Obma has a number of options out of the debt limit crisis, but I doubt he’ll avail himself of any of them. By enumerating his options, I hope to take away his excuse and make him take full blame for the cuts to Social Security and Medicare that he negotiates with the GOP. He can’t claim duress, if he fails to take available options out of the crisis.
The 14th Ammendment option has been well covered by the mainstream media, but they inevitable express concern, even conviction, the its use would “plunge the nation into a constitutional crisis,” which is sufficient excuse not to invoke it.
The other three are based on the fact that the Fed has bought up at least 1.6 trillion dollars of Treasury bonds in an effort to put more money into circulation, but so long as those bond are on the books of the Fed, they count toward the national debt. Here are three way of doing that.
1) The Dean Baker / Ron Paul plan, which Dean Baker published in the most recent issue of The New Republic, and which is to “have the Federal Reserve Board destroy the $1.6 trillion in government bonds it now holds.” But, I’ve not yet been able to figure out the bookkeeping on this, nor how to avoid the (invalid) claim that this amounts to repudiation of debt.
2) The jumbo-coin plan, which I adapted from Beowulf and letsgetitdone: the Treasury purchases them with a newly minted $1.6T coin. By law, the Secretary of the Treasury can strike platinum coins of any denomination, and by law such coins are “legal tender for all debts.”
3) Reverse quantitative easing, i.e., sell the Fed’s bonds. The profits would automatically accrue to the Treasury as revenue, which would cover deficits as do normal bond sales by the Treasury. But the Fed’s bonds are already on the books as part of our national debt, so no prohibited new debt would be incurred.