0% balance transfer and other creative options around the debt ceiling (By WW)

Mr. President, if those Republicans refuse to raise your debt ceiling, I recommend you do what millions of Americans in similar situations would do: balance transfer. Here is how it will work on the national level.

Background

The root of your problem is that the United States Congress has become akin to a single card issuer.  You need a second source.  You can then transfer the $14 trillion balance to the new issuer, keeping it off-balance sheet and under the table so that by the time it appears on your credit report to Congress, ratings agencies and investors, the cash will be in the bank.  You will then have $0 balance from the perspective of the United States Congress. In no time, Congress is flabbergasted, the American people feel better about themselves, and you feel rich enough to start borrowing again.

Yes this is unprecedented, but yes you can. You have four options to get there.

Option 1: Form a new Congress.

If this Congress allows you $14 trillion, then two Congresses means you get $28 trillion, so you can transfer from one to the other. People will label you a dictator, but you can lecture them on constitutional law: Remind them that a tyrant would dissolve Congress. You would be doubling Congress. You are twice a democrat.

Option 2: Use another country’s congress.

Congress is congress. If you can get another country’s congress to give you another debt ceiling, you can transfer the debt to them, leaving you with a $0 balance in the eyes of Congress. As the other congress must have the financial wherewithal, the National People’s Congress (NPC) of China is your best bet. Crucially, that congress must be open to keeping details of the transaction off the books and under table. On that basis too, the NPC is your best bet; African leaders will testify to that.

Option 3: Collateralize Congress.

In this scenario, you borrow money from domestic banks, using Congress as collateral. Here, Nigeria offers lessons for America. The former Speaker of that country’s House of Representatives allegedly took a bank loan to pay himself allowances, using the National Assembly as collateral. It is yet unclear whether the collateral would be the physical House (that dome must be worth something) or the members of the House (imagine John Boehner being hauled away for non-payment of your debt).  The big banks may reject your offer on the basis that they already own Congress, but some smaller ones will take the chance. Keeping it off-balance sheet will not be a problem; there is financial engineering for that.

 Option 4: Bankruptcy

If all other options fail, consider bankruptcy. Yes, other countries will find it hard to borrow money and there will be chaos all over, but, as that TV commercial says, “Congress passed bankruptcy laws for millions of honest, hardworking Americans just like you who just need a little help to get a fresh start.” Call 1-800-BANKRUPT or 1-800-THE-LAW2 or 1-800-LAW-FIRM or hundreds more.  They will fight for you.

Recommendation

Option 3: Collateralize Congress is particularly appealing because it puts Congress in a political “check mate.” Any action the members take that will jeopardize your ability to service those debts puts their own behinds on the line.

Next steps

Finding a potential lender should be relatively easily, as lenders tend to me more willing to lend you money when you appear to be having problems paying your debt. You will get pushback from some quarters that you should focus on cutting expenditure. Remind them that it is impossible to cut spending when that new high tech remote controlled drone looks so good. Americans will empathize, but messaging also matters. Remind them that what we have now is a balance transfer to future generations anyway. You are just being more creative than your predecessors.