People are starting to write about the Trillion Dollar Coin again, which can only mean one thing… Tsy is fast approaching the debt ceiling. Doing some quick math, i doubt Obama is going to make it Election Day without the debt ceiling being raised, ignored or sidestepped (you’d think when the White House was negotiating the debt ceiling hike last year, November 2012 might have crossed their minds as an important date to push the debt ceiling past).
Obama could cite the 14th Amendment to blow past the debt ceiling, Geithner could mint platinum coins, Bernanke could order the Fed to buy $2 trillion in postage stamps (I hope they’re Forever stamps so they’re hedged against inflation) or Obama could stick to form– stand firm for 15 minutes and then act like General Hull at the Battle of Detroit (“General Hull’s own forces still outnumbered those of the approaching enemy, but he did not know this. Feeling the situation within in the fort hopeless, he ran up a white flag and quickly agreed to surrender”).
I think its likely that Mitch McConnell will renew his proposal to give the President unilateral authority to raise the debt ceiling. Romney (and Senate Republicans) would surely want this outcome– 1. It avoids making the Republicans look like a gang of arsonists just prior to Election Day and 2. It’d mean that a President Romney would never have to worry about a debt ceiling vote. The problem here is I don’t think the House Republicans can be trusted to come in out of the rain, much less vote for something (McConnell’s plan) that both avoids a financial crisis and advances their own political interests.
I’ll put it to the floor, how do you think the debt ceiling issue will shake out this year?
UPDATE: Joe Firestone wrote in to point out Tsy has more headroom than I thought. Joe thinks (and I would have to agree) that Tsy can push this past Election Day, especially if they go into robbing Peter to pay Paul mode. So in the lameduck session we’ll have Congress simultaneously striving for tighter fiscal policy(vis a vis the debt ceiling) and looser fiscal policy(to avoid the fiscal cliff).