Federal Reserve leaders should be representative of the country’s population. If they don't understand us, they can't represent us.
In theory the federal government will bump up against the debt ceiling in late February or early March. Ever since George Bush’s 2001 tax cuts the government hasn’t collected enough in taxes to cover its obligations. As a result the national debt gets higher and higher every year.
Congress has currently authorized the federal government to borrow no more than $16,394,000,000,000. The government hit that limit on December 31, 2012. With no further ability to borrow money, that means we’re now living on borrowed time.
The federal government still has money coming in, so it doesn’t have to stop spending entirely, but like a struggling family it has to start prioritizing which bills to pay. The Treasury Department expects to be able to shift funds around to keep paying all bills through March 1.
After March 1 it’s essentially the President’s decision which bills to pay. Congress could tell him what to do through legislation, but he could always veto the legislation. As a result, until the debt ceiling is raised President Obama has enormous, almost dictatorial power over government spending.
Instead of letting the Republicans dictate terms to him, he should dictate terms to the Republicans. Here’s how to do it. He should publish the following schedule.
Supplemental Security payments for the disabled are scheduled to go out Friday, March 1. After that, no Social Security payments are scheduled until the second Wednesday of the month, March 13. The President should use the seven business days in between to progressively shut down payments to key Republican constituencies.
Saturday and Sunday, March 2-3: let the Republicans sweat over the weekend.
Monday, March 4: shut down air traffic control for all airports serving private jets. It won’t save much money, but it will make for a highly symbolic opening shot.
Tuesday, March 5: stop processing all background checks for gun purchases. The NRA will go apoplectic. It’ll be fun.
Wednesday, March 6: stop the registration of all new securities. The finance industry won’t like this. Most new financial instruments aren’t created to finance industry. They’re used to set up shell companies and shells of shell companies. We can do without for a few weeks if we have to.
Thursday, March 7: stop payment for all private defence contractors. Enough said.
Friday, March 8: stop payment of all farm subsidies. The few family farmers can wait a few extra days for their subsidy checks. The big agribusinesses who take the vast majority of farm subsidies will suffer far more.
Saturday and Sunday, March 9-10: give Congressional Republicans and “moderate” Democrats a break to take calls from their corporate sponsors.
Monday, March 11: shut down all the ports. This has the added benefit that it will eliminate our trade deficit with immediate effect. Seriously, there are a lot of things made in China that you want, but there’s nothing made in China that you need. You can deal with this.
Tuesday, March 12: shut down all air traffic control. Let the country enjoy a few quiet hours at home. Yes, many good people travel for many good reasons. But have you every looked around at an airport?
Travelers are overwhelmingly white and well-off. Service workers are overwhelmingly black and Hispanic. We can all suffer a little inconvenience in order to exert a lot of pressure for a sane national future. Close the airports.
Social Security checks are due to go out Wednesday, March 13. If it comes down to a choice between paying the interest on the federal debt and paying the pensions of America’s retirees, the decision should be obvious. Grandparents before bondholders. It really is that simple.
But it won’t come to that. Play hardball, and corporate America will cry uncle within one week. If the President plays hardball he will win. We don’t need a silly $1 trillion coin. We need a victory. The debt ceiling is the President’s trump card. He should use it.