Sanders: Obama should play 14th Amendment card

Posted July 29, 2011, at 8:51 p.m.

MONTPELIER, Vt. — Vermont officials said Friday the state is in relatively good shape to weather the crisis if Congress doesn’t agree to raise the federal debt ceiling by a Tuesday deadline.

U.S. Sen. Bernie Sanders, meanwhile, called for President Barack Obama to raise the debt ceiling unilaterally if no agreement is reached on Capitol Hill. He cited the 14th Amendment to the U.S. Constitution, which says the nation’s readiness to pay its debts shall not be questioned. The White House has been cool to the idea.

“What makes this preferable is that we would prevent default while also preventing the devastating cuts proposed under the other options,” Sanders, a left-leaning independent, said in a statement released by his office.

Vermont Finance and Management Commissioner Jim Reardon said the state Medicaid program is expected to receive a payment of more than $53 million from the federal government Monday — a day before the federal government may stop paying some bills.

Another state agency that uses a lot of federal money — the Agency of Transportation — has enough cash on hand to get the state through the next few months, so there will be no immediate halt to any ongoing highway projects.

In all, the state was slated to receive about $1.6 billion in federal funds this fiscal year, to help pay for programs ranging from drug enforcement to environmental protection to a range of education programs. Roughly $150 million was expected to flow into the state in August.

Transportation Secretary Brian Searles said Friday that if the government budget crisis continues for more than a few days or weeks, he would have to consult with state Treasurer Beth Pearce about what course of action to take.

But while state agencies are in relatively good shape — at least in the short term — Sanders on Friday warned that individual citizens and families benefiting from federal programs ranging from Medicare to student aid may not be as lucky.

“Nobody knows what will happen if we don’t extend the debt ceiling,” Sanders said in an interview. “There’s no precedent for this. It’s never happened in the history of our country.”

Pearce also said the problem is much bigger than any impact on state agencies.

“It’s already had an impact on consumer and investor confidence [and] business planning,” Pearce said. “Vermont does not need this in terms of its recovery from the recent recession. Vermonters do not need to face the prospect of increased interest rates on bonds, mortgages, car loans, education loans.”

Sanders argued that Vermonters — and other Americans — should be less worried about whether government agencies have enough funds to get through the next few months and more about whether their elderly family members and neighbors will get their Social Security and other government benefits.

Reardon said it is too soon to say what the impact would be if the federal government begins defaulting on its debt payments and the crisis drags on for months. The U.S. has never defaulted before, but there has been much speculation that the Treasury Department would begin to prioritize payments with available funds, leaving some of the government’s bills unpaid.

Reardon said it’s too soon either to panic or sigh with relief at what programs the government might continue paying for.

“Any time there could be an adverse impact on the state’s financial position, I get deeply concerned,” the commissioner said. “But I can only react to what I know is out there.”

Sanders likened the situation to a family facing a sudden loss of income and trying to determine what bills to put off paying.

Searles said agencies like his that rely on federal funding would have to wait and see what those choices in Washington are before knowing what actions to take at the state level.

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