Here’s an exchange from last Friday’s Chris Hayes All In MSNBC show among Chris, Robert Costa of the National Review, and Ezra Klein of The Washington Post’s Wonkblog. In what follows I’ve slightly edited the MSNBC transcript to get rid of obvious verbal deviations but haven’t corrected for punctuation.
Robert: I think Ezra brought up a great point. you saw Eric Cantor trying to come up with this plan and that would allow conservatives, allow the right to have a vote on defunding, but not really attach it to the continuing resolution. The minute he brought this up, the conservatives they revolted. you have a republican leadership that wants to fund the government, but they don’t have the votes.
Chris: You’ve got 233 house republicans. You need 218 to pass something and 33 republicans want to fully defund obama care. You had Harry Reid today saying about John Boehner, I feel sorry for him. Rveryone’s constantly looking at him saying he has essentially the worst job in Washington. What is the way out of this box?
Robert: It’s a great question. I think as much it’s not a great way out of the box. what you see speaker boehner doing behind the scenes, don’t have a shutdown on the government. He is using the 2011 model. He says I was able to get concessions in 2011. We’ll fight for them in december. Come with me. Let’s fight on the debt limit. I don’t want to have a shutdown. It’s not going to help you with your races in 2014.
Chris: The thing about that is, that’s an even sick higher strategy.
Ezra Klein: This is terrifying that this is the argument. And the analogy I would use is this is like trading a bad flu for septic shock. It is the worst trade in the history of all trades you could imagine . . .
Then after further remarks from Ezra on the doomed strategy, a reference by Chris to game theory and games of chicken and a reinforcing comment by Robert Costa about the intransigence of the right wing and their hope of getting some concession from the Administration delaying some part of Obamacare, Chris asks Ezra if the Administration has a negotiating position “to throw the conservatives a bone?” And Ezra replies:
Ezra: No. The White House has complete religion on the debt ceiling. They believe not just about this negotiation, but about as a matter of presidential legacy. If they are the white house remembered for permitting the debt ceiling to become a routine matter of hostage taking in american politics, imagine you just think there’s a 10% chance of any debt ceiling negotiation going on. It’s not very big, but over ten years, it’s going to go wrong. This White House does not want their legacy to be they set in motion the chain of events that led to America’s role as an economic corner stone of the world being degraded. So they believe not just as matter of this negotiation, but all negotiations going forward. they need to break this habit now and that’s why i am scared going into this. Nobody believes we’re likely to go over the debt ceiling, but if you look at the positions on the table now, the White House’s we will not negotiate and Boehner’s, right now, the only thing that is there is the default.
I found this exchange really interesting because of Ezra Klein’s framing of the situation, more or less reinforced, if not endorsed by Chris Hayes and Robert Costa. Ezra’s terrified about the situation because he says there are only two positions “on the table,” namely, one side insisting on the ransom of a concession on Obamacare; while the other side is insisting on a “clean” debt limit increase bill. But, what does “on the table” mean? Does it mean only the positions that the Administration will publicly talk about, or perhaps only the positions that Ezra Klein and Chris Hayes, who know better, will cover? Both Ezra and Chris, and I suspect Robert Costa, as well, know very well that there are other options for the Administration besides giving in to the Republicans on Obamacare, or letting the Government default, shut down, or both.
They know this because there were at least four other options that were offered in the blogosphere and the news media during the 2011 debt limit crisis, three of them at CNN, that a well-informed White House might have been expected to know about. The four options were:
1. A selective default strategy by the Executive, prioritizing not paying for things that Congress needed, and perhaps not paying debt to the Fed when it falls due and working with the Fed to get the $1.6 Trillion in bonds that it was holding canceled;
2. An exploding option involving selling a 90-day option to the Fed for purchasing some Federal property for $ 2 Trillion. Then when Congress lifts the debt ceiling, the Treasury could buy back the option for one dollar, or the Fed could simply let the option expire;
3. Using the authority of a 1996 law to mint proof platinum coins with arbitrary face values in the trillions of dollars to fill the Treasury General Account (TGA) with enough money to cease issuing debt instruments, and even enough to pay off the existing debt; and
4. Using the authority of the 14th Amendment to keep issuing debt in defiance of the debt ceiling, while declaring that the debt ceiling legislation was unconstitutional because it violated the 14th Amendment in the context of Congressional appropriations passed after the debt ceiling mandating deficit spending.
Since, the summer of 2011, beowulf has offered yet a fifth option for getting around the debt ceiling by issuing consols. Consols are debt instruments that pay a fixed rate on interest in perpetuity, but never promise principal repayment at a maturity date.
The debt ceiling law is written in such a way that what counts against the ceiling is the principal repayment guaranteed by the instrument. Since consols provide no principal repayment, one can have unlimited consol issuance without increasing the debt-subject-to-the-limit.
The links above provide explanations of the various options, so I won’t describe them in more detail than I’ve already done here. But I do want to note a couple of points.
First, why didn’t Ezra and Chris remind everyone that there were many other options available to the Administration, apart from the one distasteful to the Administration and the other catastrophic to the economy? Were they so interested in the narrative of the terrifying game of chicken that they thought it best not to complicate matters by pointing out that there are other choices, less damaging for the economy, the Administration can make, and that these are not “on the table” only because they view the Administration as “the decider” of what is on the table?
What happened to the responsibility of the Press to put other choices on the table by acknowledging their existence and talking about them? Both Ezra and Chris have talked about some of these option, including platinum coin seigniorage before. Why not again now?
Why not point out that if the Administration does not negotiate with the Republicans, it can still prevent defaults and shutdowns due to the failure to raise the debt limit? Is it because the President prefers a crisis atmosphere, and perhaps even a shutdown to prepare the way for the treasured “grand bargain” on entitlements he has been seeking since at least January 2010, when he appointed the beloved Bowles-Simpson Catfood Commission?
That there may be something to this, is suggested by two things happening this morning. In his address to the Business Roundtable, the President stated his willingness to negotiate with the Republicans on the budget on matters including entitlements, along with his unwillingness to negotiate with them on the debt ceiling. Since the issue of the budget and a government shutdown occurs first, at the end of this month, he is saying that he is willing to do a deal on the budget with entitlements on the table, if the Republicans agree to give him a clean debt limit increase bill.
Then later on MSNBC’s NOW with Alex Wagner during a panel discussion also, including Alex Wagner, David Corn, and Ezra Klein again. After Ezra once again repeated his apocalypse now framing of the debt limit crisis, Sam Stein emphasized that Obama and the Administration continue to emphasize a willingness to negotiate over the budget.
Sam Stein: . . . You can see the contours of a deal that would upset both parties but palatable. Something like in exchange for changes to social security payments, cpi, chained cpi. you could get a reprieve from sequestration. Something like that along the lines where both parties are like, well, we don’t really want to do it, but for the sake of making sure we pay our bills — that’s why the Republicans keep going there. they know obama care defunding isn’t going to happen, but there are other hostages.
Alex: Why does President Obama come to the table at all?
Ezra: I think that’s the kind of deal they would come to the table on. They would consider that a deal over sequestration. I’m not sure if they would do that exact deal, But the two deals they won’t do are the ones the republicans want. They don’t want that sequestration deal. They want an obama care deal or a debt ceiling deal. They won’t come to the table on those. . .
So, Sam Stein thinks the zombie “chained CPI” lives again, and Ezra agrees, but also thinks that the Republicans will not agree to that unless they get the deals they want. So, once again, the right wing, through their intransigence, may save us from President Obama’s continuing insistence that seniors must suffer now, and future seniors must suffer as well, for the sake of an illusory long-term debt/insolvency problem that doesn’t really exist, and that he can dispel at any moment by minting a $60 T coin.
Meanwhile, the four Versailles “progressives” on this panel laugh at the stupidity of the Republicans who are marching to the doom of their party, while refusing to call attention to the fact that this “funding” crisis, and the previous ones since 2010 were and are all kabuki, since the President could and still can dispel the illusion of possible insolvency any time he chooses to use the power Congress has given him to mint that coin. The big $60 T one; not just the timid TDC.
Cross-posted from New Economic Perspectives