Lawyerly Economist

And Paul Krugman continues to demonstrate his invincible ignorance. Disappointed by the demise of the platinum coin proposal, he propounds yesterday upon why it is simply impossible for Congress not to raise the debt ceiling. None of the options other than the platinum coin would be legal, says he, demonstrating that he can be as asinine when he is playing lawyer as when he is being an economist.

“The thing is,” he says, “the coin option sounds silly,” which it most certainly does so we are in agreement to this point in the argument, “but it clearly obeys the letter of the law.” No, actually, it does not, because he overlooks the word “commemorative” in the coin law. The law in question allows the issuance of “commemorative coins,” which can never have more than a trivial, nominal cash value.

“Failing to pay debt service would be a breach of contract.” Perhaps, but freezing the debt ceiling would not require failing to pay debt service. We would issue new bonds to replace the bonds we are paying off, which would not raise the debt, and the government has sufficient revenue without borrowing to pay interest on the debt.

“Paying contractors, and maybe Social Security recipients, in scrip would violate the law.” Nobody, other than Paul Krugman, has even suggested paying with scrip. There are two separate issues here. Social Security has its own money, sufficient to pay beneficiaries for a considerable time. We would not need to “pay contractors in scrip,” we would need to suspend those services for which we are unable to pay from existing revenue. There would be a partial shutdown of government, which is certainly inconvenient but is not illegal.

“Deciding that the president has the right to ignore the debt limit after all would avoid these legal breaches at the expense of another breach.” Otherwise known as having the president actually break the law would resolve a lot of imaginary problems.

“And default in any of these senses would risk a huge collapse of confidence.” Aha, his version of the “confidence fairy,” which he has been claiming for years does not exist.