Avoiding Government Shutdown ?

Avoiding Government Shutdown?

There are those who believe that the debt ceiling is unconstitutional, according to CNN Money . There are some who believe that, if the current impasse in Congress over whether or not to raise the debt ceiling is not resolved and the debt ceiling is not raised by August 2 (the last day Treasury Secretary Timothy Geithner maintains the government must again reassume its full financial obligations or the nation will face a government shutdown and default on its outstanding loans), President Barack Obama should invoke the 14th Amendment of the Constitution and order that the U. S. Treasury assume its regular payment schedule in order for the government to maintain its operations.

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

What does it mean? Simply, it is a sweeping mandate that requires the government to meet its financial obligations, making default an unconstitutional premise. If Congress remains in gridlock and cannot come to a compromise in order to raise the debt ceiling, which is a possible scenario given the current climate of stalemate, the Executive must intercede and charge the Department of the Treasury with paying the operational costs of the nation.

According to an estimate concluded by the Bipartisan Policy Center , a think-tank founded by former Democratic and Republican Senate majority leaders, between 40 and 45 percent of 80 million payments would not be made if the government should go into default. Without a raised debt ceiling, which must be done by an act of Congress, the payment of all of the government’s debts would become impossible. The BPC study also noted that just to make a $29 billion interest payment to investors in mid-August, the government would have to defer 44 percent of federal spending, which would be felt by the broader American economy.

This on top of Treasury Secretary Geithner already juggling expenditures since May, when the debt ceiling was reached and the government stopped borrowing money to pay its debts, in what he has termed “extraordinary measures” in order to pay the government’s bills.

Writing for The Atlantic , Garrett Epps declared that: “If Congress won’t pay them, then the executive must.”

Bruce Barlett at The Fiscal Times agreed , noting the “congressional irresponsibility” should not cause a government shutdown. He also proposed that those worried about Treasury securities sold to pay the nation’s debts could be reassured by the Federal Reserve that it would always be a buyer of such securities.

At the same time, though, prudence must be observed. Epps told CNN Money in an email: “I think ignoring the debt ceiling would and should be at most a last-minute thing, like a tourniquet on a wound, where the choice is between losing a leg and losing a life.”

When asked at a press conference Wednesday evening about the possible invocation of the 14th Amendment, President Obama sidestepped the issue altogether.

Republicans in Congress want budgetary spending cuts for approving the debt ceiling raise. Democrats want Republicans to allow debate on tax increases, something which Republicans absolutely refuse to consider. House minority leader Eric Cantor (R-VA) walked out of negotiations in June when tax increases were brought up. Sen. Charles Schumer (D-NY) says that Republicans are purposely attempting to undermine the economy in order to win the 2012 general election.

If the government is forced to shut down, like it did briefly in 1995 and 1996, all nonessential services will halt immediately. Shutdown could also affect Social Security checks, food stamps, federal worker and military paychecks, government contractor bills and payments to Medicare and Medicaid providers.

The strategy that Republican Senator Pat Toomey, Republican US Representatives Mike Fitzpatrick, Jim Gerlach, Pat Meehan and many conservatives like Jeb Hensarling and Tom Price, M.D., (interestingly Democratic US Rep. Allyson Schwartz also voted for this CR) and Republican leadership is using can be, I call “Selective, Sequential Shutdown”, that is, rather than across the board shutdown, various programs are analyzed for effectiveness and the cost-benefit.

It seems reasonable strategy to me and, certainly, is no betrayal of any campaign promise. I do think the Liberal Democrats will provoke a shutdown and it will be because they refuse to reduce spending as the voters, clearly, communicated last November.

The Morning Call Pennsylvania Avenue reports “Sen. Pat Toomey, after joining a majority of his colleagues to keep the government funded for three more weeks, said his support for the stopgap measure did not come easily. The bill passed 87-13.”