The Increasingly Crackpot Solutions to the Debt Ceiling

Declare Bankruptcy! Invoke the 14th Amendment!

As the nation veers ever closer to default and economic catastrophe, the various solutions to solving the debt ceiling impasse have become increasingly unorthodox (to put it lightly). It seems everyone's got a clever workaround or shortcut to magically resolve the nation's fiscal woes or else streamline the gridlocked political process. Notice the proposed crackpot solutions to making the August 2 deadline when the Treasury Department says the government will hit its $14.29 trillion debt ceiling.

Behold, the 14th Amendment, a silver bullet  Yesterday Harvard law professor Laurence Tribe ruffled feathers in his New York Times op-ed saying "Several law professors and senators, and even Treasury Secretary Timothy F. Geithner, have suggested that section 4 of the 14th Amendment, known as the public debt clause, might provide a silver bullet.” The idea is that the White House wold invoke the 14th Amendment and raise the debt ceiling without Congress. Pushing back against the article, Treasury general counsel George Madison wrote a letter today responding to the op-ed: “like every previous Secretary of the Treasury who has confronted the question, Secretary Geithner has always viewed the debt limit as a binding legal constraint that can only be raised by Congress.”

Just declare bankruptcy! This gem comes courtesy Texas congressman Ron Paul:

[He] was discussing Greece's fiscal trouble with Iowa radio host Jan Mickelson on Monday when he was asked, "If bankruptcy is the cure for Greece, is it also the cure for the United States?"

"Absolutely," Paul replied.

Paul suggested destroying the $1.6 trillion in government bonds the Fed holds to pay down the debt. Unusually, Paul's solution was praised by The New Republic, not what you would consider a libertarian rag. "Representative Ron Paul has hit upon a remarkably creative way to deal with the impasse over the debt ceiling... if Congress told the Fed to burn the bonds, it would in effect just be destroying a liability that the government had to itself, but it would still reduce the debt subject to the debt ceiling by $1.6 trillion. This would buy the country considerable breathing room before the debt ceiling had to be raised again."

"I could end the deficit in 5 minutes," said Berkshire Hathaway CEO Warren Buffett, in a swaggering interview on CNBC today. For him, it's all about the political process and holding legislators responsible for keeping America's deficit down in the first place. “I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection." Voila!

Just chillax, the deadline is phony  This is what a number of Republicans have suggested, saying that the Treasury has artificially pegged the deadline at Aug. 2 for political purposes. Brian Darling, a senior fellow at The Heritage Foundation, a conservative think tank, justifies the position to Fox News. “The first date that Congress was supposed to reach a debt ceiling was on March 31, between that date and May 16, so members of Congress legitimately have real concern if this August date is real date or yet another fake deadline.” Needless to say, the Treasury strongly disagrees.