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August 20, 2019

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Obama could go it alone on debt limit; Reid still talking compromise

obamareid

Associated Press

President Barack Obama meets with Senate Majority Leader Harry Reid, right, and House Speaker John Boehner of Ohio, left, in the Cabinet Room of the White House, Saturday, July 23, 2011, in Washington, to discuss the debt.

With six days to go until the country defaults on its debt, some Democrats in Congress think it’s time for President Barack Obama to think about the nuclear option — declaring the debt limit unconstitutional and raising it through 2012 via executive order.

“I would say to the president, that if ... what lands on his desk (is) a short-term lift of the debt ceiling, he should put it on his desk next to an executive order that he will have drawn up,” Assistant House Democratic Leader Jim Clyburn said today. “And with the same pen that he vetoes that short-term debt ceiling extension, he should sign an executive order invoking the 14th Amendment to this issue.

“I believe that something like this will bring calm to the American people and will bring needed stability to our financial markets,” continued Clyburn, who later today appeared to be discussing 14th Amendment strategy with House Democratic Leader Nancy Pelosi.

The pressure to ready the ultimate backup comes in the midst of deadlock. On one side is Republican House Speaker John Boehner, who is pushing a proposal to raise the debt limit by about $1 trillion, covering the country for six months; on the other side is Senate Majority Leader Harry Reid, who is pushing a $2.4 trillion hike of the debt ceiling to take the country’s borrowing authority through 2012. Reid’s plan also envisions $2.7 trillion in cuts, while Boehner’s has $1.2 trillion in cuts. Neither raises taxes.

But both plans are being tweaked after Congress’ nonpartisan budget authority ran the numbers by economists and found both plans came up short. Boehner’s cuts $850 billion, thereby breaking his own rule that every dollar of the debt ceiling be matched or outpaced by cuts; Reid’s cuts $2.2 trillion.

Faulty accounting or not though, each party leader is dead set against the other’s plan.

Boehner charges that Reid’s cuts in mandatory spending — which rely heavily on placing a $450 billion cap on military spending for the wars in Iraq and Afghanistan after 2012 — are gimmicky accounting. But the accounting does fall within congressional rules for measuring savings, letting Reid claim $1 trillion more in cuts under his plan than Boehner’s — plus the interest saved from not having to borrow that cash.

Reid, meanwhile, charges that Boehner’s two-step plan leaves too much to be determined later. Any increase of the debt limit — or any cut — beyond the first trillion is subject to the review of a bipartisan Joint Commission that will meet to draw up a budget of future cuts by the end of the year.

But if they end up as deadlocked as the rest of Congress is now, there’s no recourse, which led credit rating agency Standard & Poor’s to warn Congress that if that’s the best it can do, the country should brace itself for a credit downgrade.

Credit rating agencies have said they want to see evidence that any debt-limit deal will “make a difference over the medium-term in slowing, if not reversing, the rising trajectory of government debt,” S&P’s chief David Beers said on CNBC today.

A presidential executive order would get Washington, businesses, the stock market and the American people past the threat of default before 2013, which may calm the markets.

But without cuts, that option doesn’t address the rating agencies’ concern that the U.S. do something to change course.

“We’re getting down to decision time. We don’t know what the other side is going to do. They’ve walked away from everything including their own leader’s proposals,” said Rep. John Larson, chairman of the House Democratic Caucus. Obama has taken a position on this already, but circumstances have changed ... we just want to let him know that his caucus is prepared to stand behind him.”

The 14th Amendment issue flared and fizzled this month, when Obama said at a town-hall meeting in Maryland that “there have been some suggestions that a president could use that language to basically ignore this debt ceiling rule, which is a statutory rule. It’s not a constitutional rule.

“I have talked to my lawyers,” Obama continued. “They are not persuaded that that is a winning argument.”

What lawmakers are referring to is Section 4 of the 14th Amendment, the first part of which reads:

“The validity of the public debt of the United States, authorized by law, including debts incurrent for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

Debt obligation may seem a strange topic to consider under the amendment that establishes natural-born citizenship, but they appear together because the 14th Amendment was passed in 1868, when Civil War debts were a pressing issue. (Yes, it’s also the same amendment that came up during the birthers’ campaign that sought Obama’s birth certificate. And the same lawmakers who wanted to abolish it because of the U.S. birthright issue would likely be the first to throw darts at Obama if he uses it to single-handedly raise the debt limit through the next election.)

If Obama wants to issue an executive order, he’s working in murky legal waters. Executive orders are used to make rule changes or to modify existing laws of Congress. House Democrats urging him to prepare such an executive order say the 14th Amendment gives the president that authority.

But Senate Democratic leaders don’t seem wholly convinced.

Reid, who is still knee-deep in the process of trying to hammer out a congressional solution, isn’t talking about handing the package over to Obama.

“We’re going to stick with (our bill) until somebody comes up with a better idea,” Reid said.

Is the executive order a better idea? Well, Reid would say only that he knows Democratic Sen. Tom Harkin has been speaking with Vice President Joe Biden about the issue, but wouldn’t speak to the merits of the idea: “I’m not going to be giving them advice on a legal issue,” Reid said.

Harkin will though.

“If there are legal experts out there who say they don’t know if he has the authority to do it, that’s the wrong question. Is there anything in the constitution that prohibits him from doing it?” Harkin said.

“I think the president’s going to have to do this. I don’t see any compromise. I think we’ve gone down every avenue that we can. I don’t see anything happening,” Harkin continued, adding that while he supports Reid’s proposal, “that’s not going to go anywhere. And if they start pitching off parts of it to get Republican votes, then they’re going to lose Democrats. And it’ll never get through the House anyway.”

Reid, who is still having daily discussions with the his Senate Republican counterpart Mitch McConnell, and whose office is still in touch with Boehner’s, doesn’t seem ready to throw in the towel.

“Magic things can happen here in Congress in a very short period of time in the right circumstances,” Reid continued. “But (Boehner’s plan) is a flawed piece of legislation, and is not a solution to the problems we have here ... Nobody believes that the Boehner bill is anything more than a big wet kiss to the right wing.”

But his bill, he says, is the opposite. “There’s only one bill in Congress that is a true compromise,” Reid said. “We’re running out of time and we need to get serious about finding a compromise.”

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