Wednesday, January 09, 2013 5:10 pm
White House says 'no backup plan' to debt ceiling
By JIM ABRAMSAssociated Press
President Barack Obama's adamant stand that he will not negotiate with Congress over raising the nation's borrowing limit and Republican demands that a debt ceiling vote be linked to spending cuts have prompted a creative outburst of alternatives to driving the country into default.
Under one proposed scenario, pushed by a number of House Democrats, the president could invoke the 14th Amendment, a post-Civil War change to the Constitution that states that "the validity of the public debt of the United States...shall not be questioned."
Another proposal would take advantage of a legal loophole meant for coin collectors and have the Treasury mint platinum coins that could be deposited at the Federal Reserve and used to pay the nation's bills.
"There is no plan B. There is no backup plan," White House spokesman Jay Carney said Wednesday. "There is no alternative to Congress raising the debt ceiling."
The government has already reached its $16.4 trillion borrowing limit and by late February or early March the Treasury Department will run out of ways to cover debts and could begin defaulting on government loans.
As of Wednesday 21 Democrats, led by Rep. Peter Welch of Vermont, had signed a letter urging Obama to invoke the 14th Amendment that they say gives him the authority to raise the debt ceiling without going through Congress. The Democrats said in a letter that they would support the use of any authority, including the constitutional provision, to prevent the nation from going into default, an event that some economists predict could trigger a global recession.
The Democrats, in their letter, said they fully supported Obama's position that raising the debt ceiling will not be subject to negotiation. "Threatening default on our nation's debt is an economic weapon of mass destruction that will have immediate and catastrophic consequences for the economy as well as America's standing in the world," they said.
Welch, in an interview, told The Associated Press said he understood that the president might not want to embrace the 14th Amendment alternative at this point, when it might appear to be a power grab. But "if there is the ultimate act of congressional irresponsibility by having the United States default on its obligations, we encourage the president to rescue the country." He said ultimately the courts would have to decide what authority the amendment confers on the president.
The coin idea has been mentioned by such economists as Paul Krugman, a columnist at The New York Times, and Donald Marron, the director of the Urban-Brookings Tax Policy Center.
Carney, reiterating a position the White House has taken for some time on the use of the 14th amendment, said Wednesday: "We just don't believe that it provides the authority that some believe it does."
He did not explicitly reject the trillion dollar coin idea and directed reporters to ask Treasury about the idea. But when pressed he insisted that insisted that "Congress needs to pay the bills that Congress racked up."
And as he left the White House briefing room, he added: "I answered it thoroughly, at length, with great detail. And I have no coins in my pocket, nothing."
Associated Press writer Jim Kuhnhenn contributed to this report.