THE CLIFF AT THE END OF CONSTITUTION AVENUE
Almost exactly a year ago, on June 30, 2011, the second of the Fed's two bouts of "Quantitative Easing" (QE) came to an end. For six weeks after that, the US Administration and Congress were embroiled in the circus which became known as the budget and debt ceiling "debate". In the lead up to this "debate", one which resulted in the whole mess being put into the too hard basket and papered over, there were actually appeals to the US Constitution. President Obama was urged by several of his advisors, with Treasury Secretary Geithner at the head of the pack, to go over the head of Congress and issue an Executive Order raising the Treasury's debt limit by invoking the Fourteenth Amendment.
Section four of the Fourteenth Amendment to the US Constitution reads as follows: "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." The rationale as presented by Mr Geithner and others was simple. Any move by the US Congress to stall or put conditions on a raising of the Treasury's debt limit would call "the validity of the public debt of the United States" into question. THAT'S UNCONSTITUTIONAL! Therefore, the President, having sworn to preserve, protect and defend that same constitution, must act to forestall any debate on the matter.
If you think that this display of convoluted "logic" is reminiscent of Chief Justice Roberts' recent majority ruling the case of "Obamacare", we would not disagree with you. But "interpreting" the Constitution has long since become a favourite parlour game in the corridors of Washington DC.
A year ago, the matter was given serious consideration and then rejected as perhaps being a tiny bit too blatant. The result was the debt limit circus and the decision to revisit the problem at the end of 2012. That decision, and the scraps thrown to the Republican majority in the House to get them to go along, set up what has since become known as the "fiscal cliff". Here we are in July 2012 with that infamous precipice coming closer and closer.
What To Do When The Voting Stops:
Mr Obama is again being urged to use his "Constitutional Authority" to prevent the public debt of the US from coming into disrepute. The evidence that this is happening is contained in headlines taken at random from the mainstream media over the last week of June and the first week of July in the US:
"US teeters on a fiscal cliff edge"
"Analysis: Jumping off the fiscal cliff"
"The Historic Accident Awaiting US Over the Fiscal Cliff"
"IMF urges US lawmakers to remove fiscal cliff'"
"Congress Said to Consider Delaying Automatic Budget Cuts"
Under the August 2011 deal that allowed the Treasury's debt limit to be raised by $US 2.1 TRILLION, all actions to address deficits and budgets was pushed back until the end of this year. At that point, if nothing was done in the meantime, a combination of expiring tax cuts and mandated spending cuts would automatically be triggered. Now, of course, the chant is rising across the land that the US government cannot "afford" to do ANY of these things because if it did, the economy would stop "growing".
The last headline in the list above is the first of what is sure to be a steady stream as time winds down towards November 6 and the US election. At present, both parties are "discussing" a law which will "extend" the tax cuts, "postpone" the spending cuts and tweak the debt limit sufficiently to see it last until March 2013. And after that? Well, the US Congress has been "discussing" budget cuts for at least the past three years. Thus far, that is all they have been doing.
.Ó 2009 – The Privateer
(reproduced with permission)
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