Semi-Daily Journal

First, the Constitution guarantees the debt. The Fourteenth Amendment states "The validity of the public debt of the United States...shall not be questioned." Clinton could have made debt payments and reissued existing debt (but could not make appropriations) without congressional authorization because the debt ceiling would be null and void to the extent to which it contradicted the Constitution.

Second, U.S. government welching on debt is a common practice and has been done many times. We don't repudiate the debt, of course. But we do inflate the currency to make the debt shrink. Nixon simply suspended payment in spiece of government obligations. Roosevelt changed the definition of a dollar to make it worth much, much less. And he prohibited ownership of Gold to keep out alternatives the devalued dollars, so he could collect seginorage on the currency.

It's not a proud three-hundred year history of promises kept. It's just a matter of slow, conservative devaluations and repudiations instead of catastrophic emergencies. And Newt's debt ceiling would have been another gentle, reasonable move in the same game.

This is bloodsport for Newt and his ilk. And I'm taken to task for making a wise assed crack about Andy Sullivan on a blog? Can't the Democrats make Paris Hilton and her video tape exhibit 1 why the inheritance tax phase out should be repealed? Should average Americans really care if she and her sister will have to trudge by with only $80 million apiece and not the full $150 million? Is it the Woody Allen movie Manhatten, at the start, when the characters are at a social function and a few engage in small talk and Woody's character says" "has anyone herad there are Nazis going to march in New Jersey? Shouldn't we gon down there and protest." And one socialite woman says, "oh I read the most devastating op-ed piece in the New York Times about that. Nothing is more devastaing than a good editorial." To which Woody Allen's character responds: "That's funny, I always thought bricks and baseball bats worked best against Nazis." (All of that is paraphrased.) I'm not saying we need to use violence against Bush and the hardright, but I do think that the Democrats need to get angrier and that moderate Republicans needs to be exposed and forced to make a choice or a stand within their own party.

Lest we forget the seriousness of their folly and madness, it was this precise year that they chose to 'shut down' the 'non essential' parts of the government over a series of weeks. From 1995-1996 there was an accumulated MONTH long Repug. Congressionally mandated 'holiday' at the cost of well over 2 Billion dollars to the public and well as untold millions in lost services etc. That means that for that year, I paid taxes, but 1/12 of the year, I was paying for bupkes, nada, nothing. That's just how damn serious they were about their Repug. revolution. And now with the infamous 3 hour 'open' vote on the Medicare bill and the cronyism personified in the Energy bill we can be reminded again of what they wanted this unchecked power for. To accomplish some great looting of the Treasury. Nothing more, nothing less. Go back to the archives of PRI's 'Marketplace' and listen to how serious professionals thought the crisis was. It lasted for months. Not days, not weeks, MONTHS.

"Second, U.S. government welching on debt is a common practice and has been done many times. We don't repudiate the debt, of course. But we do inflate the currency to make the debt shrink. Nixon simply suspended payment in spiece of government obligations. Roosevelt changed the definition of a dollar to make it worth much, much less. And he prohibited ownership of Gold to keep out alternatives the devalued dollars, so he could collect seginorage on the currency."

Not true; inflating away debt immolates the debtor country. People tend to be a lot more touchy when you just outright steal it.

As an analogy, which pisses off lendors more when you're really in debt? Killing yourself, or declaring bankruptcy?

"Second, U.S. government welching on debt is a common practice and has been done many times. We don't repudiate the debt, of course. But we do inflate the currency to make the debt shrink. Nixon simply suspended payment in spiece of government obligations. Roosevelt changed the definition of a dollar to make it worth much, much less. And he prohibited ownership of Gold to keep out alternatives the devalued dollars, so he could collect seginorage on the currency."

Not true; inflating away debt immolates the debtor country. People tend to be a lot more touchy when you just outright steal it.

As an analogy, which pisses off lendors more when you're really in debt? Killing yourself, or fleeing to Bermuda?

"Second, U.S. government welching on debt is a common practice and has been done many times. We don't repudiate the debt, of course. But we do inflate the currency to make the debt shrink. Nixon simply suspended payment in spiece of government obligations. Roosevelt changed the definition of a dollar to make it worth much, much less. And he prohibited ownership of Gold to keep out alternatives the devalued dollars, so he could collect seginorage on the currency."

Not true; inflating away debt immolates the debtor country. People tend to be a lot more touchy when you just outright steal it.

As an analogy, which pisses off lendors more when you're really in debt? Killing yourself, or fleeing to Bermuda?

John Podesta most accurately characterizes the spawn Gingerich:

https://www.kintera.org/site/pp.asp?c=biJRJ8OVF&b=12825

"Over the last few years, conservative leaders hell-bent on consolidating power have taken every political and legislative opportunity to push an ideological agenda – never letting a commitment to democratic principles or bi-partisanship get in the way of a chance to score political points. The result is an environment where compromise is precluded, reconciliation is elusive, sound public policy is a rarity and democratic traditions are routinely cast-aside. The legislative process, which in the past – at least occasionally – has included genuine efforts to overcome ideological differences in pursuit of the common good, has been transformed into a partisan political exercise."

Last Friday, on my way home from work, I saw Gingrich on the street. I wasn't sure whether I should approach him, shake his hand, and declare it an honor or if I should just push him into traffic. Now I know.

It's true that the Democrats are perfect. They have no equivalent of Newt. Yeah, right (rolling eyes).

It's true that the Democrats are perfect. They have no equivalent of Newt. Yeah, right (rolling eyes).

Nathaniel West vision of the month: come the next great economic/social disruption in the United States, all those people marginalized by the "I got mine, kiss my ass; and, now I'm gonna get some more for my supporters who already have more than enough but, really, you can never have enough" policies of the hardright will wake up and realize: hey, we can't pay our mortgages, bankruptcy doesn't work because we have to repay the debts (at 22% interest) under onerous workout plans because the credit card companies bought Congress, and Wallmart and its Southern protectors crushed the Unions so we all make minimum substistance wages, medical insurance is unaffordable, etc., but there is one bright light; the hard right never abridged our freedom to own the most lethal personal arsenals of firearms imaginable, hmmmmm, we think we'll go a huntin. No safety net: No Safety.

Who is the Democratic equivalent of Newt?

I don't really see one. (Of course not being Newt, is still far from being perferct of course.)

Who else has corrupted the language like Newt did. Has any Democrat published an Orwellian vocabulary to be used to create dishonest discourse?

I'm genuinely curious, who is the Democratic equivalent of Newt?

Strom Thurmond, but he quit the Party years ago. All those nutty notions about race had to qualify for torturing political language. But then he walked across the aisle and opened shop with the party of Lincoln-turning-in-his-grave and thus nurtured, sustained and brought to flower: Trent Lott, a Gingrich ally.

Brad,

is it true that this would have been the first default in 300+ years?

I thought that the US defaulted in the 1930s when it unilaterally changed the conditions of some gold paying bonds.

Am I mistaken?

Great fun to see Bob Rubin on the subject of Newt!

Newt is one of my evil twins: for years and years, roughly 1965 through 1990, he and I were in and out of Al Toffler's apartment on rotation. Sometimes the elevator operator would tell me "You just missed him."

(Newt's owner is an opera fan, and he would come up to New York a couple of times a year, bringing his young Congresman in tow. Newt would slope off to talk with Al and Heidi, and get what he thought was a taste of the intellectual life.)

Newt's problem is that he's awfully smart, but he doesn't know how stupid he is. My IQ is about the same as his, but I have a vast advantage over him because I know just how low that is.

Bill Clinton has the same thing going for him.

Gingrich is a prick. Why does that shock anyone? (Excuse my lack of civility for the moment, but you know that I am right.)

Cal, is
No safety Net: No safety a bumper stickers? It should be.

The substantitive difference between Gingrich and the debt ceiling in the mid 1990s versus Daschle and the debt ceiling in 2002 is ... what, exactly?

Victor,

I admit to no real expertise on what either man thinks, but I believe the difference is this. Gingrich was trying to win a big battle about the direction of government by playing chicken with our national credit rating. He couldn't win it on the floor of Congress, so he tried going another route. Daschle wants the debt ceiling to require a vote, because the Republicans for a considerable period, when they were the party of fiscal rectitude, forced votes on the debt ceiling to impose a poltical cost on Democrats. Now that Republicans are buying up political support left and right, Daschle wants them to have to take suffer the same cost that Republicans once imposed on Democrats. Daschle's behavior is small-bore, small-minded politics that won't matter in the grand scheme of things (debt ceilings don't change fiscal outcomes, just political ones). Gingrich's behavior was large-bore and massively egotistical, putting his agenda ahead of pledges he, himself had tacitly authorized as a member of a legislative body which voted on spending and tax matters, putting his judgement ahead of that of 200 years of US fiscal policy makers who had always honored our debts, at least in terms of handing over the specified amount of national currency. At least, that's the way I recall it went.

I see the question being asked who might be a Democratic Newt Gingrich.

I would be very honored if somebody were to suggest me, but I think Curtis Wilkie might be more entitled to the palm-leaf crown: he's smart, funny, and has the energy to rekindle the Democratic Party in the south.

As the cardinals say, "Papem habemus." Curtis Wilkie it is.

Then again, Solomon Gort could probably take Mississippi, Alabama, and Louisiana, if he would just get his ass in gear.

And where is Sam Love? Sam: Solomon needs you! Get back in the game, you self-indulgent little slacker!

David Lloyd-Jones

Why don't Robert Byrd and Jay Rockefeller get more attention? They are wonderful Senators, courageous and outspoken and put to shame the notion the Democrats can not thrive in the South.

Here is Senator Robert Byrd on the sorry Medicare Bill -

http://byrd.senate.gov/byrd_speeches/byrd_speeches_2003november/byrd_speeches_2003november_lis/byrd_speeches_2003november_lis_4.html

There is remarkable speech after speech. We should notice!

http://byrd.senate.gov/byrd_speeches/byrd_speeches.html

GW
>>I thought that the US defaulted in the 1930s when it unilaterally changed the conditions of some gold paying bonds.> And he [Roosevelt] prohibited ownership of Gold to keep out alternatives the devalued dollars, so he could collect seginorage on the currency.<<
No longer exchanging pounds or dollars for gold is not a default on the debt owed by a country. Default means that those notes that people have bought will no longer be redeemed at all, in any currency, at anytime.

Steven Landsburg author of the book “Price Theory” claims the US Treasury has defaulted on its obligations-- specifically Treasury bill #GS7-2-179-46-6606. The purchaser paid the face value of $20,000, but Treasury failed to remit the discount as it is supposed to do. The Treasury ultimately took the position that it was not obligated to correct it’s admitted clerical error; the error being “irreparable,” and the discount would never be paid. In other words “screw you,” – It’s good to be The King. See page 574 4th ed.

Anne, West Virginia is not exactly "South". WV is Appalachia. It has much more in common with upstate NY, and the mountain areas of PA, GA, TN and KY than the Tidewater South or the Deep South.

A Zharkov writes:
>>Steven Landsburg author of the book "Price Theory" claims the US Treasury has defaulted on its obligations-- specifically Treasury bill #GS7-2-179-46-6606.>>
Steven you have missed the point. Default means that, like Russia, all notes are not paid from a certain point. Enron did not declare bankruptcy because it missed a payment but because it could not make any payments. Without going into the details of this specific Treasury issue the passage below is extremely confused.

>>The purchaser paid the face value of $20,000, but Treasury failed to remit the discount>>

In general the Treasury issues financial instruments with a specific face value redeemable at a certain date. These are sold at auction at a price below the face value (the disount). The Treasury's "promise" is that it will redeem the face value. The markets determine the discount. Of course we could go on from here and have an argument over minutia. In general had the U. S. ever defaulted on its debt it would have been a big deal, not something that has a confused reference to a single Treasury note. This is a case of if a tree falls in the forest and no one hears it, then it really did not occur.

A Zharkov writes:
>>Steven Landsburg author of the book "Price Theory" claims the US Treasury has defaulted on its obligations-- specifically Treasury bill #GS7-2-179-46-6606.>>
Steven you have missed the point. Default means that, like Russia, all notes are not paid from a certain point. Enron did not declare bankruptcy because it missed a payment but because it could not make any payments. Without going into the details of this specific Treasury issue the passage below is extremely confused.

>>The purchaser paid the face value of $20,000, but Treasury failed to remit the discount>>

In general the Treasury issues financial instruments with a specific face value redeemable at a certain date. These are sold at auction at a price below the face value (the disount). The Treasury's "promise" is that it will redeem the face value. The markets determine the discount. Of course we could go on from here and have an argument over minutia. In general had the U. S. ever defaulted on its debt it would have been a big deal, not something that has a confused reference to a single Treasury note. This is a case of if a tree falls in the forest and no one hears it, then it really did not occur.

There’s nothing confused about the passage. The Treasury failed to pay the buyer the discount, which is the difference between the bid price and the face value of the bill. While the buyer did get his $20,000 back, he received no interest. Here the Treasury is clearly in default, at least according to my Blacks Law Dictionary (6th ed. P. 417) where “default” is the failure to “ . . . discharge an obligation (e.g. pay interest or principal on a debt when due.)” Perhaps this only happened once, and as such has little significance. But how do we know this only happened once? I think Landsburg’s point is that, strictly speaking, T-Bills are not completely “risk free.” For that matter is a TIP really inflation protected? Suppose the BLS changes the way the index is calculated to ease the burden to the Treasury during a period of extreme inflation. Do you really trust those guys completely?

Anne,

I see that user@brown.edu doesn't exist -- but I'd be happy to hear from you offline at the e-mail I'm using here.

-dlj.