Robert Kuttner : Most of the budget shortfall going into the financial crisis was the result of the Bush tax cuts and wars -- and most of the rest of it since 2008 was the consequence of lost revenues from the recession itself. It had very little to do with public spending

.

From Huffington Post :

"It would be perverse of President Obama to reward Republican intransigence by agreeing to an 11th hour deal that, by definition, would have to be on almost entirely Republican terms to be approved by the Tea-Party besotted House of Representatives".

"Better to show some leadership in an emergency, invoke the 14th Amendment, calm money markets, and leave the Republicans sputtering mad. Obama might even come to enjoy exercising leadership"

Huffington Post
Obama Holds the Cards -- If He Will Play Them Well
By Robert Kuttner
Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His most recent book is A Presidency in Peril.
July 24, 2011


Obama Holds the Cards -- If He Will Play Them Well


Some excerpts :

My guess is that the Republicans are so intoxicated with their own negativity that they will not be able to get to yes, even though Obama keeps trying to give away the store. The House Republican Caucus, in thrall to the Tea Party, is just too locked in to the premise of no new revenues under any circumstances

So then we are left with the president's powers under the 14th Amendment, an approach that Obama seemed to rule out last week, but may need to come back to.

The fact is, the ritual of Congress periodically voting to approve an increase in the national debt only dates to the World War I era. Before that, government incurred debt and rolled it over as necessary. Congress, of course, approved legislation to levy and collect taxes, but management of the public debt was the business of the executive branch.

And playing cute with the debt ceiling only dates to New Gingrich in the 1990s. Before that, increases in the debt ceiling, as necessary, were entirely pro forma votes.

The 14th Amendment, in Section 4 provides that "The validity of the public debt of the United States.... shall not be questioned." Although the 14th Amendment was part of a package of Amendments intended to resolve issues left over from the Civil War, the Supreme Court has interpreted the public debt provision as giving the president very broad authority.

The government can go on selling bonds to cover its costs as long as money markets accept them. Lately, the Federal Reserve has been helping that process along. Whether Congress has voted to increase the permissible amount of total debt is a technicality. It's not as if the government runs out of money next week.

If President Obama were to invoke that emergency authority to prevent the economy from collapsing as money markets began shunning U.S. government bonds, it is hard to imagine Republican leaders suing the president... to demand what? That he let the economy go off a cliff? And it is even harder to imagine the Supreme Court, even a Court as partisan and corrupted as the Roberts Court, voting to tie Obama's hands in an economic emergency that -- keep in mind -- is entirely contrived.

...........