Tuesday, October 08, 2013

Obama holds press conference, warns that debt ceiling evasion would not be accepted by Wall Street or courts; note "McConnell Rule"

Yahoo! Finance has a column today by Norman Ornstein, “How to avoid a debt ceiling disaster”, link here.
Orstein mentions a “McConnell Rule”, which seems to be another “trick” to get around a debt ceiling debacle.  The President raises the debt ceiling unilaterally, and lets Congress pass a law overriding him, and then he vetoes the law, which requires a 2/3 majority of the Senate. He also thought that Congress would approve a short term extension right before the deadline.  He said that Tea Party Republicans have driven themselves into a “box canyon” (as in the 1969 movie “MacKenna’s Gold”).
Yahoo! Also interviewed David Stockman, who says that the US absolutely will not default on bond interest or even entitlement obligations; he didn’t say that it couldn’t be late with some other kinds of payments.  
President Obama held a news conference at the White House at 2 PM Tuesday, CNN story here.  Obama waffled on speculation about emergency measures to prioritize payments, mint coins and the like. He suggested that if he borrowed under the 14th Amendment, he feared investors would be unwilling to buy Treasury Securities under a legal cloud, while the case was probably in the courts.   That is, Obama fully expects widespread litigation from any conceivable scheme to prioritize and make payments without Congressional approval.  Obama took more questions than usual and somewhat bypassed a question about previous presidents’ willingness to negotiate on the debt ceiling, by hinting that in the past the issue had not been used as ransom.  I’m not sure that is completely correct. Obama also hinted he could take a shorter term clean CR and debt deal, and said that Boehner should call an immediate vote on the House floor on a clean bill and “see what happens”.

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