Teh Debt Ceiling Debate Maketh My Head To Hurt
I keep coming back to the essential problem that in our increasingly complex society, we are actually required
to hold very firm opinions about highly complex matters that require analysis from multiple fields of expertise (economics, law, political science, engineering, others) in hugely complex systems where we must use our imperfect data to choose among possible outcomes that involve significant trade offs. This would be OK if we did not regard everyone who disagreed with us as an ignorant pinhead or vile evildoer whose sole motivation for disagreeing is their intrinsic idiocy, greed, or hatred for our essential freedoms/people not like themselves. Except that there actually are LOTS of ignorant pinheads and vile evildoers whose sole motivation etc., or whose self-interest is obvious to everyone but themselves.
It maketh my head to hurt.
A few quick reflections on the platinum coin debate.
1) The fact that Larry Tribe says something doesn't make it true. I have taken opposing positions to Tribe on several occasions with regard to his expansive First Amendment positions on media regulation. Progressives should consider that Tribe also passionately believes that restrictions on media ownership violate the First Amendment.
OTOH, the fact that Larry Tribe thinks the Platinum Coin idea is perfectly legal indicates that it is not a frivolous idea. That doesn't make those holding the opposing view, that legislative history and other cannons of statutory interpretation indicate that the statute does not authorize the Treasury to print denominations of any value, necessarily wrong. What it should mean is "please take the idea and its opposition seriously, even if you are convinced that the other side is utterly misinterpreting the other argument." (And BTW, I would like to ask Tribe why he thinks Brown & Williams v. FDA
(Finding FDA did not have authority to regulate cigarettes as a nicotine delivery system due to pre-existing complex regulatory scheme for regulating cigarettes and concluding "Congress does not hide elephants in mouse holes" does not apply; OTOH, would like to know from those opposed why Chevron
and its progeny ("we look first to the plain language, where Congress has spoken definitively, the matter is at an end") does not apply.
2) "This idea is silly" is not a good reason. Lots of things are silly. So what? If dipping in the Jordan seven times cures leprosy, the smart Assyrian general gives it a try no matter how silly it seems. What matters is whether silliness has consequences. More importantly, where the "silliness" is converted into a big "FU A-holes, see how easily I wriggle out of your little trap," it is no longer silly.
3) On the flip side, the idea that the President "must" do something because he will otherwise "break the law" is not terribly persuasive here. Even if this is a proper reading of the Impoundment Act (and I am not convinced that a statute prohibiting the President from unilaterally declaring that he will not spend money allocated for a specific purpose is the same as being unable to spend money because of a superseding Congressional action (or failure to act), and if the interpretation that the Act compels the President is correct that survives modern Separation of Powers principles), it is hardly unheard of to find the President (or anyone else) caught between conflicting legal imperatives. When I was in law school, they had a class on "conflict of laws" theory. It happens.
3a) Part of the problem is we are conflating the legal argument and the moral argument. The moral argument against the Platinum Coin (from some) is that it circumvents the Congressional "power of the purse" and that it is wrong of the President to circumvent Congressional controls on Executive authority. This would be more convincing, however, if the conflict were not artificially created by a minority of members as an effort to circumvent the will of the majority that had previously voted to fund all the stuff that needed funding. Congress is an institution, and you cannot claim to ignore all the history and dynamics of the institution except for the thing you find convenient at the moment.
To be clear, I do not have an objection to a minority of members using the tools available to them to try to force a result. That's part of our government system when we opted for Congress and divided powers rather than a parliament. But, by the same token, when someone else finds a clever loophole to circumvent your clever loophole, I'm not impressed when you sieze the moral high ground. House Republicans are allowed their pound of flesh, but only if they spill no drop of blood. Or, if you prefer, the fact that we can have a law that all fairies who marry a mortal must be executed means we can amend the law to read that all fairies who don't
marry a mortal must be executed.
4) The consequences of what happen if we use the coin are hard to predict because no one has ever done this shit before. But they must be weighed against the potential consequences of default -- and of negotiating to prevent default. My personal feeling is that minting the coin would do less damage than either, it being comparable to when Queen Anne swamped the House of Lords with 12 new life peers to get the Treaty of Utrecht approved -- a power play you can use once but you can't abuse without creating a other very serious problems.
Here, the plain fact is that every single major financial interest desperately wants something that will work. This is the real reason the $1 trillion coin is not inflationary. It's a neat little accounting trick that makes everyone in this stupid little game happy. By contrast, the other two possible courses of action (assuming a majority of members in the House do not come to their senses) make lots of people who actually play at this level very panicky and scared.
Because here is the dirty little secret of money -- it is arbitrary. The fact that it is arbitrary doesn't mean there are no rules, or that you can ignore rules at your peril. English is arbitrary (in the sense that no law of nature compels us to use it or to assign meaning to its symbols), but all unilateral efforts to try to change the rules have failed. It may seem stupid that you can, in theory, represent the sounds of "fish" with the symbols "ghoti," but that knowledge has not helped anyone simplify spelling and ghoti remains a parlor trick not a word. But new words and new rules spring up all the time organically because if enough people, for whatever reason, decide that "truthiness" is a word or that "interface" can now be used as a verb, then this becomes operative for everyone but a handful of holdouts.
Which brings me back to money and its arbitrary nature. The use of fiat money is merely the latest refinement since we gave up barter (obligatory School House Rock link
). That does not mean it lacks rules. it does not mean you can unilaterally decide to change things. Gerald Ford was not able to stop inflation by distributing WIN buttons. But the arbitrary nature of the financial system means that, on very rare and special occasions, we can all collectively agree to declare a mulligan because the alternative is unthinkable. The dollar is not just any currency. It is the default global currency, and has been since post WWII. Other currencies can collapse and it is only a problem for the people dependent on them. If the U.S. currency collapsed, it would be utterly catastrophic on a global level.
Which is why every bondholder in a position to freak out and lose confidence in the dollar because of our supposed debasing our currency will do no such thing. The bondholders with enough clout to cause serios financial panic recognize this for what it is -- a fiction similar with the little wire around my neighborhood that lets me carry on Shabbos. They will gladly accept it as a way out of the alternative chaos. Why, because United States debt is te most secure debt in the world. It is so because we believe it is so. We *must* believe it is so because the alternative is unthinkable. Therefore it is so, as assuredly as we spell fish as f-i-s-h despite the fact that we could
spell it ghoti.