Edward Kleinbard’s opinion piece in the New York Times entitled The Debt Ceiling’s Escape Hatch offers an interesting solution to the coming federal debt ceiling fight between the White House and Republicans in Congress. He proposes that President Obama issue “registered warrants” also known as scrip. The non-technical term would be an I.O.U. In fact, the state of California, successfully, issued I.O.U.’s as recently as 2009 when it faced its own budget crisis. Kleinbard writes,
“The scrip would not violate the debt ceiling because it wouldn’t constitute a new borrowing of money backed by the credit of the United States.”
Who can say whether or not this would be the best approach, but the alternatives are probably worse. If President Obama were to heed the House Minority Leader, Nancy Pelosi’s advice and invoke the 14th Amendment, Republicans in the House, no doubt, would move toward Articles of Impeachment. Given President Obama’s pragmatic political disposition, I just don’t see him doing that.
Read the full article at: http://www.nytimes.com/2013/01/10/opinion/an-escape-hatch-for-the-debt-ceiling.html?_r=1&
Edward D. Kleinbard, a former chief of staff at the Congressional Joint Committee on Taxation, is a law professor at the University of Southern California.