Although the financial press speculates about a downgrade of the US government's credit rating and default if political impasse prevents the debt ceiling from being raised in time, I doubt anyone really believes that the debt ceiling will not be raised. It is just all a part of the political theater of the next couple of months.
Republicans will blame the budget deficit and accumulated national debt
on Medicare and Social Security. Wall Street sees billions of profits in
privatizing either, and debt rating agencies will oblige their Wall Street
paymasters by opining from time to time that US Treasury bonds might be
downgraded unless "entitlements can be addressed and the deficit brought under
control."
Democrats will say that the budget deficit cannot be addressed without an
increase in tax revenues, especially from the rich whose incomes have exploded
upward while their tax rates have declined.
All the
while the pressure of an approaching deadline for default will be used to
reshape the US social contract, most likely in the further interest of the
rich.
However,
regardless of whether the debt ceiling is raised, the US government is not going
to go out of business. Why does anyone think that the President, who does not
obey the War Powers Act, the Foreign Intelligence Surveillance Act, US and
international laws against torture, or any of the laws and procedures that guard
civil liberty, is going to feel compelled to obey the debt
ceiling?
As long
as the US is at war, the American President is a Caesar. He is above the law.
The US Justice (sic) Department has ruled this, and Congress and the Courts have
accepted it.
Moreover, the Federal Reserve is independent of the government. In its
approach to regulatory matters and bailouts, the Fed has ceased to follow its
own rules. Regardless of the debt ceiling, the Fed will continue to purchase the
Treasury's bond issues, and the Treasury will continue to fund the federal
deficit with the proceeds. If Goldman Sachs is too
big to fail, certainly the US government is.
As
Congress has abandoned its powers over war, how can Congress hold on to its
powers over spending? It cannot. Indeed, an impasse between the political
parties over the debt ceiling would be welcomed by the executive branch as more
proof that Congress is incapable of doing its part in governing and, therefore,
the task has of necessity passed to the executive branch, which already does
most of it.
If the
President can declare on his own authority, without statutory basis and in
defiance of the US Constitution, that he can assassinate US citizens who he
considers to be a threat to national security, he certainly can declare that
default is a threat to national security and that it is within his powers as
commander-in-chief to ignore the debt ceiling.
Indeed,
the executive branch would jump at the chance. Then it could reshape the budget
to its own pleasing without having to consult Congress on spending any more than
the executive branch consults Congress on war.
The
Bush/Cheney regime brought democracy and accountable government to an end. If
Obama doesn't finish the process, the next in line will.
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