At times like this, the public craves bold leadership, even if corners need to be cut. FDR understood that. President Obama is very lucky that he could stop this madness without cutting any legal corners. Here’s what he should say Sunday night:
My fellow Americans. The endless squabbling in Washington over the debt ceiling is injecting uncertainty into the markets and threatening the recovery. Therefore, after consultation with my legal advisers, I have decided to not enforce the debt limit, until Congress resolves the budget mess. This non compliance will consist of two steps. First, we will show that compliance with the debt limit would force either default on our debt obligations, which is illegal and unthinkable, or deep cuts in programs like Social Security. Because funding for these programs was passed after the debt limit law, they take precedence whenever there is a conflict between two laws.
I anticipate this stance will be contested in the courts, and there may be a long drawn out case that ends up in the Supreme Court. If we lose, I’m told there are accounting gimmicks that will allow us to avoid the constraints of the debt limit, in a fashion that is perfectly legal, but undignified for a great power. Unfortunately, I may have no other choice, as default is far more undignified, and would be disgraceful for a nation like ours.
At the same time, the problems in Europe have given me a greater awareness of the threat posed by runaway spending. Hence I’ve accepted the fact that some cuts need to be made in programs that I strongly support. I look forward to working with Congress on the budget process, to sharply reduce the deficit in the out years. I call on the Federal Reserve to assure the markets that these debt reductions do not reduce economic activity, and lead to higher unemployment. Thank you.
I know I’m hopelessly naive, and this will never happen. I have no idea what Obama really thinks. Maybe this is all a Machiavellian plan to entrap the GOP, as Clinton did in 1995. But if Obama is serious, I think the public (and stock market) would welcome this speech. As Obama Osama once said, people gravitate toward the strong horse. People detest chaos in government and look for bold leadership, especially when the economy is a mess. I probably won’t even vote for Obama, but I think this is what he should do.
Then we should abolish the debt ceiling, and while we’re at it abolish the Social Security trust fund. Burn all the securities in the trust fund. Have a marshmallow roast. Then adopt a parliamentary form of government.
That’s all for today.