1 00:00:11,280 --> 00:00:15,560 Speaker 1: Hello, and welcome to another episode of The Odd Lots Podcast. 2 00:00:15,600 --> 00:00:17,320 Speaker 1: I'm Joe Wisenthal. 3 00:00:16,880 --> 00:00:17,959 Speaker 2: And I'm Tracy Alloway. 4 00:00:18,360 --> 00:00:22,000 Speaker 1: Uh, Tracy, stupidest law in the world. The debt ceiling. 5 00:00:22,000 --> 00:00:22,600 Speaker 1: We're still here. 6 00:00:22,800 --> 00:00:24,880 Speaker 2: I was gonna say, you'll have to narrow that one down, 7 00:00:24,920 --> 00:00:26,720 Speaker 2: but I know exactly what you're talking about. Yeah, the 8 00:00:26,720 --> 00:00:30,720 Speaker 2: debt ceiling. I am really struggling with this one. I'm 9 00:00:30,760 --> 00:00:32,800 Speaker 2: struggling to get into it because I feel like we've 10 00:00:32,840 --> 00:00:36,760 Speaker 2: been here before and we kind of know how it's 11 00:00:36,800 --> 00:00:40,120 Speaker 2: going to play out. But of course the wild card 12 00:00:40,159 --> 00:00:44,400 Speaker 2: this time around is just I guess the lengths to 13 00:00:44,520 --> 00:00:48,400 Speaker 2: which a certain portion of a certain party is willing 14 00:00:48,440 --> 00:00:50,280 Speaker 2: to go and using this as political leverage. 15 00:00:50,360 --> 00:00:54,200 Speaker 1: Yeah, well, you know, I think what you said sort 16 00:00:54,240 --> 00:00:57,320 Speaker 1: of captures the spirit perfectly. We know how this plays out, 17 00:00:57,880 --> 00:01:00,840 Speaker 1: and it probably will play out as you have in 18 00:01:00,880 --> 00:01:04,080 Speaker 1: your head, except that the potential in the scenario where 19 00:01:04,080 --> 00:01:07,880 Speaker 1: it doesn't play out like that is very bad. People 20 00:01:07,920 --> 00:01:11,040 Speaker 1: think yes, and so you have this situation where like, oh, everything, 21 00:01:11,160 --> 00:01:13,399 Speaker 1: you know, we all know how it works out. It's 22 00:01:13,400 --> 00:01:17,360 Speaker 1: all theater. They resolve it, and that's probably true, and 23 00:01:17,480 --> 00:01:20,680 Speaker 1: yet the possibility that somehow it doesn't get worked out, 24 00:01:21,040 --> 00:01:24,320 Speaker 1: it would be unprecedented and potentially very calamitous. 25 00:01:24,400 --> 00:01:27,280 Speaker 2: Well, the other thing that's happened this time around, and 26 00:01:27,360 --> 00:01:30,480 Speaker 2: again I am sort of struggling to get excited about 27 00:01:30,480 --> 00:01:32,959 Speaker 2: this particular debt ceiling episode. But the other thing that's 28 00:01:33,000 --> 00:01:36,280 Speaker 2: happened is that the White House started out this whole 29 00:01:36,280 --> 00:01:39,720 Speaker 2: thing saying that it wasn't going to negotiate on the 30 00:01:39,720 --> 00:01:42,560 Speaker 2: debt ceiling, and yet here we are, we're recording this 31 00:01:42,640 --> 00:01:46,360 Speaker 2: on May twenty third. It seems like they're negotiating. 32 00:01:46,480 --> 00:01:49,559 Speaker 1: They're absolutely negotiating. And it made sense for the White 33 00:01:49,560 --> 00:01:51,320 Speaker 1: House to say that. And the reason I say that 34 00:01:51,440 --> 00:01:56,080 Speaker 1: is because Biden was there in twenty eleven when Obama 35 00:01:56,440 --> 00:02:00,240 Speaker 1: negotiated the dead ceiling deal with the House Republicans and 36 00:02:00,400 --> 00:02:03,840 Speaker 1: sort of saw first hand how that sort of derailed 37 00:02:03,840 --> 00:02:06,640 Speaker 1: Obama's presidency, and Biden had front or seats to that, 38 00:02:07,040 --> 00:02:09,440 Speaker 1: and so you figure, like, from Biden's perspective, it's like, well, 39 00:02:09,440 --> 00:02:11,080 Speaker 1: I'm not going to go down that road again. I 40 00:02:11,160 --> 00:02:14,880 Speaker 1: saw how this derailed the White House the last time 41 00:02:15,400 --> 00:02:18,280 Speaker 1: I was in the White House, and yet here we 42 00:02:18,320 --> 00:02:21,280 Speaker 1: are and they I would say, at a minimum, the 43 00:02:21,320 --> 00:02:24,640 Speaker 1: White House has failed to a stick by that and 44 00:02:24,680 --> 00:02:27,560 Speaker 1: failed to sort of avoid the same path that Obama 45 00:02:27,639 --> 00:02:28,040 Speaker 1: went down. 46 00:02:28,280 --> 00:02:31,240 Speaker 2: What if saying you're not going to negotiate was in 47 00:02:31,280 --> 00:02:33,200 Speaker 2: itself a negotiation tactic. 48 00:02:33,360 --> 00:02:36,160 Speaker 1: It may have been. It may have been, but it 49 00:02:36,200 --> 00:02:39,080 Speaker 1: seems to have failed. And so right, like that's like 50 00:02:39,240 --> 00:02:40,840 Speaker 1: that's sort of the thing. It's like, well, that was, no, 51 00:02:41,000 --> 00:02:41,640 Speaker 1: here we are. 52 00:02:42,040 --> 00:02:45,120 Speaker 2: I don't think the intent was that in late May 53 00:02:45,200 --> 00:02:47,280 Speaker 2: of this year we would be talking about the President 54 00:02:47,360 --> 00:02:50,520 Speaker 2: potentially invoking the fourteenth Amendment to deal with this issue. 55 00:02:50,560 --> 00:02:53,720 Speaker 2: That couldn't have been the game plan. And can I 56 00:02:53,760 --> 00:02:58,160 Speaker 2: just say one more thing about this episode. I really 57 00:02:58,240 --> 00:03:03,480 Speaker 2: resent having to turn this into a constitutional law podcast, 58 00:03:03,840 --> 00:03:07,359 Speaker 2: Like I never wanted that for my career. And yet 59 00:03:07,400 --> 00:03:08,120 Speaker 2: here we are. 60 00:03:08,280 --> 00:03:10,960 Speaker 1: And yet here we are exactly right, and you know, 61 00:03:11,120 --> 00:03:14,480 Speaker 1: again you sort of said it like we the problem. 62 00:03:14,680 --> 00:03:16,680 Speaker 1: You said, you know, the president, the White House might 63 00:03:16,720 --> 00:03:19,520 Speaker 1: have to invoke the fourteenth Amendment or might except that, 64 00:03:20,520 --> 00:03:22,400 Speaker 1: except that the White House has already said that's not 65 00:03:22,440 --> 00:03:24,400 Speaker 1: a great option. It doesn't really want to do that option. 66 00:03:24,680 --> 00:03:26,920 Speaker 1: And so if there are these various off ramps, like 67 00:03:26,919 --> 00:03:29,440 Speaker 1: if there are these various alternatives to just sort of 68 00:03:29,600 --> 00:03:33,320 Speaker 1: raising the dead ceiling via Congress, like it's been done 69 00:03:33,360 --> 00:03:36,120 Speaker 1: dozens of times in the past. The White House has 70 00:03:36,160 --> 00:03:38,000 Speaker 1: like trashed every one of those operations. 71 00:03:38,200 --> 00:03:41,920 Speaker 2: This is the process with talking specifically about the off 72 00:03:42,040 --> 00:03:45,080 Speaker 2: ramps is you kind of tell everyone what your least 73 00:03:45,160 --> 00:03:48,120 Speaker 2: preferred option is, and all of them are bad options, 74 00:03:48,200 --> 00:03:50,200 Speaker 2: it seems like for the White House. And so there's 75 00:03:50,240 --> 00:03:52,800 Speaker 2: no like they have to really pointed to this is 76 00:03:52,840 --> 00:03:55,040 Speaker 2: the thing that would be a massive win for us. 77 00:03:55,000 --> 00:03:56,600 Speaker 1: Right, they just point to the things that would be 78 00:03:56,600 --> 00:04:01,000 Speaker 1: a loss for them. Should we get started? So how 79 00:04:01,040 --> 00:04:04,200 Speaker 1: did the White House get into a position in which 80 00:04:04,200 --> 00:04:06,520 Speaker 1: it expressly said it would not? How is the White 81 00:04:06,520 --> 00:04:10,080 Speaker 1: House negotiating over the debt ceiling when it expressly said 82 00:04:10,080 --> 00:04:12,240 Speaker 1: for months and months that there would be no negotiation. 83 00:04:12,680 --> 00:04:14,800 Speaker 1: Today we are going to be speaking with two guests, 84 00:04:14,840 --> 00:04:18,960 Speaker 1: Gonda Amernath, executive director and Employe America and Arnap Data, 85 00:04:19,160 --> 00:04:23,640 Speaker 1: senior counsel for employ America. So let's get started. Is 86 00:04:23,680 --> 00:04:28,159 Speaker 1: the basic intro true skanda that the White House said 87 00:04:28,160 --> 00:04:32,039 Speaker 1: it wasn't going to negotiate and is now negotiating. 88 00:04:32,160 --> 00:04:35,080 Speaker 3: Thanks for having me on a thank I think that 89 00:04:35,120 --> 00:04:41,240 Speaker 3: descriptively checks out that they promised to not negotiate that 90 00:04:41,320 --> 00:04:44,880 Speaker 3: they wanted a clean debt ceiling increase, right, and yet 91 00:04:44,880 --> 00:04:48,159 Speaker 3: here we are where it very likely will not be 92 00:04:48,279 --> 00:04:51,600 Speaker 3: a clean debt ceiling increase, and they are very clearly negotiating. 93 00:04:52,200 --> 00:04:54,039 Speaker 3: I don't know how to take issue with that description. 94 00:04:54,960 --> 00:04:57,520 Speaker 2: Can I ask a really basic question just before we 95 00:04:57,560 --> 00:04:59,960 Speaker 2: go any further, But I would be curious to get 96 00:05:00,080 --> 00:05:02,560 Speaker 2: either of your opinions on this. But what is it 97 00:05:02,760 --> 00:05:06,479 Speaker 2: about the debt ceiling that makes it such an attractive 98 00:05:06,760 --> 00:05:09,840 Speaker 2: pressure point for this kind of political wrangling? 99 00:05:11,560 --> 00:05:14,920 Speaker 3: I think it's a ransom note of sorts, right, So 100 00:05:14,960 --> 00:05:19,120 Speaker 3: it ends up being this catastrophic risk if people perceive 101 00:05:19,279 --> 00:05:21,600 Speaker 3: that we don't raise the deat ceiling, then we're going 102 00:05:21,640 --> 00:05:24,080 Speaker 3: to default or it's going to lead to chaos and 103 00:05:24,160 --> 00:05:27,640 Speaker 3: how government pays for various things, and that chaos is 104 00:05:27,640 --> 00:05:29,880 Speaker 3: owned by the executive branch. And so if you are 105 00:05:30,120 --> 00:05:33,640 Speaker 3: in Congress and you want to extract concessions, this is 106 00:05:33,640 --> 00:05:37,719 Speaker 3: a kind of holdout problem where I can effectively force 107 00:05:37,800 --> 00:05:40,960 Speaker 3: you into position of giving whatever I want in order 108 00:05:41,000 --> 00:05:43,839 Speaker 3: to raise the debt ceiling as a matter of procedure. 109 00:05:45,279 --> 00:05:47,640 Speaker 3: And it's all kind of operating in the shadow of 110 00:05:48,080 --> 00:05:51,760 Speaker 3: what is a reasonable concession to extract, and that hold 111 00:05:51,800 --> 00:05:55,880 Speaker 3: out problem is, yeah, a very real one that the 112 00:05:55,920 --> 00:05:57,760 Speaker 3: White House is facing right now. 113 00:05:59,360 --> 00:06:02,719 Speaker 4: Add to that too, Yeah, add to that too, And thanks, 114 00:06:02,800 --> 00:06:07,200 Speaker 4: thanks so much for having me that the uncertain timeline 115 00:06:07,480 --> 00:06:12,960 Speaker 4: of it, I think really necessitates that hostage tanking mentality. 116 00:06:13,000 --> 00:06:16,760 Speaker 4: This is not like the typical appropriation cycle where you 117 00:06:16,839 --> 00:06:19,200 Speaker 4: have an X date from the beginning. You know, when 118 00:06:19,560 --> 00:06:23,480 Speaker 4: this was first announced for four months ago, when Secretary 119 00:06:23,520 --> 00:06:25,760 Speaker 4: Ellen said we're going to hit the dead ceiling. We 120 00:06:25,800 --> 00:06:28,920 Speaker 4: have to start taking extraordinary measures. Even the date was 121 00:06:29,400 --> 00:06:32,480 Speaker 4: highly uncertain at that point. We're now a week before 122 00:06:32,600 --> 00:06:35,800 Speaker 4: June first, which they say might be the X date, 123 00:06:35,880 --> 00:06:38,359 Speaker 4: but we're still not sure. And so it creates this 124 00:06:38,440 --> 00:06:42,720 Speaker 4: kind of uncertain environment that I think is really because 125 00:06:43,160 --> 00:06:45,920 Speaker 4: you don't have the opportunity to make certain cuts or 126 00:06:46,000 --> 00:06:50,160 Speaker 4: certain demands during that typical process of authorization or appropriations. 127 00:06:50,520 --> 00:06:54,400 Speaker 4: It's kind of a convenient place to take hostage the 128 00:06:54,400 --> 00:06:55,240 Speaker 4: global economy. 129 00:06:56,520 --> 00:06:58,719 Speaker 1: So what was the White House hoping for when it 130 00:06:58,800 --> 00:07:01,520 Speaker 1: said months ago, we're not going to negotiate over the 131 00:07:01,520 --> 00:07:04,159 Speaker 1: dead ceiling this time. What was sort of the original 132 00:07:04,240 --> 00:07:04,760 Speaker 1: vision there? 133 00:07:07,320 --> 00:07:11,040 Speaker 3: So I think the hope in the gamble was that 134 00:07:12,480 --> 00:07:15,680 Speaker 3: the extremist nature of the demands, or what was perceived 135 00:07:15,720 --> 00:07:18,360 Speaker 3: to be extreme by the administration. It's called what's the 136 00:07:18,840 --> 00:07:21,320 Speaker 3: I know it as the LSGA Limit Save and Save 137 00:07:21,400 --> 00:07:24,840 Speaker 3: Growth Act or Limit Save and Grow Act would be 138 00:07:24,920 --> 00:07:28,960 Speaker 3: seen as so dangerous and even just the process of 139 00:07:29,000 --> 00:07:31,680 Speaker 3: getting to that piece of legislation would reveal so many 140 00:07:31,720 --> 00:07:35,240 Speaker 3: extreme demands, all to raise the dead ceiling, that you'd 141 00:07:35,240 --> 00:07:40,560 Speaker 3: have this confluence of political pressure, media driven pressure, and 142 00:07:41,480 --> 00:07:44,960 Speaker 3: a sort of maybe CEO driven pressure. There's a lot 143 00:07:44,960 --> 00:07:49,120 Speaker 3: of reports of Secretary Yellen trying to get major CEOs 144 00:07:49,120 --> 00:07:51,920 Speaker 3: to talk to Republicans persuade them of the importance of 145 00:07:52,000 --> 00:07:55,120 Speaker 3: raising the dead ceiling, and that through this sort of 146 00:07:55,760 --> 00:07:59,800 Speaker 3: these different pressures, the Republicans would see the light that 147 00:07:59,840 --> 00:08:02,160 Speaker 3: they would feel like they had no other choice of 148 00:08:02,520 --> 00:08:06,800 Speaker 3: the coalition would fracture and they would have to raise 149 00:08:06,800 --> 00:08:07,760 Speaker 3: the debt ceiling cleanly. 150 00:08:08,120 --> 00:08:08,920 Speaker 5: I would just yeah, I. 151 00:08:08,920 --> 00:08:10,880 Speaker 4: Would agree with all of that and say, I think 152 00:08:10,880 --> 00:08:17,800 Speaker 4: there was this particular question, that particular decision that just 153 00:08:17,840 --> 00:08:23,000 Speaker 4: gond disappointed about CEOs, that these interests would be advocating 154 00:08:23,080 --> 00:08:27,640 Speaker 4: lobbying with Congress. You guys have to do the right thing. 155 00:08:27,680 --> 00:08:31,840 Speaker 4: Here because they're demanding a clean debt ceiling hike. And 156 00:08:32,160 --> 00:08:35,480 Speaker 4: I think that was a real miscalculation because you know, 157 00:08:35,800 --> 00:08:38,920 Speaker 4: Jamie Diamond doesn't have an interest in a clean debt 158 00:08:38,920 --> 00:08:40,199 Speaker 4: ceiling hike on its own. 159 00:08:40,720 --> 00:08:42,920 Speaker 5: He just wants a debt ceiling hike. 160 00:08:43,080 --> 00:08:45,320 Speaker 4: And so I think that's really part of the miscalculation 161 00:08:45,440 --> 00:08:46,520 Speaker 4: that happened here. 162 00:08:46,800 --> 00:08:49,120 Speaker 2: Wait, can you can you talk a little bit more 163 00:08:49,120 --> 00:08:52,480 Speaker 2: about the distinction between a debt ceiling hike versus a 164 00:08:52,559 --> 00:08:56,280 Speaker 2: clean debt ceiling hike and so what is the difference there? 165 00:08:56,320 --> 00:08:59,880 Speaker 2: And then secondly, why does it seem like the Democrats 166 00:09:00,160 --> 00:09:02,680 Speaker 2: more into the idea of a clean debt ceiling hike 167 00:09:02,840 --> 00:09:03,680 Speaker 2: this time around? 168 00:09:05,400 --> 00:09:08,360 Speaker 4: Yeah, so, by clean debt ceiling hike, it just means 169 00:09:08,480 --> 00:09:11,680 Speaker 4: raising the limit on the debt ceiling without any other 170 00:09:12,120 --> 00:09:17,239 Speaker 4: changes in the law and no strings attached. And what's 171 00:09:17,320 --> 00:09:20,040 Speaker 4: likely to happen now with a deal is you're going 172 00:09:20,080 --> 00:09:22,400 Speaker 4: to have a hike in the debt ceiling, but it's 173 00:09:22,440 --> 00:09:27,320 Speaker 4: going to come attached with paps on spending, potentially cuts 174 00:09:27,360 --> 00:09:30,440 Speaker 4: to spending. And also there's all these other you know, 175 00:09:30,600 --> 00:09:35,320 Speaker 4: items that make I would emphasize very very little, have 176 00:09:35,480 --> 00:09:39,000 Speaker 4: very little impact on the budgetary outlook of the country. 177 00:09:39,480 --> 00:09:42,960 Speaker 4: But are things that a certain party is interested in, 178 00:09:43,000 --> 00:09:47,640 Speaker 4: for example, like work requirements on certain welfare programs. That's 179 00:09:47,880 --> 00:09:51,760 Speaker 4: those are kind of the concessions that the administration will 180 00:09:51,760 --> 00:09:55,920 Speaker 4: have to give here without having a clean debt ceiling hike. 181 00:10:13,320 --> 00:10:15,319 Speaker 1: Okay, And so this is you know, again, we have 182 00:10:15,480 --> 00:10:18,360 Speaker 1: this in twenty eleven where it went down virtually to 183 00:10:18,400 --> 00:10:21,079 Speaker 1: the wire at the very last second. Oh, the Obama 184 00:10:21,120 --> 00:10:25,040 Speaker 1: administration and the newly elected Tea Party majority led by 185 00:10:25,120 --> 00:10:28,280 Speaker 1: John Bayner, they came up with this dead ceiling hike, 186 00:10:28,640 --> 00:10:30,640 Speaker 1: and they had the sequester, and there was sort of 187 00:10:30,760 --> 00:10:35,680 Speaker 1: a limit to growth of both discretionary and defense spending, 188 00:10:36,160 --> 00:10:39,959 Speaker 1: and arguably it slowed the trajectory of the recovery coming 189 00:10:40,000 --> 00:10:43,880 Speaker 1: out of the Great Financial Crisis. Talk to us about 190 00:10:44,040 --> 00:10:47,280 Speaker 1: the alternatives. So, okay, we saw what happened in twenty eleven, 191 00:10:47,360 --> 00:10:51,680 Speaker 1: We saw how that potentially derailed the recovery. What could 192 00:10:51,720 --> 00:10:55,080 Speaker 1: the White House theoretically have done differently, And we'll get 193 00:10:55,120 --> 00:10:58,120 Speaker 1: it into details, but months ago, other than say please 194 00:10:58,480 --> 00:10:59,880 Speaker 1: just give us a clean dead ceiling hike. 195 00:11:01,840 --> 00:11:05,679 Speaker 4: Yeah, I think the biggest thing I would emphasize here 196 00:11:05,920 --> 00:11:10,640 Speaker 4: and I think perhaps the biggest miscalculation was not developing 197 00:11:11,320 --> 00:11:17,560 Speaker 4: the operational readiness to undertake unilateral actions. So obviously there 198 00:11:17,559 --> 00:11:20,680 Speaker 4: are a number of different avenues that they could take 199 00:11:20,760 --> 00:11:22,880 Speaker 4: unilaterally that we can talk about more. 200 00:11:23,240 --> 00:11:26,160 Speaker 5: Platinum Coin is I think a favorite of some people, 201 00:11:26,760 --> 00:11:28,720 Speaker 5: perhaps some people on this podcasts. 202 00:11:29,440 --> 00:11:34,360 Speaker 4: Yeah, perhaps there's also this this idea that's been floating 203 00:11:34,400 --> 00:11:38,640 Speaker 4: around for console bonds, these perpetual bonds. All of these 204 00:11:38,679 --> 00:11:44,200 Speaker 4: things take some operational readiness to be executed, and the President, 205 00:11:44,280 --> 00:11:47,160 Speaker 4: I think, just a couple of days ago, said even 206 00:11:47,160 --> 00:11:49,680 Speaker 4: if we wanted to take unilateral action, we couldn't do 207 00:11:49,800 --> 00:11:53,080 Speaker 4: so in a number of weeks. And I think that 208 00:11:53,280 --> 00:11:57,520 Speaker 4: perhaps that lack of operational readiness is maybe the biggest 209 00:11:57,520 --> 00:11:59,959 Speaker 4: fault that you can put on the Treasury Department, which 210 00:12:00,000 --> 00:12:03,120 Speaker 4: which is when they're, for example, issuing a new security, 211 00:12:03,120 --> 00:12:06,160 Speaker 4: a new debt instrument, it takes a lot of work. 212 00:12:06,679 --> 00:12:09,880 Speaker 4: I'm not a debt expert, and I don't understand their 213 00:12:09,960 --> 00:12:12,960 Speaker 4: programs internally, but it takes a lot of coding. There's 214 00:12:13,000 --> 00:12:15,400 Speaker 4: a lot of different things with auction design and that 215 00:12:15,480 --> 00:12:18,080 Speaker 4: they need to do to get these securities ready, and 216 00:12:18,160 --> 00:12:20,920 Speaker 4: they could have taken steps four months ago when they 217 00:12:20,960 --> 00:12:23,760 Speaker 4: knew they were coming to the debt ceiling to be 218 00:12:23,800 --> 00:12:27,040 Speaker 4: able to do that if we came to a default moment. 219 00:12:27,200 --> 00:12:31,319 Speaker 4: And I think there's a broader principle to abstract here, 220 00:12:31,360 --> 00:12:36,079 Speaker 4: which is, when you are dealing with a environment of 221 00:12:36,840 --> 00:12:41,439 Speaker 4: high uncertainty, the most important course you could take, I 222 00:12:41,480 --> 00:12:46,240 Speaker 4: would argue, is to maintain as much optionality as possible, 223 00:12:46,600 --> 00:12:49,839 Speaker 4: and part of that is developing that operational readiness. And 224 00:12:49,920 --> 00:12:53,280 Speaker 4: so yes, let's say six months ago, if Treasury had 225 00:12:53,320 --> 00:12:58,840 Speaker 4: done an operational test to deposit a coin to mint 226 00:12:58,840 --> 00:13:01,240 Speaker 4: a new coin and depositive for ten thousand dollars, or 227 00:13:01,280 --> 00:13:04,760 Speaker 4: if it had started taking the steps to issue console bonds, 228 00:13:05,360 --> 00:13:07,800 Speaker 4: certainly that would have gotten noticed. These aren't you know, 229 00:13:07,800 --> 00:13:10,959 Speaker 4: it's not the Fed, the Treasury. Good agencies do a 230 00:13:11,040 --> 00:13:13,559 Speaker 4: number of tests and pilots. They don't always get a 231 00:13:13,559 --> 00:13:17,000 Speaker 4: lot of attention. This probably would, but I think in 232 00:13:17,120 --> 00:13:21,360 Speaker 4: the broader context of the uncertainty they were dealing with. 233 00:13:22,320 --> 00:13:26,360 Speaker 4: Both with divided government, we saw a very protracted speaker fight, 234 00:13:26,440 --> 00:13:29,720 Speaker 4: which just is another indicator of the volatility within Congress 235 00:13:29,800 --> 00:13:33,840 Speaker 4: that you have to manage. Not developing that operational readiness, 236 00:13:33,840 --> 00:13:36,480 Speaker 4: to me, is a really, really big mistake. 237 00:13:36,840 --> 00:13:39,840 Speaker 2: I'm just thinking back to the interview with Terry Duffy. 238 00:13:40,400 --> 00:13:41,920 Speaker 2: He was sort of talking about whether or not he 239 00:13:41,960 --> 00:13:44,920 Speaker 2: would leave Chicago, and he threw out there that they 240 00:13:44,920 --> 00:13:48,120 Speaker 2: had renegotiated all their leases to make them more flexible. 241 00:13:48,200 --> 00:13:50,640 Speaker 2: They didn't actually own any property. That seems like laying 242 00:13:50,679 --> 00:13:51,600 Speaker 2: the groundwork for a. 243 00:13:51,600 --> 00:13:53,559 Speaker 1: Possibility executive leadership. 244 00:13:54,480 --> 00:13:58,719 Speaker 2: Okay, can we talk about the fourteenth Amendment, because all 245 00:13:58,760 --> 00:14:02,640 Speaker 2: I know about it is that it says something along 246 00:14:02,679 --> 00:14:05,480 Speaker 2: the lines of the validity of the public debt of 247 00:14:05,520 --> 00:14:09,760 Speaker 2: the US shall not be questioned, something like that. What 248 00:14:09,960 --> 00:14:13,160 Speaker 2: is this option? Where did it come from? And why 249 00:14:13,200 --> 00:14:15,840 Speaker 2: does it seem to be a very big deal about 250 00:14:15,920 --> 00:14:18,880 Speaker 2: whether or not President Biden will actually invoke it. 251 00:14:20,400 --> 00:14:22,240 Speaker 3: I'm going to toss this over to my senior council. 252 00:14:25,680 --> 00:14:30,200 Speaker 4: Yeah, so basically, I mean, you got you got the 253 00:14:30,240 --> 00:14:32,120 Speaker 4: text right this thing. 254 00:14:32,240 --> 00:14:34,160 Speaker 2: I am reading it from the screen to be fair. 255 00:14:34,200 --> 00:14:39,720 Speaker 4: But yeah, okay, So basically, this is a post Civil 256 00:14:39,760 --> 00:14:43,240 Speaker 4: War amendment that was passed, and there are a number 257 00:14:43,320 --> 00:14:46,200 Speaker 4: of reasons. 258 00:14:45,880 --> 00:14:46,880 Speaker 5: Why it was passed. 259 00:14:46,880 --> 00:14:50,800 Speaker 4: There's they wanted to be able to They wanted to 260 00:14:50,800 --> 00:14:53,800 Speaker 4: make sure that bonds that were issued to pay for 261 00:14:53,840 --> 00:14:57,400 Speaker 4: the Civil War were not renegged on. But basically the 262 00:14:57,440 --> 00:15:01,120 Speaker 4: text of that that a lot of constant scholars who 263 00:15:01,120 --> 00:15:03,360 Speaker 4: are you know, I would say highly respective, believe is 264 00:15:03,400 --> 00:15:07,280 Speaker 4: that it is unconstitutional for the US to default. 265 00:15:07,480 --> 00:15:10,120 Speaker 5: Everything needs to be done to avoid a default. 266 00:15:10,240 --> 00:15:15,000 Speaker 4: And I think, just to take this into a broader 267 00:15:15,040 --> 00:15:18,840 Speaker 4: context here, there's because I think sometimes a bit of 268 00:15:18,840 --> 00:15:22,080 Speaker 4: a challenge, a bit of a mistake in how people 269 00:15:22,160 --> 00:15:25,800 Speaker 4: understand the fourteenth Amendment in this context. And basically, what 270 00:15:25,840 --> 00:15:28,720 Speaker 4: I would say is the fourteenth Amendment is not a verb. 271 00:15:29,480 --> 00:15:33,000 Speaker 4: You can't fourteenth Amendment something. This isn't something that is 272 00:15:33,080 --> 00:15:36,240 Speaker 4: like as as our mutual friend Carlos Muchra says, this 273 00:15:36,360 --> 00:15:40,440 Speaker 4: is not a sword. And so I think sometimes people 274 00:15:40,480 --> 00:15:43,360 Speaker 4: think that you can just like invoke the fourteenth Amendment 275 00:15:43,520 --> 00:15:47,680 Speaker 4: like you're Michael Scott in the office declaring bankruptcy. 276 00:15:47,840 --> 00:15:53,720 Speaker 2: And somebody woke the fourteenth exactly, and that's not really 277 00:15:53,760 --> 00:15:54,680 Speaker 2: how it works. 278 00:15:54,960 --> 00:15:58,680 Speaker 4: What the fourteenth Amendment does is it places a obligation 279 00:15:58,800 --> 00:16:03,680 Speaker 4: a duty the executive branch to avoid default. That places 280 00:16:03,720 --> 00:16:07,160 Speaker 4: a duty on the executive branch to find every lawful 281 00:16:07,280 --> 00:16:10,760 Speaker 4: avenue to avoid a default. And that's where you start 282 00:16:10,800 --> 00:16:14,320 Speaker 4: to get into the different tools that are available at 283 00:16:14,320 --> 00:16:17,520 Speaker 4: the executive branch's discretion. But that's what I would really 284 00:16:17,760 --> 00:16:19,400 Speaker 4: emphasize about the fourteenth Amendment. 285 00:16:19,520 --> 00:16:23,320 Speaker 2: So it's more a frame of mind rather than like 286 00:16:23,360 --> 00:16:26,560 Speaker 2: an actual set of things that you could start doing, 287 00:16:26,640 --> 00:16:27,360 Speaker 2: right like Biden. 288 00:16:28,200 --> 00:16:32,280 Speaker 1: Biden took an oath to protect the constitution. In the 289 00:16:32,320 --> 00:16:36,200 Speaker 1: Constitution is the fourteenth Amendment, And therefore the argument would 290 00:16:36,240 --> 00:16:38,920 Speaker 1: be that in order to sort of uphold his oath 291 00:16:39,240 --> 00:16:42,040 Speaker 1: to defend the Constitution, he has to find a way 292 00:16:42,440 --> 00:16:45,200 Speaker 1: to pay the debt regardless of what the law says. 293 00:16:45,920 --> 00:16:46,160 Speaker 5: SCN. 294 00:16:46,280 --> 00:16:47,880 Speaker 1: I want to go to you because we sort of 295 00:16:47,880 --> 00:16:51,000 Speaker 1: glossed over something important. You and Arna were talking about 296 00:16:51,000 --> 00:16:55,840 Speaker 1: a console bond bond. How if the government is running 297 00:16:55,920 --> 00:16:58,800 Speaker 1: up against the debt ceiling, is there an argument that 298 00:16:58,840 --> 00:17:01,480 Speaker 1: there is a type of bond that would allow the 299 00:17:01,520 --> 00:17:05,200 Speaker 1: government to keep borrowing and not violate that What is 300 00:17:05,240 --> 00:17:08,560 Speaker 1: a console first of all? And why would that not 301 00:17:08,840 --> 00:17:10,160 Speaker 1: violate the debt sealing law? 302 00:17:10,800 --> 00:17:16,399 Speaker 3: So the debt sealing statute is very short, very easy 303 00:17:16,440 --> 00:17:18,760 Speaker 3: to read. You don't have to be a lawyer to 304 00:17:18,840 --> 00:17:20,720 Speaker 3: understand this. I am not a lawyer. I have a 305 00:17:20,720 --> 00:17:23,879 Speaker 3: lot agree so I'm in this sort of in between space. 306 00:17:24,160 --> 00:17:25,960 Speaker 3: But you can read the statute and you can see 307 00:17:26,280 --> 00:17:30,280 Speaker 3: how it is written in terms of face value of 308 00:17:30,320 --> 00:17:33,160 Speaker 3: the bond. Ah And so there are bonds that have 309 00:17:33,240 --> 00:17:37,440 Speaker 3: no face value, specifically perpetual bonds, and you can issue 310 00:17:37,640 --> 00:17:41,600 Speaker 3: perpetual bonds with obviously they existing perpetuity. You can put 311 00:17:41,640 --> 00:17:43,199 Speaker 3: call options on them so that you can take them 312 00:17:43,200 --> 00:17:47,560 Speaker 3: out of circulation later. But these bonds also have precedent 313 00:17:47,720 --> 00:17:51,600 Speaker 3: in US treasury history. You issued them as part of 314 00:17:51,920 --> 00:17:55,639 Speaker 3: financing the Panama Canal. These were things that existed before 315 00:17:55,760 --> 00:17:59,400 Speaker 3: the debt ceiling Statute was passed and general bond authorities 316 00:17:59,440 --> 00:18:04,000 Speaker 3: were passed. So if there are bonds that exist that 317 00:18:04,040 --> 00:18:08,200 Speaker 3: don't have a face without face value, and you can't 318 00:18:08,200 --> 00:18:11,120 Speaker 3: issue them under the bond authority. Again, there's also something 319 00:18:11,160 --> 00:18:15,240 Speaker 3: unique about issuing bonds. There doesn't have to be that's 320 00:18:15,280 --> 00:18:18,160 Speaker 3: for the statute. There doesn't have to be a time 321 00:18:18,240 --> 00:18:22,000 Speaker 3: limitation where principle must be repaid. This is in contrast 322 00:18:22,040 --> 00:18:24,680 Speaker 3: to treasury notes and treasury bills. Again, these are things 323 00:18:24,680 --> 00:18:27,840 Speaker 3: that are pretty plain to see in the statutes. You 324 00:18:27,920 --> 00:18:32,119 Speaker 3: don't have to make exotic interpretations, you don't have to 325 00:18:32,119 --> 00:18:34,560 Speaker 3: make any sort of particularly strained interpretation of the law 326 00:18:34,720 --> 00:18:37,200 Speaker 3: to figure out that these things are possible. These things 327 00:18:37,200 --> 00:18:40,640 Speaker 3: have been done. They were pretty well understood by Congress 328 00:18:40,640 --> 00:18:45,120 Speaker 3: when they passed the debt ceiling. And if this is possible, 329 00:18:45,240 --> 00:18:48,600 Speaker 3: if we all can agree that perpetual bonds are possible, 330 00:18:49,160 --> 00:18:52,360 Speaker 3: then what the implication of fourteenth Amendment, at least under 331 00:18:52,359 --> 00:18:55,840 Speaker 3: certain interpretations. I'm not here to tell you there's only one. 332 00:18:56,240 --> 00:18:58,520 Speaker 3: But if you think that that is a constraint, if 333 00:18:58,560 --> 00:19:00,800 Speaker 3: you think avoiding default is a really important thing for 334 00:19:00,840 --> 00:19:05,200 Speaker 3: both economic and constitutional reasons, you have actually every obligation 335 00:19:05,240 --> 00:19:07,480 Speaker 3: to find a solution to this problem and to try 336 00:19:07,480 --> 00:19:09,760 Speaker 3: and reconcile all of the laws of the United States. 337 00:19:10,400 --> 00:19:12,760 Speaker 3: That's the part that I think is sort of being 338 00:19:12,800 --> 00:19:15,240 Speaker 3: glossed over by the Treasury, which is to say, oh, 339 00:19:15,280 --> 00:19:18,520 Speaker 3: we don't have we have a bad situation where if 340 00:19:18,920 --> 00:19:22,280 Speaker 3: the dead ceiling binds, we have no choices. Therefore we 341 00:19:22,280 --> 00:19:25,000 Speaker 3: may have to talk about the fourteenth Amendment. But it's like, no, 342 00:19:25,080 --> 00:19:27,760 Speaker 3: you do have other options. Some are probably better than others, 343 00:19:27,920 --> 00:19:30,520 Speaker 3: but I will you do have a suite of solutions 344 00:19:30,520 --> 00:19:33,280 Speaker 3: on the table you could consider. One of them could 345 00:19:33,280 --> 00:19:35,960 Speaker 3: be the coin. There are pros and cons to it 346 00:19:36,080 --> 00:19:38,600 Speaker 3: from a legal perspective, but it's not, at least in 347 00:19:38,680 --> 00:19:42,040 Speaker 3: terms of literal interpretation. That's pretty strong. There are console bonds, 348 00:19:42,080 --> 00:19:44,359 Speaker 3: perpetual bonds that are stuff you can just read in 349 00:19:44,400 --> 00:19:47,199 Speaker 3: the I say, the bond authority is the statute right 350 00:19:47,240 --> 00:19:51,440 Speaker 3: after the dead cealing. So you have plenty of room 351 00:19:51,480 --> 00:19:55,480 Speaker 3: to identify alternative solutions. And if you identify alternative solutions, 352 00:19:55,680 --> 00:19:59,040 Speaker 3: I guess simple negotiation theory, simple game theory would say 353 00:19:59,560 --> 00:20:05,280 Speaker 3: that more alternatives, more viable alternatives, strengthens your negotiating position, 354 00:20:05,359 --> 00:20:08,359 Speaker 3: strengthens the likelihood of a clean debt sealing increase. And 355 00:20:08,520 --> 00:20:10,920 Speaker 3: if you play down those alternatives, if you think those 356 00:20:10,960 --> 00:20:14,040 Speaker 3: alternatives are less viable, and you telegraph that to the world, 357 00:20:14,560 --> 00:20:17,160 Speaker 3: that'll actually reduce your bargaining position. 358 00:20:17,600 --> 00:20:21,400 Speaker 1: Tracy, I have a question for you. No, No, it's 359 00:20:21,400 --> 00:20:25,720 Speaker 1: a serious question. It's a serious question. Actually, does the 360 00:20:25,800 --> 00:20:30,720 Speaker 1: idea of issuing perpetual console bonds offend you less than 361 00:20:30,720 --> 00:20:31,119 Speaker 1: the coin? 362 00:20:31,320 --> 00:20:31,560 Speaker 3: Yes? 363 00:20:31,680 --> 00:20:33,879 Speaker 1: Okay, I kind of feeling this is like this is 364 00:20:34,000 --> 00:20:36,679 Speaker 1: me and Tracy. It's like coin consopts, Like both of 365 00:20:36,680 --> 00:20:39,280 Speaker 1: them are like these sort of accounting legal workarounds, and 366 00:20:39,320 --> 00:20:42,200 Speaker 1: they sort of like appeal and disappeal to different parts 367 00:20:42,200 --> 00:20:42,720 Speaker 1: of us. 368 00:20:43,080 --> 00:20:47,919 Speaker 2: I find comfort in using like the traditional language and 369 00:20:48,000 --> 00:20:52,880 Speaker 2: structure of the existing financial system in solving a looming problem, 370 00:20:53,080 --> 00:20:56,679 Speaker 2: rather than trying to do something completely out of the box. 371 00:20:56,760 --> 00:20:57,800 Speaker 2: Let's just put it that way. 372 00:20:58,200 --> 00:20:58,920 Speaker 1: That's a good uh. 373 00:20:59,000 --> 00:21:01,600 Speaker 2: But actually, could I since we're on the topic of 374 00:21:02,320 --> 00:21:07,320 Speaker 2: like more reasonable solutions versus large novelty coins, can I 375 00:21:07,359 --> 00:21:10,600 Speaker 2: ask about like another basic solution that I have seen? 376 00:21:11,080 --> 00:21:13,280 Speaker 2: You know, people talk about a little bit, But couldn't 377 00:21:13,400 --> 00:21:15,960 Speaker 2: couldn't you just have like a vote on the debt 378 00:21:16,000 --> 00:21:20,280 Speaker 2: ceiling and just like maybe create a situation where some 379 00:21:20,760 --> 00:21:25,080 Speaker 2: more moderate Republicans could switch sides and make it happen. 380 00:21:25,800 --> 00:21:28,119 Speaker 3: You can pass the debt ceiling increase. You could. The 381 00:21:28,240 --> 00:21:30,920 Speaker 3: challenge with doing this through Congress when it's center divide 382 00:21:30,920 --> 00:21:36,359 Speaker 3: government is the legislative procedure, where again they're certainly better 383 00:21:36,440 --> 00:21:41,360 Speaker 3: experts and more thoughtful people than myself. But a discharge 384 00:21:41,400 --> 00:21:44,520 Speaker 3: tradition in which you can actually get something through government, 385 00:21:44,680 --> 00:21:47,560 Speaker 3: even while the Speaker of the House very intently wants 386 00:21:47,640 --> 00:21:50,760 Speaker 3: to have the debt ceiling increase be attached to other 387 00:21:50,800 --> 00:21:55,200 Speaker 3: policy itself. That takes a long time. That takes a 388 00:21:55,240 --> 00:21:56,960 Speaker 3: long time, and it's not something that's very easy to 389 00:21:57,000 --> 00:21:59,440 Speaker 3: execute on. And I think these are things that get 390 00:21:59,440 --> 00:22:01,639 Speaker 3: to talk to about a lot in maybe sort of 391 00:22:02,359 --> 00:22:06,119 Speaker 3: more kind of wish casting of like, oh, there will 392 00:22:06,160 --> 00:22:07,760 Speaker 3: be a clean debt's the only increase because there'll be 393 00:22:07,760 --> 00:22:10,560 Speaker 3: a discharge petition that will undercut Kevin McCarthy. And these 394 00:22:10,600 --> 00:22:13,600 Speaker 3: things have always been kind of a hope's wishes, dreams 395 00:22:13,640 --> 00:22:15,680 Speaker 3: as opposed to the realities of how long it takes 396 00:22:15,680 --> 00:22:18,479 Speaker 3: to get some of those things through, and it may 397 00:22:18,520 --> 00:22:22,440 Speaker 3: even take longer than trying to identify alternative lawful solutions 398 00:22:22,560 --> 00:22:23,720 Speaker 3: on the part of Treasury. 399 00:22:24,280 --> 00:22:28,080 Speaker 4: Wow, these process take time. Legislative You know, I worked 400 00:22:28,080 --> 00:22:29,600 Speaker 4: in the Senate, so I don't have a good sense 401 00:22:29,600 --> 00:22:32,680 Speaker 4: of House procedures. But these things take a lot of time, 402 00:22:32,760 --> 00:22:35,600 Speaker 4: and there's a lot of maneuvering that can happen even 403 00:22:36,440 --> 00:22:39,160 Speaker 4: with the discharge petition, And so you know, you're you're 404 00:22:39,240 --> 00:22:42,399 Speaker 4: kind of in that place where if you had tried 405 00:22:42,400 --> 00:22:44,520 Speaker 4: some of that stuff a couple of months ago, maybe 406 00:22:44,520 --> 00:22:47,840 Speaker 4: the urgency wouldn't be there for the moderate Republicans that 407 00:22:48,040 --> 00:22:51,400 Speaker 4: Tracy may mentioned, And so you're always trying to balance 408 00:22:51,840 --> 00:22:53,720 Speaker 4: those issues. And I think it's it's really hard to 409 00:22:53,760 --> 00:22:55,080 Speaker 4: do this stuff legislatively. 410 00:22:56,359 --> 00:22:59,080 Speaker 2: So this is one of those instances where a technocratic 411 00:22:59,160 --> 00:23:02,359 Speaker 2: solution that would be i mean hopefully done fairly quickly, 412 00:23:02,359 --> 00:23:04,280 Speaker 2: it might be the more viable option. 413 00:23:05,680 --> 00:23:26,160 Speaker 6: Yes, yeah, yeah, So I want to actually talk about 414 00:23:26,200 --> 00:23:28,880 Speaker 6: the operational aspect of some of these workarounds. 415 00:23:28,880 --> 00:23:31,440 Speaker 1: So one where you know, the coin and theoretically could 416 00:23:31,480 --> 00:23:35,159 Speaker 1: be minted tomorrow and according to Philip Deal who he 417 00:23:35,240 --> 00:23:37,840 Speaker 1: had on the podcast, it'd be a few days. What 418 00:23:38,000 --> 00:23:42,960 Speaker 1: is you mentioned arna the coding, So it's like, let's 419 00:23:42,960 --> 00:23:46,040 Speaker 1: say Janet Yellen woke up Tomorrow's like, all right, you 420 00:23:46,040 --> 00:23:48,440 Speaker 1: know what, We're going to issue consoles. We're going to 421 00:23:48,520 --> 00:23:52,680 Speaker 1: issue these perpetual bonds because it'll allow us to keep 422 00:23:52,680 --> 00:23:55,160 Speaker 1: borrowing money without adding to the face value of the debt. 423 00:23:55,520 --> 00:23:59,960 Speaker 1: What do we know about the you talked about operational preparedness, 424 00:24:00,119 --> 00:24:02,440 Speaker 1: which the Treasury could have been working on six months ago. 425 00:24:02,800 --> 00:24:04,359 Speaker 1: What do we know about what it would take to 426 00:24:04,440 --> 00:24:09,080 Speaker 1: even like launch console auctions the way we'd have for 427 00:24:09,119 --> 00:24:11,720 Speaker 1: like thirty year and ten year and five year bonds, 428 00:24:11,760 --> 00:24:12,160 Speaker 1: et cetera. 429 00:24:13,640 --> 00:24:17,200 Speaker 4: Yeah, So there's there's a number of things that happen 430 00:24:17,640 --> 00:24:21,200 Speaker 4: when I should clarify this is not my area of expertise. 431 00:24:21,240 --> 00:24:23,480 Speaker 4: I'm kind of just going off with small other smart 432 00:24:23,480 --> 00:24:25,480 Speaker 4: folks have told me so apologies if I get something 433 00:24:25,560 --> 00:24:30,640 Speaker 4: slightly wrong. But basically what it is is when Treasury 434 00:24:30,680 --> 00:24:33,959 Speaker 4: issues and new security, they go through a number of 435 00:24:34,680 --> 00:24:38,880 Speaker 4: tests and a number of calculations, and they test kind 436 00:24:38,920 --> 00:24:41,880 Speaker 4: of how this is going to be priced by the market, 437 00:24:41,920 --> 00:24:44,919 Speaker 4: whether they're actually going to sell. So there's all of 438 00:24:44,960 --> 00:24:47,440 Speaker 4: that prep work first that has to go into it, 439 00:24:47,520 --> 00:24:52,720 Speaker 4: and then there's the coding challenge itself of they've never 440 00:24:52,840 --> 00:24:56,280 Speaker 4: priced a perpetual bond before, at least on their new 441 00:24:56,480 --> 00:24:58,120 Speaker 4: auction system, so I think the. 442 00:24:58,119 --> 00:24:59,960 Speaker 5: Highest they've gone is thirty years. 443 00:25:00,400 --> 00:25:03,159 Speaker 4: Maybe they've done fifty, but they've never really tried to 444 00:25:03,200 --> 00:25:07,600 Speaker 4: price a perpetual bond, and so there's time that once 445 00:25:07,600 --> 00:25:10,400 Speaker 4: you've kind of once you've put that into the coding 446 00:25:11,040 --> 00:25:14,800 Speaker 4: into the computer mechanism, you then also have to go 447 00:25:14,880 --> 00:25:18,720 Speaker 4: through all that analysis and Treasury just doesn't have I 448 00:25:18,720 --> 00:25:20,800 Speaker 4: think the muscle memory. There was a new security that 449 00:25:20,920 --> 00:25:24,440 Speaker 4: was issued sometime during the Obama administration and it took 450 00:25:24,440 --> 00:25:26,879 Speaker 4: about six seven months for it to get off the ground, 451 00:25:27,560 --> 00:25:29,000 Speaker 4: and I don't think. 452 00:25:28,840 --> 00:25:29,840 Speaker 5: You can, you know. 453 00:25:29,960 --> 00:25:33,679 Speaker 4: Unfortunately, I mean we saw this in a different context 454 00:25:34,520 --> 00:25:39,080 Speaker 4: during the COVID recovery, during the pandemic, when they passed 455 00:25:39,080 --> 00:25:42,200 Speaker 4: the Cares Act and had unemployment this great, these great 456 00:25:42,480 --> 00:25:47,440 Speaker 4: additions to unemployment, insurance and state agencies couldn't change their 457 00:25:47,600 --> 00:25:52,040 Speaker 4: Cobel programmed systems to actually give out money in time. 458 00:25:52,119 --> 00:25:54,399 Speaker 4: And so I think there's like, you know, Treasuries I 459 00:25:54,440 --> 00:25:58,120 Speaker 4: think probably better equipped and probably has better software systems, 460 00:25:58,160 --> 00:26:00,600 Speaker 4: but these things still take a lot of time. 461 00:26:01,160 --> 00:26:03,679 Speaker 3: If I could just give a quicker more recent example, obviously, 462 00:26:03,760 --> 00:26:08,000 Speaker 3: the Undersecretary reneution they launched the twenty year bond, right so, 463 00:26:08,160 --> 00:26:11,200 Speaker 3: and that took a long time to sort of plan out. Ideally, 464 00:26:11,240 --> 00:26:13,920 Speaker 3: this is going to be an emergency. And look, I 465 00:26:14,000 --> 00:26:16,600 Speaker 3: think arm is probably selling some of his knowledge a 466 00:26:16,640 --> 00:26:18,960 Speaker 3: little short in terms of we've talked to a few 467 00:26:18,960 --> 00:26:22,000 Speaker 3: people who've worked into Treasury and gave us some insight 468 00:26:22,040 --> 00:26:25,240 Speaker 3: into the time it takes to execute this. It's not 469 00:26:25,280 --> 00:26:27,840 Speaker 3: it would not be easy to do it super quickly, 470 00:26:28,000 --> 00:26:30,760 Speaker 3: but it certainly would be. It could still be done 471 00:26:30,800 --> 00:26:33,199 Speaker 3: if you give it enough time. The question really is, 472 00:26:33,359 --> 00:26:35,280 Speaker 3: is the treasure you've been thinking and working about on 473 00:26:35,320 --> 00:26:38,919 Speaker 3: this in the background. Is there something that's like they've 474 00:26:38,920 --> 00:26:42,359 Speaker 3: been trying to keep their cards closer to the vest. 475 00:26:43,080 --> 00:26:46,879 Speaker 3: They're trying to indicate that they're not looking at alternatives, 476 00:26:46,880 --> 00:26:49,040 Speaker 3: but they really are. I don't know why they would 477 00:26:49,480 --> 00:26:52,400 Speaker 3: trash alternatives while still working on them, but it's possible 478 00:26:52,440 --> 00:26:54,840 Speaker 3: they are, And if they are, that would be good 479 00:26:54,840 --> 00:26:57,720 Speaker 3: to know because that would obviously create the kind of 480 00:26:57,760 --> 00:27:00,159 Speaker 3: pathway to avoid default and avoid a lot of the 481 00:27:00,359 --> 00:27:02,560 Speaker 3: chaos that's tied to the debt ceiling itself. 482 00:27:02,720 --> 00:27:06,240 Speaker 4: There's no opportunity like a crisis, and I think there's 483 00:27:06,320 --> 00:27:10,040 Speaker 4: obviously this process that they go through with issuing these bonds. 484 00:27:10,440 --> 00:27:13,000 Speaker 4: But I hope that someone at Treasury is thinking, Okay, 485 00:27:13,200 --> 00:27:15,400 Speaker 4: let's say we can't do it through our existing process. 486 00:27:15,400 --> 00:27:17,840 Speaker 4: We can't do it like that twenty year issuance that 487 00:27:17,920 --> 00:27:19,160 Speaker 4: Secretary Mnuchin did. 488 00:27:19,440 --> 00:27:20,320 Speaker 5: Is there another way? 489 00:27:20,800 --> 00:27:24,320 Speaker 4: Is there some you know, we obviously we did bond 490 00:27:24,400 --> 00:27:28,080 Speaker 4: issuances and new bond issuances before all the software is created. 491 00:27:28,200 --> 00:27:29,720 Speaker 5: So can I hope that. 492 00:27:29,760 --> 00:27:32,280 Speaker 4: Someone there is going through and trying to find an 493 00:27:32,320 --> 00:27:35,760 Speaker 4: avenue to do this quickly if possible. But that also 494 00:27:35,800 --> 00:27:37,359 Speaker 4: doesn't take away from the fact that they should have 495 00:27:37,359 --> 00:27:41,080 Speaker 4: been doing the operational readiness exercises six months ago. 496 00:27:42,000 --> 00:27:45,720 Speaker 2: Is there any indication why they wouldn't have done that? Is, 497 00:27:45,960 --> 00:27:48,359 Speaker 2: do we just think they sort of dropped the ball 498 00:27:48,400 --> 00:27:50,920 Speaker 2: and thought that this issue would be resolved, even though 499 00:27:50,920 --> 00:27:53,240 Speaker 2: there's quite a lot of evidence out there that there 500 00:27:53,320 --> 00:27:56,520 Speaker 2: is a sort of more extremist element of the Republican 501 00:27:56,640 --> 00:27:59,679 Speaker 2: Party who is maybe willing more willing to take this 502 00:27:59,720 --> 00:28:00,440 Speaker 2: down to the wire. 503 00:28:01,720 --> 00:28:01,800 Speaker 5: No. 504 00:28:01,920 --> 00:28:05,080 Speaker 4: Look, I think I mean, I tend to give I 505 00:28:05,119 --> 00:28:07,040 Speaker 4: think it's good to give a lot of these people 506 00:28:07,040 --> 00:28:07,960 Speaker 4: the benefit of the doubt. 507 00:28:07,960 --> 00:28:09,120 Speaker 5: They're good faith actors. 508 00:28:09,200 --> 00:28:11,919 Speaker 4: I think that what they would probably tell you is 509 00:28:11,960 --> 00:28:16,440 Speaker 4: that if we take these steps, people are going to notice, 510 00:28:16,680 --> 00:28:20,280 Speaker 4: and then it's going to become oh, you're doing an 511 00:28:20,280 --> 00:28:22,960 Speaker 4: operational test for the coin, Biden is thinking about minting 512 00:28:22,960 --> 00:28:26,160 Speaker 4: the core, and it becomes a story, and I think 513 00:28:26,200 --> 00:28:29,439 Speaker 4: they view some risk in that. To me, that just 514 00:28:29,480 --> 00:28:31,960 Speaker 4: comes down to a different risk calculation. I think that 515 00:28:31,960 --> 00:28:35,560 Speaker 4: that would be a if there is risk to those 516 00:28:35,560 --> 00:28:38,080 Speaker 4: stories coming out, I think that's a risk worth taking. 517 00:28:38,720 --> 00:28:42,480 Speaker 4: And I think, if any if it also would strengthen 518 00:28:42,480 --> 00:28:46,160 Speaker 4: your hand in negotiation. In negotiations, knowing that you're taking 519 00:28:46,160 --> 00:28:48,520 Speaker 4: the steps to do this, and if Congress wants to 520 00:28:48,520 --> 00:28:50,960 Speaker 4: take away that authority, they can go ahead and do it. 521 00:28:51,560 --> 00:28:53,719 Speaker 4: But until then, we're going to make sure we have 522 00:28:54,480 --> 00:28:57,479 Speaker 4: the operational readiness to do what we need to do. 523 00:28:58,280 --> 00:29:00,800 Speaker 2: I would just like to say that Treasury has an 524 00:29:00,840 --> 00:29:03,800 Speaker 2: open invitation to come on this show and reveal that 525 00:29:03,800 --> 00:29:06,680 Speaker 2: they have in fact been working on either premium bonds 526 00:29:06,840 --> 00:29:08,719 Speaker 2: or the coin. Just throwing that out there. 527 00:29:08,760 --> 00:29:11,480 Speaker 1: That's the invite. Twenty four to seven. You want to 528 00:29:11,520 --> 00:29:13,720 Speaker 1: schedule something, get two and in the morning we'll wake 529 00:29:13,800 --> 00:29:16,440 Speaker 1: Kerman up and say, hey, we're talking to the Treasury 530 00:29:16,760 --> 00:29:19,760 Speaker 1: about consoles and the coin. We're recording in fifteen minutes, 531 00:29:19,840 --> 00:29:23,160 Speaker 1: let's do it. I want to talk about one more 532 00:29:23,240 --> 00:29:26,680 Speaker 1: option that we haven't talked about, and I think there's 533 00:29:26,720 --> 00:29:29,560 Speaker 1: two dimensions to it, which is the idea of we 534 00:29:29,680 --> 00:29:33,920 Speaker 1: hit the debt ceiling and then the Treasury theoretically prioritizes 535 00:29:34,040 --> 00:29:38,000 Speaker 1: interest payments and so it preserves the incoming revenue from 536 00:29:38,040 --> 00:29:41,920 Speaker 1: taxation so that it can meet its constitutional obligations to 537 00:29:42,000 --> 00:29:44,200 Speaker 1: honor the debt. And I feel like there's two dimensions 538 00:29:44,240 --> 00:29:48,080 Speaker 1: to this question. Maybe is this possible software wise? Do 539 00:29:48,160 --> 00:29:51,480 Speaker 1: we know if the Treasury has the software capabilities to 540 00:29:51,520 --> 00:29:55,680 Speaker 1: set aside certain payments as going ahead while other payments 541 00:29:55,680 --> 00:30:00,120 Speaker 1: don't go through. And then b is that legal in 542 00:30:00,120 --> 00:30:03,480 Speaker 1: the sense that can the executive branch just decide, Hey, 543 00:30:03,520 --> 00:30:05,200 Speaker 1: these are the payments we're not going to make, even 544 00:30:05,200 --> 00:30:07,800 Speaker 1: though the Congress is authorized X and Y, welfare and 545 00:30:07,880 --> 00:30:10,640 Speaker 1: defense and all this stuff, We're just gonna not make them. 546 00:30:10,640 --> 00:30:13,400 Speaker 1: Can we talk about both the software and legal prioritization. 547 00:30:13,920 --> 00:30:16,720 Speaker 3: I'll leave the legal aspect of this question to aren't. 548 00:30:16,800 --> 00:30:19,000 Speaker 3: But at least terms of feasibility, there was a lot 549 00:30:19,000 --> 00:30:23,479 Speaker 3: of reporting about Secretary Geithner taking the steps to make 550 00:30:23,520 --> 00:30:27,280 Speaker 3: sure that prioritization became a possibility of feasibility. So I 551 00:30:27,280 --> 00:30:30,040 Speaker 3: think at least there was reporting that effect either. 552 00:30:29,920 --> 00:30:32,880 Speaker 1: From a software perspective, at least it could theoretically be. 553 00:30:32,880 --> 00:30:36,000 Speaker 3: Done that this kind of prioritization would become more feasible. 554 00:30:36,280 --> 00:30:40,880 Speaker 3: I would be curious at the standpoint of the law, 555 00:30:40,960 --> 00:30:42,440 Speaker 3: what artifs take is here? 556 00:30:42,760 --> 00:30:45,880 Speaker 5: Yeah, so I do not believe that would be lawful. 557 00:30:46,520 --> 00:30:50,280 Speaker 4: This is basically I think there's the Fourteenth Amendment constitutional 558 00:30:50,360 --> 00:30:53,280 Speaker 4: challenges that you run into that we've already talked about. 559 00:30:53,320 --> 00:30:55,240 Speaker 5: But then there's this separation. 560 00:30:54,840 --> 00:30:58,440 Speaker 4: Of powers issue that you would run into with prioritization, 561 00:30:59,320 --> 00:31:01,360 Speaker 4: and i'll I can go a bit more into detail 562 00:31:01,360 --> 00:31:06,080 Speaker 4: on that, which is, the executive branch does not have 563 00:31:06,160 --> 00:31:11,640 Speaker 4: the authority to prioritize mandatory payments. So there's different you know, 564 00:31:11,680 --> 00:31:14,560 Speaker 4: the government, the federal government spends trillions of dollars on 565 00:31:14,720 --> 00:31:17,320 Speaker 4: a number of different things. Some of that spending is 566 00:31:17,320 --> 00:31:21,600 Speaker 4: discretionary and some of it is mandatory. And mandatory spending 567 00:31:21,680 --> 00:31:27,400 Speaker 4: includes things like Social Security, Medicare, certain veterans programs, certain 568 00:31:27,440 --> 00:31:29,320 Speaker 4: student loan programs. 569 00:31:29,080 --> 00:31:30,719 Speaker 5: And a couple of other small things. 570 00:31:30,960 --> 00:31:35,560 Speaker 4: And regardless of who is in power, what the president's 571 00:31:35,600 --> 00:31:40,160 Speaker 4: ideological persuasions are, even if we're in government shutdown, those 572 00:31:40,200 --> 00:31:43,720 Speaker 4: payments continue to be made because their Congress has simply 573 00:31:43,720 --> 00:31:47,600 Speaker 4: given no discretion to the president to do so. Congress, 574 00:31:47,720 --> 00:31:53,640 Speaker 4: in the Constitution, is afforded the authority to control the strings. 575 00:31:53,720 --> 00:31:57,040 Speaker 4: And so what you would end up in here is 576 00:31:57,160 --> 00:32:00,480 Speaker 4: you would end up in the situation where let's say 577 00:32:01,560 --> 00:32:05,760 Speaker 4: the President decides we're going to stop making certain student 578 00:32:05,840 --> 00:32:11,720 Speaker 4: loan payments and not to keep making interest payments. That 579 00:32:12,160 --> 00:32:14,520 Speaker 4: act in of itself the first time that that payment 580 00:32:14,600 --> 00:32:16,280 Speaker 4: is not made or the first time that a Social 581 00:32:16,280 --> 00:32:21,680 Speaker 4: Security payment is not made for a political decision is 582 00:32:21,720 --> 00:32:26,240 Speaker 4: a constitutional crisis. Congress is not allowed to delegate that 583 00:32:26,320 --> 00:32:31,080 Speaker 4: authority to the president, and they where they do delegate 584 00:32:31,320 --> 00:32:35,720 Speaker 4: spending discretion, they have to provide what's called an intelligible 585 00:32:35,760 --> 00:32:39,080 Speaker 4: principle to guide the president's decision making, and they haven't 586 00:32:39,120 --> 00:32:43,320 Speaker 4: done that here. The debt limit Statute has nothing to 587 00:32:43,400 --> 00:32:46,840 Speaker 4: say about if we run into the limit, what. 588 00:32:46,720 --> 00:32:49,360 Speaker 5: Payments should be prioritized or what shouldn't. 589 00:32:49,480 --> 00:32:53,320 Speaker 4: And if Congress were to do that, maybe this would 590 00:32:53,320 --> 00:32:57,360 Speaker 4: be a constitutional law. But until they do that, they 591 00:32:57,360 --> 00:33:03,120 Speaker 4: can't delegate that to the president. Congress can't advocate that authority. 592 00:33:03,240 --> 00:33:04,720 Speaker 3: If I can just like add on to that part, 593 00:33:04,760 --> 00:33:07,480 Speaker 3: it's let's think about it. If any president, whether it's 594 00:33:07,520 --> 00:33:11,000 Speaker 3: Biden or Trump or Bush or Obama, that they have 595 00:33:11,080 --> 00:33:14,680 Speaker 3: to prioritize payments, some will have different ecological persuasions about 596 00:33:14,720 --> 00:33:16,960 Speaker 3: what's important to keep spending on and what's important what's 597 00:33:16,960 --> 00:33:19,080 Speaker 3: worth cutting. Let's say there's a president that wanted to 598 00:33:19,080 --> 00:33:22,920 Speaker 3: cut the entire Department of Defense until uh, the deat 599 00:33:22,920 --> 00:33:25,000 Speaker 3: ceiling was lifted. Like that's a lot of discretion. 600 00:33:25,320 --> 00:33:27,960 Speaker 1: Someone listeners somewhere. 601 00:33:28,720 --> 00:33:30,960 Speaker 3: I'm sure I go with the program that would scare 602 00:33:31,000 --> 00:33:37,400 Speaker 3: every single listener here, And that discretion scares this almost 603 00:33:37,440 --> 00:33:40,640 Speaker 3: surely uh scare of the Supreme Court. It would scare 604 00:33:40,680 --> 00:33:42,400 Speaker 3: a lot of legal scholars with a lot of different 605 00:33:42,440 --> 00:33:46,160 Speaker 3: persuasions about the notion that there's so much unchecked power 606 00:33:46,160 --> 00:33:50,120 Speaker 3: and discretion that would arise from the situation. And I 607 00:33:50,120 --> 00:33:53,680 Speaker 3: think that's like actually something worth reckoning with. When people say, oh, 608 00:33:53,720 --> 00:33:57,239 Speaker 3: we'll just like prioritize payments and keep like making sure 609 00:33:57,280 --> 00:33:59,280 Speaker 3: we pay bondholders, like this is not actually a very 610 00:33:59,800 --> 00:34:03,320 Speaker 3: lead goal solution either, And. 611 00:34:03,360 --> 00:34:05,000 Speaker 5: It would set a really poor precedent. 612 00:34:05,840 --> 00:34:09,440 Speaker 4: Right if if the dead ceiling allows the president to 613 00:34:10,480 --> 00:34:14,719 Speaker 4: limit certain types of mandatory spending, what other situations do. 614 00:34:15,360 --> 00:34:18,040 Speaker 4: Where is that extraordinary power coming from? And could a 615 00:34:18,120 --> 00:34:21,040 Speaker 4: future president abuse it? I think that's like a real 616 00:34:21,160 --> 00:34:24,440 Speaker 4: real constitutional problem that not enough folks are wrestling with. 617 00:34:24,719 --> 00:34:24,879 Speaker 5: Right. 618 00:34:24,920 --> 00:34:27,680 Speaker 1: I guess the situation that arises is what if a 619 00:34:27,719 --> 00:34:31,680 Speaker 1: president one could imagine, let's just say a future Republican 620 00:34:31,760 --> 00:34:36,239 Speaker 1: president and Democratic House, the House votes to raise the 621 00:34:36,239 --> 00:34:40,200 Speaker 1: dead ceiling, the president doesn't agree to the dead ceiling hike, 622 00:34:40,239 --> 00:34:41,279 Speaker 1: and just to say do you know what I'm going 623 00:34:41,360 --> 00:34:43,799 Speaker 1: to prioritize instead? Because the dead ceiling has been hit. 624 00:34:44,080 --> 00:34:47,440 Speaker 1: So I guess there's all kinds of permutations there where 625 00:34:47,480 --> 00:34:49,759 Speaker 1: if you sort of like give the executive branch that 626 00:34:49,840 --> 00:34:53,080 Speaker 1: discretion to prioritize, who knows where you go anyway, Tracy 627 00:34:53,120 --> 00:34:54,759 Speaker 1: say no, I was going to say. 628 00:34:55,040 --> 00:34:57,560 Speaker 2: That makes a lot of sense to me, and has 629 00:34:57,640 --> 00:35:00,840 Speaker 2: been also, ironically one of my criticism of the trillion 630 00:35:00,880 --> 00:35:03,360 Speaker 2: dollar coin, which is like, Okay, maybe you agree with 631 00:35:03,480 --> 00:35:06,239 Speaker 2: using it in this one instance, but what happens in 632 00:35:06,280 --> 00:35:08,920 Speaker 2: the next presidency. Maybe it's someone you don't agree with 633 00:35:09,000 --> 00:35:12,440 Speaker 2: and they decide to use it to fund something outrageous. 634 00:35:12,480 --> 00:35:12,840 Speaker 3: I don't know. 635 00:35:12,920 --> 00:35:17,000 Speaker 2: But anyway, getting back to the current situation, what's your 636 00:35:17,080 --> 00:35:19,600 Speaker 2: base case for how this plays out? I know I 637 00:35:19,680 --> 00:35:21,640 Speaker 2: joked in the intro that you know, we've kind of 638 00:35:21,640 --> 00:35:24,120 Speaker 2: been here before, we've seen it all before, but there 639 00:35:24,120 --> 00:35:26,879 Speaker 2: are some elements that are different this time. So where 640 00:35:26,880 --> 00:35:27,959 Speaker 2: do you think we go from here? 641 00:35:29,400 --> 00:35:33,200 Speaker 3: It seems like the direction of travel is towards what 642 00:35:33,360 --> 00:35:36,279 Speaker 3: Republicans are seeking and what they can get away with 643 00:35:36,360 --> 00:35:39,319 Speaker 3: from at least some faction of centrist Democrats I would 644 00:35:39,360 --> 00:35:42,080 Speaker 3: call it. So It probably will be a some kind 645 00:35:42,120 --> 00:35:44,560 Speaker 3: of bipartisan increase in the debt ceiling and some kind 646 00:35:44,600 --> 00:35:48,560 Speaker 3: of government spending deal that will involve spending caps and 647 00:35:48,640 --> 00:35:50,480 Speaker 3: cuts of a few different kinds. There will be some 648 00:35:50,520 --> 00:35:53,520 Speaker 3: debate about how much composition that should shift towards non 649 00:35:53,560 --> 00:35:56,040 Speaker 3: defense over defense. I think it's going to be an 650 00:35:56,040 --> 00:35:58,479 Speaker 3: open question about how much work requirements sort of see 651 00:35:58,560 --> 00:36:00,879 Speaker 3: their find their way in to this type of deal. 652 00:36:01,160 --> 00:36:03,479 Speaker 3: But that's something that's been talked about. The one place 653 00:36:03,520 --> 00:36:08,920 Speaker 3: of bipartisan interest that may actually serve some administrator in 654 00:36:08,960 --> 00:36:11,600 Speaker 3: some of the interests of the administration or on permitting reform, 655 00:36:12,200 --> 00:36:14,520 Speaker 3: but that actually will take time to kind of craft 656 00:36:15,000 --> 00:36:17,879 Speaker 3: well and craft correctly, and I'm not sure that can 657 00:36:17,920 --> 00:36:20,359 Speaker 3: be done so quickly on a dime, even though there 658 00:36:20,400 --> 00:36:23,640 Speaker 3: is actually a lot of mutual interest across party lines there. 659 00:36:24,040 --> 00:36:26,160 Speaker 3: That's something that's been talked about. I wouldn't want to 660 00:36:26,480 --> 00:36:28,120 Speaker 3: hype that up too much in terms of this deal, 661 00:36:28,160 --> 00:36:30,560 Speaker 3: even though it seems like it's a point of mutual 662 00:36:30,920 --> 00:36:34,080 Speaker 3: agreement that could possibly come about. But those are the 663 00:36:34,120 --> 00:36:36,840 Speaker 3: kinds of things that we're hearing, and it does seem 664 00:36:36,880 --> 00:36:39,200 Speaker 3: to me that for all to talk about clean debt 665 00:36:39,160 --> 00:36:42,000 Speaker 3: ceiling increase, We're going to get a dirty debt ceiling increase, 666 00:36:42,360 --> 00:36:47,760 Speaker 3: and the incentives to do more ransom taking hostage taking 667 00:36:48,880 --> 00:36:51,959 Speaker 3: are going to increase. This worked, That's what it seems 668 00:36:52,000 --> 00:36:52,279 Speaker 3: like to me. 669 00:36:52,640 --> 00:36:56,319 Speaker 4: One thing I am not certain about a lot of 670 00:36:56,360 --> 00:36:58,600 Speaker 4: things in this environment. One thing I am certain about 671 00:36:58,760 --> 00:37:01,920 Speaker 4: is that whatever happens, it's not going to change the 672 00:37:02,040 --> 00:37:06,040 Speaker 4: long term budgetary trajectory of the federal government. And I 673 00:37:06,040 --> 00:37:09,560 Speaker 4: think that's something really worth emphasizing because the debt ceiling. 674 00:37:09,719 --> 00:37:11,120 Speaker 4: You know, a lot of people say the coin is 675 00:37:11,120 --> 00:37:13,400 Speaker 4: a gimmick, or consoles are a gimmick. 676 00:37:13,760 --> 00:37:15,320 Speaker 5: The debt ceiling is the real gimmick. 677 00:37:15,840 --> 00:37:21,440 Speaker 4: It allows people to feign seriousness about the debt picture 678 00:37:21,719 --> 00:37:25,960 Speaker 4: of the United States without actually doing anything to make 679 00:37:25,960 --> 00:37:26,520 Speaker 4: a difference. 680 00:37:26,840 --> 00:37:30,520 Speaker 5: Work requirements on welfare programs are not going to change 681 00:37:30,520 --> 00:37:34,279 Speaker 5: the budget picture. This is really something that is not 682 00:37:34,520 --> 00:37:35,399 Speaker 5: a serious thing. 683 00:37:35,680 --> 00:37:39,160 Speaker 4: No other country has it, and it won't impact the 684 00:37:39,239 --> 00:37:40,200 Speaker 4: debt picture at all. 685 00:37:40,360 --> 00:37:42,400 Speaker 5: And I think if you believe I'm. 686 00:37:42,280 --> 00:37:43,960 Speaker 4: Not one of the people who believes we're on an 687 00:37:44,040 --> 00:37:49,359 Speaker 4: unsustainable debt path, but if you believe that, then what's 688 00:37:49,440 --> 00:37:51,720 Speaker 4: going to come out of this is probably not something 689 00:37:51,719 --> 00:37:54,200 Speaker 4: that is actually going to seriously address your concerns. 690 00:37:54,440 --> 00:37:57,120 Speaker 1: Arnabn Sconda, thank you so much for coming on. 691 00:37:57,040 --> 00:37:59,120 Speaker 5: Oddlins, Thanks for having me, Thanks for having me. 692 00:38:15,040 --> 00:38:18,280 Speaker 1: Tracy, I thought that was I liked your line about 693 00:38:18,520 --> 00:38:22,319 Speaker 1: the Constitution. Sorry, the fourteenth Amendment is more like, rather 694 00:38:22,360 --> 00:38:25,640 Speaker 1: than a tool, is a frame of mind like the Obligator. 695 00:38:25,680 --> 00:38:27,120 Speaker 1: The frame of mind to that would. 696 00:38:26,960 --> 00:38:28,800 Speaker 2: Make a good T shirt. Don't you think the fourteenth 697 00:38:28,840 --> 00:38:31,800 Speaker 2: Amendment is a frame of mind? 698 00:38:32,040 --> 00:38:35,200 Speaker 1: Like like there's like teristy T shirts like the Bahamas. 699 00:38:35,239 --> 00:38:37,200 Speaker 1: It's a frame of mind. I love that. 700 00:38:37,600 --> 00:38:39,719 Speaker 2: I'm gonna I'm gonna make it. Yeah, No, but I 701 00:38:40,040 --> 00:38:43,200 Speaker 2: actually really agree. Well, two things stood out for me there. 702 00:38:43,239 --> 00:38:47,759 Speaker 2: So One the point about like you would expect the 703 00:38:47,800 --> 00:38:51,160 Speaker 2: business base of the Republican Party to maybe make more 704 00:38:51,280 --> 00:38:55,040 Speaker 2: noise about this issue and force their hand at some point. 705 00:38:55,080 --> 00:38:57,520 Speaker 2: That doesn't seem to have happened this time around. That's 706 00:38:57,600 --> 00:38:59,959 Speaker 2: kind of interesting. Where is everyone? Why is in everyone 707 00:39:00,040 --> 00:39:03,880 Speaker 2: on issuing you know, big warnings about this. I know 708 00:39:03,920 --> 00:39:06,959 Speaker 2: some people are, but there could be more. Maybe we're 709 00:39:07,000 --> 00:39:09,440 Speaker 2: just so used to it at this point it's hard 710 00:39:09,520 --> 00:39:12,480 Speaker 2: to get worked up about it. And then secondly, Arnub's 711 00:39:12,520 --> 00:39:16,799 Speaker 2: last point about the debt ceiling kind of has never 712 00:39:16,920 --> 00:39:19,920 Speaker 2: mattered that much, Like it just gets raised and raised 713 00:39:19,960 --> 00:39:23,600 Speaker 2: and raised, and the public debt continues building and not 714 00:39:23,719 --> 00:39:26,839 Speaker 2: to go full on MMT, but you know that can 715 00:39:26,880 --> 00:39:30,320 Speaker 2: become a problem at certain points with inflation, but not always. 716 00:39:31,440 --> 00:39:34,799 Speaker 2: And so I would my personal preference would be for 717 00:39:34,880 --> 00:39:38,400 Speaker 2: the debt ceiling to remain as meaningless as it has 718 00:39:38,480 --> 00:39:40,759 Speaker 2: throughout all of history and for us to not even 719 00:39:40,800 --> 00:39:43,640 Speaker 2: be recording this episode as interesting as it has been. 720 00:39:44,680 --> 00:39:46,840 Speaker 1: Uh, do you regret during the episode or do you 721 00:39:46,880 --> 00:39:48,160 Speaker 1: just want to do you want to live in a 722 00:39:48,200 --> 00:39:49,319 Speaker 1: future in which we never have. 723 00:39:49,280 --> 00:39:49,719 Speaker 5: To do it again. 724 00:39:49,880 --> 00:39:52,160 Speaker 2: I want to live in a world where we don't 725 00:39:52,280 --> 00:39:55,279 Speaker 2: have to talk about this at all, because you know, 726 00:39:55,560 --> 00:39:58,920 Speaker 2: it happens automatically. You know, maybe well we. 727 00:39:58,960 --> 00:40:02,120 Speaker 1: Did it, did you know? For years? So this was 728 00:40:02,280 --> 00:40:05,080 Speaker 1: so I think like at one point and we you know, 729 00:40:05,080 --> 00:40:06,920 Speaker 1: there's a lot of history. I think like throughout much 730 00:40:06,920 --> 00:40:09,839 Speaker 1: of the eighties, Congress had a rule which is when 731 00:40:09,880 --> 00:40:11,839 Speaker 1: they approved a new budget, I think it was called 732 00:40:12,200 --> 00:40:14,480 Speaker 1: the gap heart rule, which is when they approved a 733 00:40:14,480 --> 00:40:17,719 Speaker 1: new budget, they just increased the dead ceiling automatically, which 734 00:40:17,760 --> 00:40:19,360 Speaker 1: is what obviously what they should do. And then I 735 00:40:19,360 --> 00:40:22,360 Speaker 1: think nude Ingridge ended that. But it is really silly 736 00:40:22,400 --> 00:40:24,360 Speaker 1: that you know we're not going to That's the thing like, 737 00:40:24,440 --> 00:40:27,960 Speaker 1: because I think it was Tisconda's last point, because there 738 00:40:28,040 --> 00:40:31,280 Speaker 1: is most likely going to be a quote dirty increase. 739 00:40:31,800 --> 00:40:35,720 Speaker 1: The message to future congresses is this is your chance 740 00:40:35,800 --> 00:40:38,880 Speaker 1: to extract the concession right, and so we're going to 741 00:40:38,920 --> 00:40:40,680 Speaker 1: have to do more in twenty twenty five. 742 00:40:40,840 --> 00:40:44,080 Speaker 2: Every time this happens, the less attention is going to 743 00:40:44,120 --> 00:40:45,920 Speaker 2: be paid to it, because it's sort of like a 744 00:40:45,960 --> 00:40:48,360 Speaker 2: Boy who Cried Wolf kind of thing where everyone just 745 00:40:48,360 --> 00:40:49,560 Speaker 2: becomes very a nerd to it. 746 00:40:49,600 --> 00:40:51,640 Speaker 1: And then what happened with the boy who cried Wolf? 747 00:40:52,120 --> 00:40:54,640 Speaker 1: I can't remember, No, I think it was, and then 748 00:40:54,680 --> 00:40:57,279 Speaker 1: eventually something bad happened. I think, yeah, I just think 749 00:40:57,320 --> 00:40:59,000 Speaker 1: that's why we tell That's why we tell our kids 750 00:40:59,040 --> 00:40:59,440 Speaker 1: this story. 751 00:40:59,560 --> 00:41:01,560 Speaker 2: I just want to clarify though I do not regret 752 00:41:01,880 --> 00:41:03,560 Speaker 2: recording this episode. 753 00:41:03,640 --> 00:41:04,040 Speaker 5: I do. 754 00:41:04,239 --> 00:41:07,960 Speaker 2: I really resent having to look up section four of 755 00:41:08,000 --> 00:41:11,319 Speaker 2: the fourteenth Amendment and learn about it on what is, 756 00:41:11,360 --> 00:41:14,440 Speaker 2: you know, ostensibly a finance and economics and markets podcast. 757 00:41:14,600 --> 00:41:16,799 Speaker 1: You know what I thought is really interesting too. People 758 00:41:16,960 --> 00:41:19,440 Speaker 1: say like, oh, just invoke the fourteenth Amendment. And I 759 00:41:19,520 --> 00:41:23,480 Speaker 1: really appreciated arno argument about why that really is inherently 760 00:41:23,520 --> 00:41:25,799 Speaker 1: problematic that no matter who it is, no matter what 761 00:41:25,840 --> 00:41:28,960 Speaker 1: the president, what you're basically saying is, let's create a 762 00:41:29,000 --> 00:41:31,880 Speaker 1: condition in which the president can start picking and choosing 763 00:41:32,400 --> 00:41:35,360 Speaker 1: which appropriations to make. So you might have one president 764 00:41:35,440 --> 00:41:38,080 Speaker 1: who is like a big pacifist piece, and they say, Okay, 765 00:41:38,520 --> 00:41:40,759 Speaker 1: the Defense Department doesn't get any money, and then another 766 00:41:40,800 --> 00:41:43,600 Speaker 1: one say okay, the EPA and Social Security and Medicaid 767 00:41:43,680 --> 00:41:46,760 Speaker 1: recipients don't get any money. If you think it through 768 00:41:46,880 --> 00:41:49,799 Speaker 1: what prioritization entails, it is pretty problematic. 769 00:41:49,960 --> 00:41:53,120 Speaker 2: I thought that was a really interesting and important point 770 00:41:53,160 --> 00:41:55,800 Speaker 2: because you do see a lot of people talking about, oh, 771 00:41:55,840 --> 00:41:57,880 Speaker 2: this might not be such a big tale because they 772 00:41:57,880 --> 00:42:01,120 Speaker 2: can just prioritize payments. But actually that opens up a 773 00:42:01,120 --> 00:42:04,120 Speaker 2: whole other count of wars and a potential, i guess, 774 00:42:04,120 --> 00:42:09,320 Speaker 2: overturning of political and social norms. So interesting stuff all round. 775 00:42:09,440 --> 00:42:10,240 Speaker 1: We'll see what happens. 776 00:42:10,280 --> 00:42:11,000 Speaker 2: Shall we leave it there? 777 00:42:11,120 --> 00:42:11,839 Speaker 1: Let's leave it there. 778 00:42:12,120 --> 00:42:14,960 Speaker 2: This has been another episode of the All Thoughts podcast. 779 00:42:15,040 --> 00:42:17,680 Speaker 2: I'm Tracy Alloway. You can follow me on Twitter at 780 00:42:17,680 --> 00:42:18,440 Speaker 2: Tracy alloway. 781 00:42:18,520 --> 00:42:21,120 Speaker 1: Oh I meant to say, cobol came up again. Oh yeah, 782 00:42:21,200 --> 00:42:22,600 Speaker 1: it's always, It's always coming back. 783 00:42:22,920 --> 00:42:23,920 Speaker 2: You can't escape Coball. 784 00:42:24,400 --> 00:42:27,000 Speaker 1: I'm Jill wisanth All. You can follow me on Twitter 785 00:42:27,120 --> 00:42:31,200 Speaker 1: at The Stalwart, follow Scanda at Irving Swisher, and follow 786 00:42:31,320 --> 00:42:34,960 Speaker 1: Arnab at Arnab Data three two one. Follow our producer 787 00:42:35,040 --> 00:42:39,600 Speaker 1: Carman Rodriguez at Carmen Arman and dash Old Bennett at Dashbot. 788 00:42:40,200 --> 00:42:44,120 Speaker 1: Follow all of the Bloomberg podcasts under the handle at podcasts, 789 00:42:44,200 --> 00:42:46,560 Speaker 1: and for more odd Lots content, go to Bloomberg dot 790 00:42:46,600 --> 00:42:49,759 Speaker 1: com slash odd Lots, where we post transcripts. We have 791 00:42:49,800 --> 00:42:52,360 Speaker 1: a blog and a newsletter that comes out every Friday. 792 00:42:52,520 --> 00:42:56,760 Speaker 1: And check out our discord discord dot gg slash odd logs, 793 00:42:57,040 --> 00:42:59,480 Speaker 1: where listeners are talking about all these topics. Twenty four 794 00:42:59,480 --> 00:43:02,040 Speaker 1: seven thirty been tons of debt ceiling talk. So if 795 00:43:02,040 --> 00:43:03,640 Speaker 1: you want to wake up at two in the morning 796 00:43:03,680 --> 00:43:07,120 Speaker 1: and talk debt ceiling, there's almost certainly in there someone 797 00:43:07,160 --> 00:43:10,120 Speaker 1: who will talk about the intricacies of the fourteenth Amendment 798 00:43:10,480 --> 00:43:13,120 Speaker 1: and Section three one two one K and the coin 799 00:43:13,160 --> 00:43:14,799 Speaker 1: and all there. Go there and check it out. It's 800 00:43:14,840 --> 00:43:17,160 Speaker 1: really fun. I hang out in there a lot thanks 801 00:43:17,160 --> 00:43:38,600 Speaker 1: for listening,