LeRoy Goldman: The Shadow Knows

Obama's legacy forming amid debt fights

Now that the president has been re-elected, the only thing left for him that counts is his legacy. So far, that legacy is thin gruel. And unless the president has got a new way of doing business up his sleeve, there is no good reason to expect that he will leave office in 2017 as anything more than a pedestrian president.

Remember the centerpiece of his 2012 campaign — a tax increase for "millionaires and billionaires"? Well he's got it now, and it's worth $60 billion a year, enough to run the federal government for a week. Wow! Instead of a campaign that laid out Obama's road map for dealing with the real problems the nation faces, we got a vapid, yet successful, exercise in the politics of class warfare.

But now Obama must govern successfully or leave office with his tail between his legs. He's got to find a way to get the "grand bargain" enacted that will rein in the out-of-control entitlement programs, including Medicare, Medicaid and Social Security. Doing that is the key to curbing the death spiral of debt that chokes the economy and prevents job growth.

He must find a way to reform and simplify the income tax code for individuals and corporations. He needs to achieve comprehensive immigration reform. The Newtown massacre may enable him to ban assault weapons and high-capacity magazines. And he needs to end the war in Afghanistan and wring the waste out of the Pentagon. None of that can be achieved by continuing business as usual in Washington.

Standing in the president's way is the tea party-dominated House that aims to thwart him at every turn. Obama's nemesis is the work of his own creation. He created them by the way he and the congressional Democrats governed in 2009-10. Remember the stimulus and Obamacare? Their passage is what brought the tea party to power in 2010. Since then, they have become the self-destructive face of a dying Republican Party.

On New Year's Day, the president signed the bill that settled the dispute over raising taxes on the wealthy, but it kicked the much more vital and incendiary issues of raising the debt ceiling and the "sequester" down the road until March. Most House Republicans, led by the tea party insurgents, voted against the legislation. They are bitter in their defeat, and they believe that the forthcoming battle over raising the debt ceiling gives them their best opportunity for vengeance, just as it did when the debt ceiling was last raised in 2011.

In the battle, soon be joined, the tea party will be willing to close the government, to roil the world's stock markets, and to send America over the fiscal cliff. They will stop at nothing to bring Obama to his knees. Moreover, they believe they have the president cornered. And more importantly, they believe that the president will be so wounded by this fight that he will not have the political capital or the political will left to accomplish his far-reaching domestic and foreign policy agenda.

But at the White House on Jan. 2, the president said, "I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up."

What did he mean? He didn't say, but here are two possibilities.

Section 4 of the 14th amendment to the Constitution states in part, "The validity of the public debt of the United States shall not be questioned." It is possible that the president is planning to invoke this provision of the Constitution and instruct the Treasury Department to continue to issue bonds beyond the debt ceiling, thereby rendering the ceiling and the necessity for Congress to raise it unnecessary.

Were the president to take such a bold step, it would turn the tables on the Republicans. They will go nuts. Then they will attempt to take the matter to court. The outcome in court is not clear. Legal analyst Jeffrey Rosen believes that Section 4 gives the president unilateral authority to raise or ignore the debt ceiling. Legal scholar Garrett Epps and fiscal expert Bruce Bartlett have argued that the debt ceiling itself may be unconstitutional.

On the other hand, the dean of the University of California Irvine School of Law, Erwin Chemerinsky, has argued that even a "dire financial emergency" would not permit the president to raise the debt ceiling.

The second option is this. U.S. law does not place a limit on the denomination of minted coins. Thus the president could direct the minting of a $5 trillion coin, for example, to be used to buy back the nation's debt. Obama could call that option "Heads I win, tails you lose."

Either of these moves would isolate and emasculate the House GOP. And in 2014, if the Democrats pick up just 17 House seats, they recapture the House. And that opens wide the legacy floodgates.

From 1992-2004, Barack Obama was a lecturer at the University of Chicago Law School. He lectured on constitutional law. We are about to find out whether he knew what he was talking about.

The Shadow's planning to succeed Secretary Geithner at Treasury, but Goldman can be reached at: Email Me