The Center of the Universe

St Croix, United States Virgin Islands

MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

White House Threatens to Veto Speaker Boehner’s Deficit Plan

Posted by WARREN MOSLER on July 26th, 2011

First, I don’t think the President would veto any bill actually sent to his desk.

But if he does, it’s because he wants the US to go cold turkey to a balanced budget.

As per the Bard, our fate is being epoxied by both houses.

16 Responses to “White House Threatens to Veto Speaker Boehner’s Deficit Plan”

  1. Crake Says:

    Warren,

    Do you think Boehner can first even get the House votes?

    Reports so far today paint the picture that the tea party faction is saying no to him – literally from some tea party leaders.

    Speakers usually do not even bring up bills unless they have the votes, much less promise on national television to all Americans that the vote is a done deal basically in past tense. Is the tea party rhetoric today an act? Or did the Speaker really promise something, again on national tv, that was evidently very unsure?

    Reply

    Crake Reply:

    Boehner is having to re-write his bill, less than 48 hours after declaring to American people, on national TV, that it was a done deal and only a presidential veto sat between it becoming law.

    http://money.cnn.com/2011/07/26/news/economy/debt_ceiling_boehner_bill/index.htm?cnn=yes&hpt=hp_t1

    Is there a historic example of a Speaker of the House making a voting guarantee like that that the Speaker could not deliver.

    Reply

  2. beowulf Says:

    That Earl of Oxford was a real Renaissance man. :o)
    Epoxy, also known as polyepoxide, is a thermosetting polymer formed from reaction of an epoxide “resin” with polyamine “hardener”. Epoxy has a wide range of applications, including fiber-reinforced plastic materials and general purpose adhesives.
    http://en.wikipedia.org/wiki/Epoxy

    Just teasing Warren. The GOP House caucus has a policy that nothing goes to the floor without majority support of caucus. Boehner appears to be in a tricky position. Even if he can get majority support for something on the House floor (i.e. by adding in Democratic votes), he risks being fired as Speaker if he bulldozes the disgruntled caucus majority. That seems to be Eric Cantor’s fervent wish.

    Reply

    beowulf Reply:

    House GOP revolts against Boehner plan
    House Republicans do not have enough support to pass their debt-ceiling increase plan on their own, a top conservative said Tuesday as his party’s leaders tried to cobble together a coalition of Republicans and Democrats to put the bill over the top.

    http://www.washingtontimes.com/news/2011/jul/26/house-gop-revolts-against-boehner-debt-plan/

    Of course if Nancy Pelosi is supposed to come up with votes to pass the bill, she’d naturally expect to have some input on its contents. What Pelosi should do to stick to Boehner is let him put up whatever Tea Party craziness he wants, but first she would call up McConnell original no budget cuts/no tax hike debt ceiling proposal as her Motion to Recommit (House minority has the right to offer alternative bill, the MTR, prior to a vote on majority party’s bill). IF every Democrat voted for it, they’d only 26 of the 241 House Republicans to get to 218 (actually they only need 25 to 217 due to House vacancies) to win on the Motion to Recommit.

    If the Chamber of Commerce can’t beg, bully or bribe 25 Republican congressman to vote for a debt ceiling hike, they might as well pack up and move to the Caymans. And of course Mitch McConnell can hardly oppose his own proposal once it goes over to the Senate.

    Reply

    Tom Hickey Reply:

    @beowulf,

    Right, this all about GOP politics in a fight to the death for control of the party.

    Reply

    Joe C Reply:

    @beowulf, I like the analysis, but would suggest that political expediency rules McConnell’s conscience, not his previous positions.

    I would say that this applies to just about every member of Congress.

    Reply

    Crake Reply:

    More congressional craziness:

    One of my senators, Senator Hutchinson, introduced a bill related to the debt ceiling today. In her planned floor speech, upon its introductory, she explain that it had a provision in it to make sure if the debt ceiling were not increased that we would make interest payments to our “debtors.” She called them debtors several times – even called these “debtors” our job creators once. Her official press release, on her own web site, even calls them “debtors.” I would not be at all surprised if the actual bills reads “Debtor” in this provision.

    Hey Warren, are you sure, you wanted to be part of that body : )

    Reply

  3. Walter Says:

    Just out of interest:

    1. Who has the authority to decide what to cut in the cold turkey scenario?

    2. Did ever a US politician submit a proposal to vote on the elimination of the debt ceiling? (even Moody’s suggested it last week)

    Reply

    Dean Reply:

    @Walter,

    2. Did ever a US politician submit a proposal to vote on the elimination of the debt ceiling? (even Moody’s suggested it last week)

    I think it would be either unconstitutional or very impratical as only congress has the authority to borrow money on the credit of the US. Eliminating the ceiling would require congress to approve every loan, bond auction, etc. (which may have been practical prior to WWI when debt ceiling law was enacted). And no congress is going to approve a huge increase to avoid continual revisiting the issue. That would give up too much congressional oversight of borrowing.

    It seems to me the only reasonable option is to tie the debt ceiling vote to the annual budget approved by congress, with enough leeway to account for revenue decreases or emergency spending. Apparently some democrats in congress urged that very thing but were ignored.

    Reply

    John Zelnicker Reply:

    @Dean,

    I understand that Congress likes control, but if they eliminate the debt ceiling they could also delegate that borrowing power. But the truth is that we don’t need treasuries. The US government does not need to borrow to finance the deficit. Treasuries are a convenient form of savings, but there are others.

    Reply

    beowulf Reply:

    @Dean,
    Dick Gephardt agrees with you. He had that requirement added to the House Rules in the late 70s (you know, as Democrats go, he wouldn’t have made a bad president).

    Gephardt realized that the easiest way to fix the problem and impose some rationality on the process, was to do away with the second vote. He consulted the parliamentarian. “I asked if there was a way that when we pass the budget [the debt ceiling] can be deemed ‘raised’ to accommodate the budget people are voting for,” Gephardt said. “He said, ‘Yeah, we think we can work that out.’”
    Thus was born the “Gephardt rule.” For a period thereafter, the adoption of the conference report on the budget resolution would trigger the Gephardt rule and “deem to have passed” legislation raising the debt limit to accommodate the spending and revenue levels approved in the budget. Presto! Problem solved.
    It didn’t last. When Republicans took back the House in 1995, they brought back the second vote as a way to pressure members on spending.

    http://www.theatlantic.com/politics/archive/2011/05/how-dick-gephardt-fixed-the-debt-ceiling-problem/238571/

    Reply

    pebird Reply:

    @beowulf, Great find. Also, your comments are great.

    WARREN MOSLER Reply:

    exec

    no

    Reply

    Walter Reply:

    @WARREN MOSLER,

    Thanks Warren.

    So, if I understand correctly:
    in the cold turkey scenario Obama and his team decide on what to cut.
    in the Boehner scenario it’s the House and Senate.

    I would certainly not exclude that Obama is ready to cut more, but would like to control on what the cuts will be.
    Sacrificing now certain things he achieved would make him feel he did not make any difference.

    I understand no politician would want to submit any proposal that anyway won’t pass, but it seems to me that a proper explanation and motivation would make it hard to defend for anyone to vote against. As you indicated on Reuters Insider, they can’t have it both ways, and to agree to deficit spending when approving the budget and not to agree to debt limit extension at the same time.
    Do I miss something here?

    Warren, is the probability already rising that tsy will soon run an overdraft at the FED?
    You posted that, FED’s computerprograms, that require hard to do reprogramming in case of no debt-limit extension, will create ‘real dollars’ in private bank accounts.
    Although this may happen ‘accidentally’, an MMT scenario will then occur. Wouldn’t that be an enormous opportunity for MMT to get all world’s attention for the fact that the no-overdraft rule made sense during the goldstandard, but is not needed in our fiat era?

    Reply

    WARREN MOSLER Reply:

    don’t think you are missing anything.

    the fed and tsy are probably working together to not have overdrafts.

    and no telling what might come out of this.

    at least they did’t try to attach an abortion initiative…

  4. PG Says:

    Treasuries are a convenient form of savings, but there are others.

    For example, every tax payment (taxes fund nothing) could be converted to an increment of a special saving account of the citizen / organization paying it.

    Reply

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>