What's also needed is a boring, pork-barrell offence. The House members most likely to blow up the negotiations are not exactly policy wonks. We need personal engagement driven by narrow interests. Low stakes corruption to grease the wheels, like the kind Canadian politics is famous for.
Matt Gaetz, for a couple weeks before the deadline, we need you out of town on a delegation addressing Haitian refugees coming to Florida. Naturally the conference is set up at a resort in the Dominican Republic. Since you don't speak French, here's a dossier of approved translators we can hire, who may or may not be high end escorts. Refuse and the TSA might proceed with this unruly passenger complaint, and put you on a secondary screening list that makes your checked baggage come out last on the carousel.
I think the easy Republican sound byte here is “look the Democratic administration is resorting to paying 15% interest on bonds!” They can frame it as adding even more to the debt even though that’s false.
Another approach would be to address the problems we have created.
Mostly the Boomers ... I am one.
Lower spending.
Rein in our entitlements .... getting all your SS contributions back on 6 years is obscene.
Raise taxes ... to pay down the debt.
Stop buying votes with tax money .... increases and decreases are both culprits.
Such a fairy tale wish, I know.
But someday our children will be asked to pay this bill .... that bill should be on us.
Is a National Debt at 130% of GDP, and growing, OK?
Economists on both sides have their perspectives.
Just so sad there are no adults in the room to get this sorted out.
I've been thinking about this more and as much as I want to give a huge middle finger to GOP Congress via the platinum coin (I was thinking Trump's face should go on the coin, but now I am wondering if George Santos would be better - maybe it should be a 2-headed coin), Josh is correct that would be bad.
But, the kind of debt machinations here will be recdeived as a middle finger by Congress. And, some Republican groups will file a lawsuit in front of a hand-picked judge Texas judge who will strike the program down and leave us at the mercy of the crazy 5th circuit.
You’re just begging to get trolled by Joe Weisenthal.
To momentarily defend the trillion dollar coin, my understanding of the proposal is that after depositing in the Fed, it's then used to retire a trillion dollars of debt from the ~$5.5 trillion that's currently on the Fed's balance sheet. That then lowers the outstanding debt and lets the Treasury continue to issue bonds as usual. (AKA it's just another accounting gimmick)
So it's not particularly inflationary in the short term, it just lowers the room the Fed has to perform Quantitative Tightening and therefore probably leads to slightly higher interest rates in the long term.
However this just re-enforces the major criticism of minting the coin - that it requires an extraordinary amount of co-operation from the Fed, and there's many opportunities in the process for some judge in Texas to enjoin the whole thing.
“But a third problem is that it’s a huge middle finger to Congress, or at least to Republicans in Congress.”
Umm... are you sure this is a big and not a feature?
Depends. Is your objective to avoid a debt default, reach a budget deal, and keep the government open? Or is it to gain emotional satisfaction?
Is it bad that I want both? But unlike you I was not being Very Serious with my comment.
Ask the Republicans that question!
*bug