WEBVTT - On the Debt Ceiling, the White House Is Doing What It Said It Wouldn't Do 0:00:11.280 --> 0:00:15.560 Hello, and welcome to another episode of The Odd Lots Podcast. 0:00:15.600 --> 0:00:17.320 I'm Joe Wisenthal. 0:00:16.880 --> 0:00:17.959 And I'm Tracy Alloway. 0:00:18.360 --> 0:00:22.000 Uh, Tracy, stupidest law in the world. The debt ceiling. 0:00:22.000 --> 0:00:22.600 We're still here. 0:00:22.800 --> 0:00:24.880 I was gonna say, you'll have to narrow that one down, 0:00:24.920 --> 0:00:26.720 but I know exactly what you're talking about. Yeah, the 0:00:26.720 --> 0:00:30.720 debt ceiling. I am really struggling with this one. I'm 0:00:30.760 --> 0:00:32.800 struggling to get into it because I feel like we've 0:00:32.840 --> 0:00:36.760 been here before and we kind of know how it's 0:00:36.800 --> 0:00:40.120 going to play out. But of course the wild card 0:00:40.159 --> 0:00:44.400 this time around is just I guess the lengths to 0:00:44.520 --> 0:00:48.400 which a certain portion of a certain party is willing 0:00:48.440 --> 0:00:50.280 to go and using this as political leverage. 0:00:50.360 --> 0:00:54.200 Yeah, well, you know, I think what you said sort 0:00:54.240 --> 0:00:57.320 of captures the spirit perfectly. We know how this plays out, 0:00:57.880 --> 0:01:00.840 and it probably will play out as you have in 0:01:00.880 --> 0:01:04.080 your head, except that the potential in the scenario where 0:01:04.080 --> 0:01:07.880 it doesn't play out like that is very bad. People 0:01:07.920 --> 0:01:11.040 think yes, and so you have this situation where like, oh, everything, 0:01:11.160 --> 0:01:13.399 you know, we all know how it works out. It's 0:01:13.400 --> 0:01:17.360 all theater. They resolve it, and that's probably true, and 0:01:17.480 --> 0:01:20.680 yet the possibility that somehow it doesn't get worked out, 0:01:21.040 --> 0:01:24.320 it would be unprecedented and potentially very calamitous. 0:01:24.400 --> 0:01:27.280 Well, the other thing that's happened this time around, and 0:01:27.360 --> 0:01:30.480 again I am sort of struggling to get excited about 0:01:30.480 --> 0:01:32.959 this particular debt ceiling episode. But the other thing that's 0:01:33.000 --> 0:01:36.280 happened is that the White House started out this whole 0:01:36.280 --> 0:01:39.720 thing saying that it wasn't going to negotiate on the 0:01:39.720 --> 0:01:42.560 debt ceiling, and yet here we are, we're recording this 0:01:42.640 --> 0:01:46.360 on May twenty third. It seems like they're negotiating. 0:01:46.480 --> 0:01:49.559 They're absolutely negotiating. And it made sense for the White 0:01:49.560 --> 0:01:51.320 House to say that. And the reason I say that 0:01:51.440 --> 0:01:56.080 is because Biden was there in twenty eleven when Obama 0:01:56.440 --> 0:02:00.240 negotiated the dead ceiling deal with the House Republicans and 0:02:00.400 --> 0:02:03.840 sort of saw first hand how that sort of derailed 0:02:03.840 --> 0:02:06.640 Obama's presidency, and Biden had front or seats to that, 0:02:07.040 --> 0:02:09.440 and so you figure, like, from Biden's perspective, it's like, well, 0:02:09.440 --> 0:02:11.080 I'm not going to go down that road again. I 0:02:11.160 --> 0:02:14.880 saw how this derailed the White House the last time 0:02:15.400 --> 0:02:18.280 I was in the White House, and yet here we 0:02:18.320 --> 0:02:21.280 are and they I would say, at a minimum, the 0:02:21.320 --> 0:02:24.640 White House has failed to a stick by that and 0:02:24.680 --> 0:02:27.560 failed to sort of avoid the same path that Obama 0:02:27.639 --> 0:02:28.040 went down. 0:02:28.280 --> 0:02:31.240 What if saying you're not going to negotiate was in 0:02:31.280 --> 0:02:33.200 itself a negotiation tactic. 0:02:33.360 --> 0:02:36.160 It may have been. It may have been, but it 0:02:36.200 --> 0:02:39.080 seems to have failed. And so right, like that's like 0:02:39.240 --> 0:02:40.840 that's sort of the thing. It's like, well, that was, no, 0:02:41.000 --> 0:02:41.640 here we are. 0:02:42.040 --> 0:02:45.120 I don't think the intent was that in late May 0:02:45.200 --> 0:02:47.280 of this year we would be talking about the President 0:02:47.360 --> 0:02:50.520 potentially invoking the fourteenth Amendment to deal with this issue. 0:02:50.560 --> 0:02:53.720 That couldn't have been the game plan. And can I 0:02:53.760 --> 0:02:58.160 just say one more thing about this episode. I really 0:02:58.240 --> 0:03:03.480 resent having to turn this into a constitutional law podcast, 0:03:03.840 --> 0:03:07.359 Like I never wanted that for my career. And yet 0:03:07.400 --> 0:03:08.120 here we are. 0:03:08.280 --> 0:03:10.960 And yet here we are exactly right, and you know, 0:03:11.120 --> 0:03:14.480 again you sort of said it like we the problem. 0:03:14.680 --> 0:03:16.680 You said, you know, the president, the White House might 0:03:16.720 --> 0:03:19.520 have to invoke the fourteenth Amendment or might except that, 0:03:20.520 --> 0:03:22.400 except that the White House has already said that's not 0:03:22.440 --> 0:03:24.400 a great option. It doesn't really want to do that option. 0:03:24.680 --> 0:03:26.920 And so if there are these various off ramps, like 0:03:26.919 --> 0:03:29.440 if there are these various alternatives to just sort of 0:03:29.600 --> 0:03:33.320 raising the dead ceiling via Congress, like it's been done 0:03:33.360 --> 0:03:36.120 dozens of times in the past. The White House has 0:03:36.160 --> 0:03:38.000 like trashed every one of those operations. 0:03:38.200 --> 0:03:41.920 This is the process with talking specifically about the off 0:03:42.040 --> 0:03:45.080 ramps is you kind of tell everyone what your least 0:03:45.160 --> 0:03:48.120 preferred option is, and all of them are bad options, 0:03:48.200 --> 0:03:50.200 it seems like for the White House. And so there's 0:03:50.240 --> 0:03:52.800 no like they have to really pointed to this is 0:03:52.840 --> 0:03:55.040 the thing that would be a massive win for us. 0:03:55.000 --> 0:03:56.600 Right, they just point to the things that would be 0:03:56.600 --> 0:04:01.000 a loss for them. Should we get started? So how 0:04:01.040 --> 0:04:04.200 did the White House get into a position in which 0:04:04.200 --> 0:04:06.520 it expressly said it would not? How is the White 0:04:06.520 --> 0:04:10.080 House negotiating over the debt ceiling when it expressly said 0:04:10.080 --> 0:04:12.240 for months and months that there would be no negotiation. 0:04:12.680 --> 0:04:14.800 Today we are going to be speaking with two guests, 0:04:14.840 --> 0:04:18.960 Gonda Amernath, executive director and Employe America and Arnap Data, 0:04:19.160 --> 0:04:23.640 senior counsel for employ America. So let's get started. Is 0:04:23.680 --> 0:04:28.159 the basic intro true skanda that the White House said 0:04:28.160 --> 0:04:32.039 it wasn't going to negotiate and is now negotiating. 0:04:32.160 --> 0:04:35.080 Thanks for having me on a thank I think that 0:04:35.120 --> 0:04:41.240 descriptively checks out that they promised to not negotiate that 0:04:41.320 --> 0:04:44.880 they wanted a clean debt ceiling increase, right, and yet 0:04:44.880 --> 0:04:48.159 here we are where it very likely will not be 0:04:48.279 --> 0:04:51.600 a clean debt ceiling increase, and they are very clearly negotiating. 0:04:52.200 --> 0:04:54.039 I don't know how to take issue with that description. 0:04:54.960 --> 0:04:57.520 Can I ask a really basic question just before we 0:04:57.560 --> 0:04:59.960 go any further, But I would be curious to get 0:05:00.080 --> 0:05:02.560 either of your opinions on this. But what is it 0:05:02.760 --> 0:05:06.479 about the debt ceiling that makes it such an attractive 0:05:06.760 --> 0:05:09.840 pressure point for this kind of political wrangling? 0:05:11.560 --> 0:05:14.920 I think it's a ransom note of sorts, right, So 0:05:14.960 --> 0:05:19.120 it ends up being this catastrophic risk if people perceive 0:05:19.279 --> 0:05:21.600 that we don't raise the deat ceiling, then we're going 0:05:21.640 --> 0:05:24.080 to default or it's going to lead to chaos and 0:05:24.160 --> 0:05:27.640 how government pays for various things, and that chaos is 0:05:27.640 --> 0:05:29.880 owned by the executive branch. And so if you are 0:05:30.120 --> 0:05:33.640 in Congress and you want to extract concessions, this is 0:05:33.640 --> 0:05:37.719 a kind of holdout problem where I can effectively force 0:05:37.800 --> 0:05:40.960 you into position of giving whatever I want in order 0:05:41.000 --> 0:05:43.839 to raise the debt ceiling as a matter of procedure. 0:05:45.279 --> 0:05:47.640 And it's all kind of operating in the shadow of 0:05:48.080 --> 0:05:51.760 what is a reasonable concession to extract, and that hold 0:05:51.800 --> 0:05:55.880 out problem is, yeah, a very real one that the 0:05:55.920 --> 0:05:57.760 White House is facing right now. 0:05:59.360 --> 0:06:02.719 Add to that too, Yeah, add to that too, And thanks, 0:06:02.800 --> 0:06:07.200 thanks so much for having me that the uncertain timeline 0:06:07.480 --> 0:06:12.960 of it, I think really necessitates that hostage tanking mentality. 0:06:13.000 --> 0:06:16.760 This is not like the typical appropriation cycle where you 0:06:16.839 --> 0:06:19.200 have an X date from the beginning. You know, when 0:06:19.560 --> 0:06:23.480 this was first announced for four months ago, when Secretary 0:06:23.520 --> 0:06:25.760 Ellen said we're going to hit the dead ceiling. We 0:06:25.800 --> 0:06:28.920 have to start taking extraordinary measures. Even the date was 0:06:29.400 --> 0:06:32.480 highly uncertain at that point. We're now a week before 0:06:32.600 --> 0:06:35.800 June first, which they say might be the X date, 0:06:35.880 --> 0:06:38.359 but we're still not sure. And so it creates this 0:06:38.440 --> 0:06:42.720 kind of uncertain environment that I think is really because 0:06:43.160 --> 0:06:45.920 you don't have the opportunity to make certain cuts or 0:06:46.000 --> 0:06:50.160 certain demands during that typical process of authorization or appropriations. 0:06:50.520 --> 0:06:54.400 It's kind of a convenient place to take hostage the 0:06:54.400 --> 0:06:55.240 global economy. 0:06:56.520 --> 0:06:58.719 So what was the White House hoping for when it 0:06:58.800 --> 0:07:01.520 said months ago, we're not going to negotiate over the 0:07:01.520 --> 0:07:04.159 dead ceiling this time. What was sort of the original 0:07:04.240 --> 0:07:04.760 vision there? 0:07:07.320 --> 0:07:11.040 So I think the hope in the gamble was that 0:07:12.480 --> 0:07:15.680 the extremist nature of the demands, or what was perceived 0:07:15.720 --> 0:07:18.360 to be extreme by the administration. It's called what's the 0:07:18.840 --> 0:07:21.320 I know it as the LSGA Limit Save and Save 0:07:21.400 --> 0:07:24.840 Growth Act or Limit Save and Grow Act would be 0:07:24.920 --> 0:07:28.960 seen as so dangerous and even just the process of 0:07:29.000 --> 0:07:31.680 getting to that piece of legislation would reveal so many 0:07:31.720 --> 0:07:35.240 extreme demands, all to raise the dead ceiling, that you'd 0:07:35.240 --> 0:07:40.560 have this confluence of political pressure, media driven pressure, and 0:07:41.480 --> 0:07:44.960 a sort of maybe CEO driven pressure. There's a lot 0:07:44.960 --> 0:07:49.120 of reports of Secretary Yellen trying to get major CEOs 0:07:49.120 --> 0:07:51.920 to talk to Republicans persuade them of the importance of 0:07:52.000 --> 0:07:55.120 raising the dead ceiling, and that through this sort of 0:07:55.760 --> 0:07:59.800 these different pressures, the Republicans would see the light that 0:07:59.840 --> 0:08:02.160 they would feel like they had no other choice of 0:08:02.520 --> 0:08:06.800 the coalition would fracture and they would have to raise 0:08:06.800 --> 0:08:07.760 the debt ceiling cleanly. 0:08:08.120 --> 0:08:08.920 I would just yeah, I. 0:08:08.920 --> 0:08:10.880 Would agree with all of that and say, I think 0:08:10.880 --> 0:08:17.800 there was this particular question, that particular decision that just 0:08:17.840 --> 0:08:23.000 gond disappointed about CEOs, that these interests would be advocating 0:08:23.080 --> 0:08:27.640 lobbying with Congress. You guys have to do the right thing. 0:08:27.680 --> 0:08:31.840 Here because they're demanding a clean debt ceiling hike. And 0:08:32.160 --> 0:08:35.480 I think that was a real miscalculation because you know, 0:08:35.800 --> 0:08:38.920 Jamie Diamond doesn't have an interest in a clean debt 0:08:38.920 --> 0:08:40.199 ceiling hike on its own. 0:08:40.720 --> 0:08:42.920 He just wants a debt ceiling hike. 0:08:43.080 --> 0:08:45.320 And so I think that's really part of the miscalculation 0:08:45.440 --> 0:08:46.520 that happened here. 0:08:46.800 --> 0:08:49.120 Wait, can you can you talk a little bit more 0:08:49.120 --> 0:08:52.480 about the distinction between a debt ceiling hike versus a 0:08:52.559 --> 0:08:56.280 clean debt ceiling hike and so what is the difference there? 0:08:56.320 --> 0:08:59.880 And then secondly, why does it seem like the Democrats 0:09:00.160 --> 0:09:02.680 more into the idea of a clean debt ceiling hike 0:09:02.840 --> 0:09:03.680 this time around? 0:09:05.400 --> 0:09:08.360 Yeah, so, by clean debt ceiling hike, it just means 0:09:08.480 --> 0:09:11.680 raising the limit on the debt ceiling without any other 0:09:12.120 --> 0:09:17.239 changes in the law and no strings attached. And what's 0:09:17.320 --> 0:09:20.040 likely to happen now with a deal is you're going 0:09:20.080 --> 0:09:22.400 to have a hike in the debt ceiling, but it's 0:09:22.440 --> 0:09:27.320 going to come attached with paps on spending, potentially cuts 0:09:27.360 --> 0:09:30.440 to spending. And also there's all these other you know, 0:09:30.600 --> 0:09:35.320 items that make I would emphasize very very little, have 0:09:35.480 --> 0:09:39.000 very little impact on the budgetary outlook of the country. 0:09:39.480 --> 0:09:42.960 But are things that a certain party is interested in, 0:09:43.000 --> 0:09:47.640 for example, like work requirements on certain welfare programs. That's 0:09:47.880 --> 0:09:51.760 those are kind of the concessions that the administration will 0:09:51.760 --> 0:09:55.920 have to give here without having a clean debt ceiling hike. 0:10:13.320 --> 0:10:15.319 Okay, And so this is you know, again, we have 0:10:15.480 --> 0:10:18.360 this in twenty eleven where it went down virtually to 0:10:18.400 --> 0:10:21.079 the wire at the very last second. Oh, the Obama 0:10:21.120 --> 0:10:25.040 administration and the newly elected Tea Party majority led by 0:10:25.120 --> 0:10:28.280 John Bayner, they came up with this dead ceiling hike, 0:10:28.640 --> 0:10:30.640 and they had the sequester, and there was sort of 0:10:30.760 --> 0:10:35.680 a limit to growth of both discretionary and defense spending, 0:10:36.160 --> 0:10:39.959 and arguably it slowed the trajectory of the recovery coming 0:10:40.000 --> 0:10:43.880 out of the Great Financial Crisis. Talk to us about 0:10:44.040 --> 0:10:47.280 the alternatives. So, okay, we saw what happened in twenty eleven, 0:10:47.360 --> 0:10:51.680 We saw how that potentially derailed the recovery. What could 0:10:51.720 --> 0:10:55.080 the White House theoretically have done differently, And we'll get 0:10:55.120 --> 0:10:58.120 it into details, but months ago, other than say please 0:10:58.480 --> 0:10:59.880 just give us a clean dead ceiling hike. 0:11:01.840 --> 0:11:05.679 Yeah, I think the biggest thing I would emphasize here 0:11:05.920 --> 0:11:10.640 and I think perhaps the biggest miscalculation was not developing 0:11:11.320 --> 0:11:17.560 the operational readiness to undertake unilateral actions. So obviously there 0:11:17.559 --> 0:11:20.680 are a number of different avenues that they could take 0:11:20.760 --> 0:11:22.880 unilaterally that we can talk about more. 0:11:23.240 --> 0:11:26.160 Platinum Coin is I think a favorite of some people, 0:11:26.760 --> 0:11:28.720 perhaps some people on this podcasts. 0:11:29.440 --> 0:11:34.360 Yeah, perhaps there's also this this idea that's been floating 0:11:34.400 --> 0:11:38.640 around for console bonds, these perpetual bonds. All of these 0:11:38.679 --> 0:11:44.200 things take some operational readiness to be executed, and the President, 0:11:44.280 --> 0:11:47.160 I think, just a couple of days ago, said even 0:11:47.160 --> 0:11:49.680 if we wanted to take unilateral action, we couldn't do 0:11:49.800 --> 0:11:53.080 so in a number of weeks. And I think that 0:11:53.280 --> 0:11:57.520 perhaps that lack of operational readiness is maybe the biggest 0:11:57.520 --> 0:11:59.959 fault that you can put on the Treasury Department, which 0:12:00.000 --> 0:12:03.120 which is when they're, for example, issuing a new security, 0:12:03.120 --> 0:12:06.160 a new debt instrument, it takes a lot of work. 0:12:06.679 --> 0:12:09.880 I'm not a debt expert, and I don't understand their 0:12:09.960 --> 0:12:12.960 programs internally, but it takes a lot of coding. There's 0:12:13.000 --> 0:12:15.400 a lot of different things with auction design and that 0:12:15.480 --> 0:12:18.080 they need to do to get these securities ready, and 0:12:18.160 --> 0:12:20.920 they could have taken steps four months ago when they 0:12:20.960 --> 0:12:23.760 knew they were coming to the debt ceiling to be 0:12:23.800 --> 0:12:27.040 able to do that if we came to a default moment. 0:12:27.200 --> 0:12:31.319 And I think there's a broader principle to abstract here, 0:12:31.360 --> 0:12:36.079 which is, when you are dealing with a environment of 0:12:36.840 --> 0:12:41.439 high uncertainty, the most important course you could take, I 0:12:41.480 --> 0:12:46.240 would argue, is to maintain as much optionality as possible, 0:12:46.600 --> 0:12:49.839 and part of that is developing that operational readiness. And 0:12:49.920 --> 0:12:53.280 so yes, let's say six months ago, if Treasury had 0:12:53.320 --> 0:12:58.840 done an operational test to deposit a coin to mint 0:12:58.840 --> 0:13:01.240 a new coin and depositive for ten thousand dollars, or 0:13:01.280 --> 0:13:04.760 if it had started taking the steps to issue console bonds, 0:13:05.360 --> 0:13:07.800 certainly that would have gotten noticed. These aren't you know, 0:13:07.800 --> 0:13:10.959 it's not the Fed, the Treasury. Good agencies do a 0:13:11.040 --> 0:13:13.559 number of tests and pilots. They don't always get a 0:13:13.559 --> 0:13:17.000 lot of attention. This probably would, but I think in 0:13:17.120 --> 0:13:21.360 the broader context of the uncertainty they were dealing with. 0:13:22.320 --> 0:13:26.360 Both with divided government, we saw a very protracted speaker fight, 0:13:26.440 --> 0:13:29.720 which just is another indicator of the volatility within Congress 0:13:29.800 --> 0:13:33.840 that you have to manage. Not developing that operational readiness, 0:13:33.840 --> 0:13:36.480 to me, is a really, really big mistake. 0:13:36.840 --> 0:13:39.840 I'm just thinking back to the interview with Terry Duffy. 0:13:40.400 --> 0:13:41.920 He was sort of talking about whether or not he 0:13:41.960 --> 0:13:44.920 would leave Chicago, and he threw out there that they 0:13:44.920 --> 0:13:48.120 had renegotiated all their leases to make them more flexible. 0:13:48.200 --> 0:13:50.640 They didn't actually own any property. That seems like laying 0:13:50.679 --> 0:13:51.600 the groundwork for a. 0:13:51.600 --> 0:13:53.559 Possibility executive leadership. 0:13:54.480 --> 0:13:58.719 Okay, can we talk about the fourteenth Amendment, because all 0:13:58.760 --> 0:14:02.640 I know about it is that it says something along 0:14:02.679 --> 0:14:05.480 the lines of the validity of the public debt of 0:14:05.520 --> 0:14:09.760 the US shall not be questioned, something like that. What 0:14:09.960 --> 0:14:13.160 is this option? Where did it come from? And why 0:14:13.200 --> 0:14:15.840 does it seem to be a very big deal about 0:14:15.920 --> 0:14:18.880 whether or not President Biden will actually invoke it. 0:14:20.400 --> 0:14:22.240 I'm going to toss this over to my senior council. 0:14:25.680 --> 0:14:30.200 Yeah, so basically, I mean, you got you got the 0:14:30.240 --> 0:14:32.120 text right this thing. 0:14:32.240 --> 0:14:34.160 I am reading it from the screen to be fair. 0:14:34.200 --> 0:14:39.720 But yeah, okay, So basically, this is a post Civil 0:14:39.760 --> 0:14:43.240 War amendment that was passed, and there are a number 0:14:43.320 --> 0:14:46.200 of reasons. 0:14:45.880 --> 0:14:46.880 Why it was passed. 0:14:46.880 --> 0:14:50.800 There's they wanted to be able to They wanted to 0:14:50.800 --> 0:14:53.800 make sure that bonds that were issued to pay for 0:14:53.840 --> 0:14:57.400 the Civil War were not renegged on. But basically the 0:14:57.440 --> 0:15:01.120 text of that that a lot of constant scholars who 0:15:01.120 --> 0:15:03.360 are you know, I would say highly respective, believe is 0:15:03.400 --> 0:15:07.280 that it is unconstitutional for the US to default. 0:15:07.480 --> 0:15:10.120 Everything needs to be done to avoid a default. 0:15:10.240 --> 0:15:15.000 And I think, just to take this into a broader 0:15:15.040 --> 0:15:18.840 context here, there's because I think sometimes a bit of 0:15:18.840 --> 0:15:22.080 a challenge, a bit of a mistake in how people 0:15:22.160 --> 0:15:25.800 understand the fourteenth Amendment in this context. And basically, what 0:15:25.840 --> 0:15:28.720 I would say is the fourteenth Amendment is not a verb. 0:15:29.480 --> 0:15:33.000 You can't fourteenth Amendment something. This isn't something that is 0:15:33.080 --> 0:15:36.240 like as as our mutual friend Carlos Muchra says, this 0:15:36.360 --> 0:15:40.440 is not a sword. And so I think sometimes people 0:15:40.480 --> 0:15:43.360 think that you can just like invoke the fourteenth Amendment 0:15:43.520 --> 0:15:47.680 like you're Michael Scott in the office declaring bankruptcy. 0:15:47.840 --> 0:15:53.720 And somebody woke the fourteenth exactly, and that's not really 0:15:53.760 --> 0:15:54.680 how it works. 0:15:54.960 --> 0:15:58.680 What the fourteenth Amendment does is it places a obligation 0:15:58.800 --> 0:16:03.680 a duty the executive branch to avoid default. That places 0:16:03.720 --> 0:16:07.160 a duty on the executive branch to find every lawful 0:16:07.280 --> 0:16:10.760 avenue to avoid a default. And that's where you start 0:16:10.800 --> 0:16:14.320 to get into the different tools that are available at 0:16:14.320 --> 0:16:17.520 the executive branch's discretion. But that's what I would really 0:16:17.760 --> 0:16:19.400 emphasize about the fourteenth Amendment. 0:16:19.520 --> 0:16:23.320 So it's more a frame of mind rather than like 0:16:23.360 --> 0:16:26.560 an actual set of things that you could start doing, 0:16:26.640 --> 0:16:27.360 right like Biden. 0:16:28.200 --> 0:16:32.280 Biden took an oath to protect the constitution. In the 0:16:32.320 --> 0:16:36.200 Constitution is the fourteenth Amendment, And therefore the argument would 0:16:36.240 --> 0:16:38.920 be that in order to sort of uphold his oath 0:16:39.240 --> 0:16:42.040 to defend the Constitution, he has to find a way 0:16:42.440 --> 0:16:45.200 to pay the debt regardless of what the law says. 0:16:45.920 --> 0:16:46.160 SCN. 0:16:46.280 --> 0:16:47.880 I want to go to you because we sort of 0:16:47.880 --> 0:16:51.000 glossed over something important. You and Arna were talking about 0:16:51.000 --> 0:16:55.840 a console bond bond. How if the government is running 0:16:55.920 --> 0:16:58.800 up against the debt ceiling, is there an argument that 0:16:58.840 --> 0:17:01.480 there is a type of bond that would allow the 0:17:01.520 --> 0:17:05.200 government to keep borrowing and not violate that What is 0:17:05.240 --> 0:17:08.560 a console first of all? And why would that not 0:17:08.840 --> 0:17:10.160 violate the debt sealing law? 0:17:10.800 --> 0:17:16.399 So the debt sealing statute is very short, very easy 0:17:16.440 --> 0:17:18.760 to read. You don't have to be a lawyer to 0:17:18.840 --> 0:17:20.720 understand this. I am not a lawyer. I have a 0:17:20.720 --> 0:17:23.879 lot agree so I'm in this sort of in between space. 0:17:24.160 --> 0:17:25.960 But you can read the statute and you can see 0:17:26.280 --> 0:17:30.280 how it is written in terms of face value of 0:17:30.320 --> 0:17:33.160 the bond. Ah And so there are bonds that have 0:17:33.240 --> 0:17:37.440 no face value, specifically perpetual bonds, and you can issue 0:17:37.640 --> 0:17:41.600 perpetual bonds with obviously they existing perpetuity. You can put 0:17:41.640 --> 0:17:43.199 call options on them so that you can take them 0:17:43.200 --> 0:17:47.560 out of circulation later. But these bonds also have precedent 0:17:47.720 --> 0:17:51.600 in US treasury history. You issued them as part of 0:17:51.920 --> 0:17:55.639 financing the Panama Canal. These were things that existed before 0:17:55.760 --> 0:17:59.400 the debt ceiling Statute was passed and general bond authorities 0:17:59.440 --> 0:18:04.000 were passed. So if there are bonds that exist that 0:18:04.040 --> 0:18:08.200 don't have a face without face value, and you can't 0:18:08.200 --> 0:18:11.120 issue them under the bond authority. Again, there's also something 0:18:11.160 --> 0:18:15.240 unique about issuing bonds. There doesn't have to be that's 0:18:15.280 --> 0:18:18.160 for the statute. There doesn't have to be a time 0:18:18.240 --> 0:18:22.000 limitation where principle must be repaid. This is in contrast 0:18:22.040 --> 0:18:24.680 to treasury notes and treasury bills. Again, these are things 0:18:24.680 --> 0:18:27.840 that are pretty plain to see in the statutes. You 0:18:27.920 --> 0:18:32.119 don't have to make exotic interpretations, you don't have to 0:18:32.119 --> 0:18:34.560 make any sort of particularly strained interpretation of the law 0:18:34.720 --> 0:18:37.200 to figure out that these things are possible. These things 0:18:37.200 --> 0:18:40.640 have been done. They were pretty well understood by Congress 0:18:40.640 --> 0:18:45.120 when they passed the debt ceiling. And if this is possible, 0:18:45.240 --> 0:18:48.600 if we all can agree that perpetual bonds are possible, 0:18:49.160 --> 0:18:52.360 then what the implication of fourteenth Amendment, at least under 0:18:52.359 --> 0:18:55.840 certain interpretations. I'm not here to tell you there's only one. 0:18:56.240 --> 0:18:58.520 But if you think that that is a constraint, if 0:18:58.560 --> 0:19:00.800 you think avoiding default is a really important thing for 0:19:00.840 --> 0:19:05.200 both economic and constitutional reasons, you have actually every obligation 0:19:05.240 --> 0:19:07.480 to find a solution to this problem and to try 0:19:07.480 --> 0:19:09.760 and reconcile all of the laws of the United States. 0:19:10.400 --> 0:19:12.760 That's the part that I think is sort of being 0:19:12.800 --> 0:19:15.240 glossed over by the Treasury, which is to say, oh, 0:19:15.280 --> 0:19:18.520 we don't have we have a bad situation where if 0:19:18.920 --> 0:19:22.280 the dead ceiling binds, we have no choices. Therefore we 0:19:22.280 --> 0:19:25.000 may have to talk about the fourteenth Amendment. But it's like, no, 0:19:25.080 --> 0:19:27.760 you do have other options. Some are probably better than others, 0:19:27.920 --> 0:19:30.520 but I will you do have a suite of solutions 0:19:30.520 --> 0:19:33.280 on the table you could consider. One of them could 0:19:33.280 --> 0:19:35.960 be the coin. There are pros and cons to it 0:19:36.080 --> 0:19:38.600 from a legal perspective, but it's not, at least in 0:19:38.680 --> 0:19:42.040 terms of literal interpretation. That's pretty strong. There are console bonds, 0:19:42.080 --> 0:19:44.359 perpetual bonds that are stuff you can just read in 0:19:44.400 --> 0:19:47.199 the I say, the bond authority is the statute right 0:19:47.240 --> 0:19:51.440 after the dead cealing. So you have plenty of room 0:19:51.480 --> 0:19:55.480 to identify alternative solutions. And if you identify alternative solutions, 0:19:55.680 --> 0:19:59.040 I guess simple negotiation theory, simple game theory would say 0:19:59.560 --> 0:20:05.280 that more alternatives, more viable alternatives, strengthens your negotiating position, 0:20:05.359 --> 0:20:08.359 strengthens the likelihood of a clean debt sealing increase. And 0:20:08.520 --> 0:20:10.920 if you play down those alternatives, if you think those 0:20:10.960 --> 0:20:14.040 alternatives are less viable, and you telegraph that to the world, 0:20:14.560 --> 0:20:17.160 that'll actually reduce your bargaining position. 0:20:17.600 --> 0:20:21.400 Tracy, I have a question for you. No, No, it's 0:20:21.400 --> 0:20:25.720 a serious question. It's a serious question. Actually, does the 0:20:25.800 --> 0:20:30.720 idea of issuing perpetual console bonds offend you less than 0:20:30.720 --> 0:20:31.119 the coin? 0:20:31.320 --> 0:20:31.560 Yes? 0:20:31.680 --> 0:20:33.879 Okay, I kind of feeling this is like this is 0:20:34.000 --> 0:20:36.679 me and Tracy. It's like coin consopts, Like both of 0:20:36.680 --> 0:20:39.280 them are like these sort of accounting legal workarounds, and 0:20:39.320 --> 0:20:42.200 they sort of like appeal and disappeal to different parts 0:20:42.200 --> 0:20:42.720 of us. 0:20:43.080 --> 0:20:47.919 I find comfort in using like the traditional language and 0:20:48.000 --> 0:20:52.880 structure of the existing financial system in solving a looming problem, 0:20:53.080 --> 0:20:56.679 rather than trying to do something completely out of the box. 0:20:56.760 --> 0:20:57.800 Let's just put it that way. 0:20:58.200 --> 0:20:58.920 That's a good uh. 0:20:59.000 --> 0:21:01.600 But actually, could I since we're on the topic of 0:21:02.320 --> 0:21:07.320 like more reasonable solutions versus large novelty coins, can I 0:21:07.359 --> 0:21:10.600 ask about like another basic solution that I have seen? 0:21:11.080 --> 0:21:13.280 You know, people talk about a little bit, But couldn't 0:21:13.400 --> 0:21:15.960 couldn't you just have like a vote on the debt 0:21:16.000 --> 0:21:20.280 ceiling and just like maybe create a situation where some 0:21:20.760 --> 0:21:25.080 more moderate Republicans could switch sides and make it happen. 0:21:25.800 --> 0:21:28.119 You can pass the debt ceiling increase. You could. The 0:21:28.240 --> 0:21:30.920 challenge with doing this through Congress when it's center divide 0:21:30.920 --> 0:21:36.359 government is the legislative procedure, where again they're certainly better 0:21:36.440 --> 0:21:41.360 experts and more thoughtful people than myself. But a discharge 0:21:41.400 --> 0:21:44.520 tradition in which you can actually get something through government, 0:21:44.680 --> 0:21:47.560 even while the Speaker of the House very intently wants 0:21:47.640 --> 0:21:50.760 to have the debt ceiling increase be attached to other 0:21:50.800 --> 0:21:55.200 policy itself. That takes a long time. That takes a 0:21:55.240 --> 0:21:56.960 long time, and it's not something that's very easy to 0:21:57.000 --> 0:21:59.440 execute on. And I think these are things that get 0:21:59.440 --> 0:22:01.639 to talk to about a lot in maybe sort of 0:22:02.359 --> 0:22:06.119 more kind of wish casting of like, oh, there will 0:22:06.160 --> 0:22:07.760 be a clean debt's the only increase because there'll be 0:22:07.760 --> 0:22:10.560 a discharge petition that will undercut Kevin McCarthy. And these 0:22:10.600 --> 0:22:13.600 things have always been kind of a hope's wishes, dreams 0:22:13.640 --> 0:22:15.680 as opposed to the realities of how long it takes 0:22:15.680 --> 0:22:18.479 to get some of those things through, and it may 0:22:18.520 --> 0:22:22.440 even take longer than trying to identify alternative lawful solutions 0:22:22.560 --> 0:22:23.720 on the part of Treasury. 0:22:24.280 --> 0:22:28.080 Wow, these process take time. Legislative You know, I worked 0:22:28.080 --> 0:22:29.600 in the Senate, so I don't have a good sense 0:22:29.600 --> 0:22:32.680