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01/06/2013

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Neilehat

As for the five talking points on our "Fiscal Cliff" issue, my comments in reverse order are as follows:

5. "Mitt Romney"? Mitt who? The man is a political has been and for all intents and purposes has disappeared from the political landscape.

4. "Republican Economic Policy"? An oxymoron at best. Due to the Neocon/Teaparty ideology that has overwhelmed the Republican Party in an attempt to destroy the Federal Government.

3. "Debt Ceiling" Another oxymoron. Due to the inflationary tendencies in both Macro and Micro economic systems the Debt must grow relative to the size of the National Economy. Otherwise, the Government will collapse (which once again ties back into the Neocon/Teaparty agenda).

2. "Fiscal Cliff best deal"? As with any budget, it's all about revenues and expenditures and creating a budget that fulfills the needs of the Nation without damaging the Nation's financial standing (given the ideologically poisoned atmosphere on Capital Hill, this is probably just a pipe dream).

1. "Fiscal Cliff real deal"? It's a "compromise" package that hasn't really solved anything; except, once again, push the necessary decisions three months into the future. Where in March 2013 we'll be back to where we started from and are at today.

Michael

I do not understand why Posner believes Obamacare will result in lower payments to doctors, given that Congress enacts a "docfix" to avoid lower payments every single year (and did so in the fiscal cliff compromise this year. I do not understand the norm by which Posner (an avowed pragmatist) finds the debt ceiling tactic "illegitimate" unless it is just a question of whether a given political tactic "strikes" Posner as illegitimate. I also do not understand why only Republicans (and Mitt Romney in particular) come in for criticism. Has the President of the United States made any public statement of specific spending cuts he would support? If there is a problem, does he not have some obligation to do so?

Thomas Rekdal

Of course it is true that Republicans have not offered any serious spending cuts that are also politically feasible, but it is a bit silly to suggest this as a criticism. There have been no important Congressional policies in opposition to a President since 1866, when the Republicans held veto-proof majorities in both houses. The only possible source of spending cuts must come from the White House, and Obama will not propose them for the obvious reasons that (a) he does not believe in them and (b) they will diminish his popularity.

An external source of pressure exists in the bond market, but, if Paul Krugman is correct, we are a long, long way away from any major concern about our ability to service our debt. No immediate crisis looms on that front.

My own recommendation for Republicans would be to shift the debate away from the size of the debt to its general objective. Nearly everyone acknowledges the difference between good debt, which enhances productivity, and bad debt, which merely finances current consumption. Borrowing money to finance the consumption of old people seems to me to be a particularly bad form of bad debt--immoral, as well, since it must be paid back by people not even born yet.

Old people, however, probably would not agree, so this may be a useless reflection as well.

Terry Bennett

The Republicans at this point do not have a policy; what they have is a set of principles (maybe not a complete set), which they need to apply to the facts of this situation to produce a policy. The Democratic side is far better articulated, and the target of far less capable attack. That doesn't make it any less odious.

On the subject of illegitimate devices, I don't recall the Senate's 60-vote supermajority requirement in the Constitution. The Senate has taken it upon itself to modify our Constitution and make governance even more difficult than the Founders designed it to be. The debt ceiling, in contrast, is the result of a law, namely the Second Liberty Bond Act of 1917, which unlike the Senate rule was duly passed by the process called for in the Constitution, using the powers Congress is given therein.

The fiscal cliff deal and all the precedent and subsequent griping about it call to mind Justice Scalia's fingering of those who are "impatient with the democratic process." This is how the sausage is made. There is still a significant minority of citizens in the U.S. who desperately want to see the government behave with more fiscal responsibility. They used their democratically derived power to force their views to be factored in to the final deal. When Romney's 47% become 61% in a few years, there will be no further opposition to Obama's communist vision, and our greatness will have been extinguished. Good luck with that.

TANSTAAFL

Posner's political commentary is worthwhile reading but underscores why Hamilton got it right in Federalist No. 78.

starsky

I'd be interested to hear your thoughts on the Constitutionality of the debt ceiling. If the 14th Amendment states that the validity of the public debt shall not be questioned, then how is the debt ceiling even legal? Regardless, it doesn't really matter. The US Treasury is empowered to issue currency. Since they are legally bound to make certain payments, they must do so by either borrowing or printing money. If they can't do the former, it seems to me they are legally bound to do the latter. It doesn't have to be a single trillion dollar platinum coin, but it could just print large denomination currency and "sterilize" it by selling assets from its own balance sheet to offset the amount printed.

Thomas Rekdal

The suggestion that the Fourteenth Amendment authorizes the President to disregard Congressional enactments on the debt ceiling seems highly improbable, given the fact that the Fourteenth Amendment was addressed to States and was concerned to prevent public funds from compensating those who stood to lose financially from the emancipation of slaves. But we can all think of improbable interpretations of the Constitution that have succeeded nontheless, so I will not belabor the point. The real restraint in this regard is the fact that it would only add constitional complications to the President's other problems.

Whether the Treasury could simply "print" the money required to pay off creditors, while "sterilizing" it in some way that avoids inflation, is an interesting idea. The fact that serious people (I assume starsky to be one) could entertain it, shows, if nothing else, how absurd our experiment in attempting to confine political power by what Madison called the "parchment barriers" of the Constitution has become.

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