HEATHER COX RICHARDSON

JUN 1, 2023

Tonight the House passed a bill to suspend the debt ceiling for two years, enabling the Treasury to borrow money to prevent a default. More Democrats than Republicans rallied to the measure, with 165 Democrats and 149 Republicans voting in favor, for a final vote of 314 to 117. Seventy-one Republicans and 46 Democrats opposed the bill. Now the measure heads to the Senate.

The votes revealed a bitter divide in the Republican Party, as the far-right House Freedom Caucus fervently opposed the measure; Representative Chip Roy (R-TX) for example, called it a “turd sandwich.” Florida governor Ron DeSantis also came out against it, saying it leaves the country “careening toward bankruptcy.”

The far right insists the measure does not provide the cuts they demand. Last night’s nonpartisan Congressional Budget Office scoring of the bill offered them ammunition when it said that the additional work requirement imposed on able-bodied people aged 18–54 without dependents to receive food benefits is outweighed by the expansion of those benefits to veterans, unhoused people, and children aging out of foster care. The CBO estimates that the measure will add 78,000 people a month to food assistance programs, adding $2.1 billion in spending over the next ten years.

Despite their fury, though, the far right in the House appears to be backing down from challenging Representative Kevin McCarthy’s (R-CA) speakership. Their angry news conferences seem mostly to be performances for their base, and to answer them, McCarthy today said on the Fox News Channel that he was creating a “commission” to “look at” cutting the budget that the president “walled off” from cuts, including the mandatory spending on Medicare and Social Security.

But, as Josh Marshall pointed out in Talking Points Memo today, the Republican base no longer seems to care much about fiscal issues. Instead, they are pushing the cultural issues at the heart of illiberal democracy: anti-LGBTQ laws, antiabortion laws, anti-immigration laws.

Former president Trump is making those themes central to his reelection campaign. Yesterday he released a video promising that on “Day One” of a new presidential term, he would issue an executive order that would end birthright citizenship. Our current policy that anyone born in the United States is a citizen, he claims, is “based on a historical myth, and a willful misinterpretation of the law by the open borders advocates.” He promises to make “clear to federal agencies that under the correct interpretation of the law, going forward, the future children of illegal aliens will not receive automatic US citizenship.”

Trump is picking up an idea from his presidential term that immigrants are flocking to the U.S. as “birth tourists” so their children will have dual citizenship, but the estimate from the immigration-restrictionist Center for Immigration Studies that birth tourism accounts for 26,000 of the approximately 3.7 million births in the U.S. each year has been shown to be wildly high. Trump’s attack on birthright citizenship is an attack on immigration itself, echoing people like Hungary’s prime minister, Viktor Orbán, who insists that immigration weakens a nation by diluting its native-born people with outsiders.

Trump’s attack on the idea of birthright citizenship as a “historical myth” is a perversion of our history. It matters. In the nineteenth century, the United States enshrined in its fundamental law the idea that there would not be different levels of citizenship in this country. Although not honored in practice, that idea, and its place in the law, gave those excluded from it the language and the tools to fight for equality. Over time, they have increasingly expanded those included in it.

The Republican Party organized in the 1850s to fight the idea that there should be different classes of Americans based on race—not only Black Americans, but also Irish, Chinese, Mexican, and Indigenous Americans faced discriminatory state laws. Republicans stated explicitly in their 1860 platform that they were “opposed to any change in our naturalization laws or any state legislation by which the rights of citizens hitherto accorded to immigrants from foreign lands shall be abridged or impaired; and in favor of giving a full and efficient protection to the rights of all classes of citizens, whether native or naturalized, both at home and abroad.”

In 1868, after the Civil War had ended the legal system of human enslavement, the American people added to the Constitution the Fourteenth Amendment, whose very first sentence reads: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” Congress wrote that sentence to overturn the 1857 Dred Scott v. Sandford decision, in which the Supreme Court ruled that people of African descent “are not included, and were not intended to be included, under the word ‘citizens’ in the Constitution, and can therefore claim none of the rights and privileges which that instrument provides for and secures to citizens of the United States.”

The Fourteenth Amendment legally made Black men citizens equal to white men.

But did it include the children of immigrants? In 1882, during a period of racist hysteria, the Chinese Exclusion Act declared that Chinese immigrants could not become citizens. But what about their children who were born in the United States?

Wong Kim Ark was born around 1873, the child of Chinese parents who were merchants in San Francisco. In 1889 he traveled with his parents when they repatriated to China, where he married. He then returned to the U.S., leaving his wife behind, and was readmitted. After another trip to China in 1894, though, customs officials denied him reentry to the U.S. in 1895, claiming he was a Chinese subject because his parents were Chinese.

Wong sued, and his lawsuit was the first to climb all the way to the U.S. Supreme Court, thanks to the government’s recognition that with the U.S. in the middle of an immigration boom, the question of birthright citizenship must be addressed. In the 1898 U.S. v. Wong Kim Ark decision, the court held by a vote of 6–2 that Wong was a citizen because he was born in the United States.

That decision has stood ever since, as a majority of Americans have recognized the principle behind the citizenship clause of the Fourteenth Amendment as the one central to the United States: “that all men are created equal” and that a nation based on that idea draws strength from all of its people. Over time, we have expanded our definition of who is included in that equality.

Now the right wing is trying to contract equality again, excluding many of us from its rights and duties. The Dobbs v. Jackson Women’s Health decision makes women a separate and lesser class of citizen; anti-LGBTQ legislation denigrates sexual minorities. Trump’s attack on birthright citizenship makes that attack on equality explicit, calling equality a “myth” and attempting to enshrine inequality as the only real theme of our history.

The concept of equality means we all have equal rights. It also means we all owe an equal allegiance to the country and that we all should be equal before the law, principles the former president has reason to dislike.

Today, Katelyn Polantz, Paula Reid, and Kaitlan Collins of CNN broke the story that federal prosecutors have an audio recording of the former president admitting he kept a classified Pentagon document about a potential attack on Iran. The material on the tape, which was recorded at his Bedminster, New Jersey, property and appears to indicate that the document was in his hands, shows that Trump understood he had taken a classified document and that he understood that there were limits to his ability to declassify records.

The recording also appears to suggest that at least one of the documents Trump took when he left office had enormous monetary value. As former Senior Foreign Service member Luis Moreno tweeted: “You can bet that if the TS/SCI dox involved military action against Iran, there would be a couple of countries willing to pay a king’s ransom for it.”

—

Notes:

https://www.cnn.com/2023/05/31/politics/work-requirements-debt-ceiling-cbo/index.html

https://www.washingtonpost.com/politics/2023/05/31/mccarthys-critics-shy-away-threat-oust-him/

https://www.politico.com/news/2023/05/29/desantis-debt-limit-deal-00099155

https://talkingpointsmemo.com/edblog/the-diehards-fold

https://www.reuters.com/article/us-usa-immigration-trump/trump-administration-rolls-out-new-rule-to-limit-birth-tourism-idUSKBN1ZM2G1

https://www.thedailybeast.com/russians-flock-to-trump-properties-to-give-birth-to-us-citizens

https://www.cdc.gov/nchs/fastats/births.htm

https://www.archives.gov/milestone-documents/chinese-exclusion-act

https://www.presidency.ucsb.edu/documents/republican-party-platform-1860

https://www.cnn.com/2023/05/31/politics/trump-tape-classified-document-iran-milley/index.html

Sean Hannity Staff, “MAGA PROMISE: Trump Vows to End Birthright Citizenship on Day One [WATCH]” at hannity DOT com, May 30, 2023.

https://www.archives.gov/milestone-documents/dred-scott-v-sandford

https://www.law.cornell.edu/supremecourt/text/169/649

May 2, 2023

HEATHER COX RICHARDSON

MAY 3, 2023

The end of the semester is always rough and I’ve had too many long nights, so tonight I am going to offer just one explanation about the debt clause in the Fourteenth Amendment: 

The debt ceiling crisis continues to dominate the news, with some speculation now that White House officials are wondering whether the Fourteenth Amendment to the Constitution might require the government to continue to pay its bills whether Congress actually raises the debt ceiling or not.

The fourth section of the Fourteenth Amendment reads: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

This statement was a response to a very specific threat. 

During the Civil War, the U.S. Treasury issued more than $2.5 billion in bonds to pay for the war effort. To make those bonds attractive to investors, Congress had made most of them payable in gold, along with their interest. That gold backing made them highly valuable in an economy plagued by inflation. 

In contrast, most working Americans used the nation’s first national currency, the greenbacks, introduced by Congress in 1862 and so called because they were printed with green ink on the back and black ink on the front—as our money still is; check out a dollar bill. Because greenbacks were backed only by the government’s ability to pay, their value tended to fluctuate. As Congress pumped more and more of them into the economy to pay expenses, inflation made their value decrease. 

National taxes funded the bonds, which meant that workers whose salary was paid in the depreciating greenbacks paid taxes to the government, which in turn paid interest to bondholders in rock-solid gold. After the war, workers noted that inflation meant their real wages had fallen during the war, while war contracts had poured money into the pockets of industrialists. 

Workers couldn’t do much about the war years and still faced years of paying off the wartime bonds. They began to call for repaying war bonds not in gold but in depreciated currency, insisting that taxpayers should not be bled dry for rich bondholders. Democrats, furious at wartime policies that had enriched industrialists and favored bankers, promised voters that if voters put them in control of Congress, they would put this policy into law.

Republican legislators who had created the bonds in the first place were horrified at the idea that Democrats were claiming the right to change the terms under which the debt had been sold. This, they said, was “repudiation” and would turn those who had invested in the United States against it. 

Bonds were about far more than just money. When the war broke out, the Treasury had turned to bankers to underwrite the war. But the bankers were notably reluctant to bet against the cotton-rich South and refused to provide the amount of help necessary. To keep the government afloat, Treasury officers had been forced to turn to ordinary Americans, who for four years had shouldered the financial burden of supporting their government. 

“It is your war,” Treasury Secretary William Pitt Fessenden wrote to the public in 1864. “Much effort has been made to shake public faith in our national credit, both at home and abroad…yet we have asked no foreign aid. Calm and self-reliant, our own means thus far have proved adequate to our wants. They are yet ample to meet those of the present and the future.” 

On April 3, 1865, the day the Confederate capital of Richmond, Virginia, fell, bond salesman Jay Cooke hung from his office window a sign that featured the nicknames of the two most popular bond issues, along with an even larger banner that read:

“The Bravery of our Army

The Valor of our Navy

Sustained by our Treasury

Upon the Faith and 

Substance of

A Patriotic People.”

The debt was a symbol of a newly powerful national government that represented ordinary Americans rather than the elite enslavers who had controlled it before the war. “There has never been a national debt so generously distributed among and held by the masses of the people as all the obligations of the United States,” wrote an Indianapolis newspaper in 1865. “This shows at once the strength of popular institutions, and the confidence the people have in their perpetuity.” 

Undermining the value of U.S. bonds was an attack not just on the value of investments, but on the nation itself. When Republican lawmakers wrote the Fourteenth Amendment in 1866, they recognized that a refusal to meet the nation’s financial obligations would dismantle the government, and they defended the sanctity of the commitments the government had made. When voters ratified that amendment in 1868, they added to the Constitution, our fundamental law, the principle that the obligations of the country “shall not be questioned.”

—

Notes:

Further interest-rate hikes to fight inflation will worsen inequality. And they’re unnecessary.

Mar 7

Robert Reich

Mr. Powell,

As chairman of the Federal Reserve Board, you’re making your semi-annual policy report today to Congress.

I hope you don’t think me impertinent, but I have an urgent question for you that I hope one of the senators asks: How can you justify further rate hikes in light of America’s staggering inequality?

You and your colleagues on the Fed’s Open Market Committee are considering pushing interest rates much higher in your quest to get inflation down to your target of 2 percent. You believe higher interest rates will reduce consumer spending and slow the economy.

With due respect, sir, this is unnecessary, and it would be unjust.

Over the past year, you’ve raised interest rates at the fastest pace since the 1980s, from near zero to more than 4.5 percent.

But consumer spending isn’t slowing. It fell slightly in November and December but jumped 1.8 percent in January, even faster than inflation.

As a result, you’re now saying you may need to lift rates above 5 percent. A recent paper by a group of academic and Wall Street economists suggests that you will need to raise interest rates as high as 6.5 percent to meet your 2 percent target.

This would worsen America’s already staggering inequalities.

You see, the Americans who are doing most of the spending are not the ones who will be hit hardest by the rate increases. The biggest spenders are in the top fifth of the income ladder. The biggest losers will be in the bottom fifth.

Widening inequality has given the richest fifth a lot of room to keep spending. Even before the pandemic, they were doing far better than most other Americans.

Their current spending spree is a big reason you and your colleagues at the Fed are having so much difficulty slowing the economy by raising interest rates (in addition to the market power of many big corporations to continue raising prices and profit margins).

The higher rates are flowing back into the top fifth’s savings, on which they’re collecting interest.

The top fifth’s savings are still much higher than they were before the pandemic, so they can continue their spending spree almost regardless of how high you yank up rates. Take a look at this chart:

(Sources: J.P. Morgan Private Bank, Haver Analytics. Data as of October 2022.)

But yank up rates and you’ll impose big sacrifices on lower-income Americans. The study I mentioned a moment ago concludes that “there is no post-1950 precedent for a sizable central-bank-induced disinflation that does not entail substantial economic sacrifice or recession.”

There’s also no post-1950 precedent for the degree of income inequality Americans are now experiencing.

The people who will endure the biggest sacrifices as the economy slows will be the first to lose their jobs: mostly, those in the bottom fifth. Relying on further interest-rate hikes to fight inflation will only worsen the consequence of America’s near-record inequality.

There’s no reason for further hikes, anyway. Inflation is already slowing.

I understand your concern, Mr. Powell. What looked like a steady albeit gradual slowdown is now looking even more gradual.

But so what? It’s the direction that counts.

You should abandon your 2 percent target rate of inflation. There’s nothing sacrosanct about 2 percent. Why not 4? Getting inflation down to 2 percent is going to cause too much pain for the most vulnerable.

And you should suggest to Congress that it use other tools to fight inflation, such as barring corporations with more than 30 percent market share from raising their prices higher than the overall inflation rate — as recently proposed by New York’s attorney general.

May I be perfectly frank with you, sir? It would be terribly unjust to draft into the inflation fight those who are least able.

Thank you.

Robert Reich