Yesterday - Moodys Investment Service - basically a global credit rating agency - fired a shot across the bow of the United States.

They basically said if our lawmakers can’t come together to raise the debt ceiling by next month - then they’ll downgrade the credit rating of our nation - signaling to the rest of the world that America can’t pay back its bond holders - likely causing a global financial catastrophe.

So the clock is ticking for the Speaker of the House John Boehner to quit playing games and raise the damn debt ceiling.

But the truth is - Republicans could care less about the debt ceiling - the only clock they care about is the one that's ticking away to the 2012 elections.

Republicans have made a calculated decision that if Democrats don’t agree to privatize Medicare, or other massive cuts - then they're going to go ahead and let our nation default on our debt - because they believe that in the end it will be President Obama who will be blamed in 2012 by the voters for the economic disaster.

As Matt Yglesias reports, one Republican who’s close to John Boehner reportedly said in closed-door Republican budget meetings:

Of course, it’s dangerous… But it’s dangerous for everybody, especially the president. At the end of the day, [Obama] will have to give in.

Another Republican piped up and said:

Who has egg on their face if there is a sovereign debt crisis, House Republicans or the president?

The truth is…the Republicans are right - President Obama IS the guy who will likely take the hit if our nation defaults - he’ll become the next Herbert Hoover - and Democrats might be banished from politics for a generation if that happens.

And that’s the exact endgame that Republicans are trying for with their scorched earth strategy - they'll do anything to win back the White House, even if it means another Great Depression for the rest of us.

That’s why Republicans are playing hardball in this case.

But what the Republicans don’t realize - and I’m not even sure the President realizes this - is that while Republicans may be armed with machetes in this budgetary knife fight - President Obama has a chainsaw.

And that chainsaw is a power that the Office of Management and Budget has given to Treasury Secretary Tim Geithner.

Back in 1985 - there was a debate going down - just like today - over raising the debt ceiling.

And one Senator from Oregon - Bob Packwood - had a question.

So he wrote a letter to the Government Accountability Office basically asking how - and in what order - our debt obligations would be paid off if Congress failed to raise the debt ceiling.

And what he received back in response is incredible - here’s the letter.

“TO THE HONORABLE BOB PACKWOOD:

CHAIRMAN, SENATE COMMITTEE ON FINANCE, UNITED STATES SENATE

YOU HAVE REQUESTED OUR VIEWS ON WHETHER THE SECRETARY OF THE TREASURY HAS AUTHORITY TO DETERMINE THE ORDER IN WHICH OBLIGATIONS ARE TO BE PAID SHOULD THE CONGRESS FAIL TO RAISE THE STATUTORY LIMIT ON THE PUBLIC DEBT OR WHETHER TREASURY WOULD BE FORCED TO OPERATE ON A FIRST IN-FIRST-OUT BASIS.”

And here’s the key part of this letter:

“IT IS OUR CONCLUSION THAT THE SECRETARY OF THE TREASURY DOES HAVE THE AUTHORITY TO CHOOSE THE ORDER IN WHICH TO PAY OBLIGATIONS OF THE UNITED STATES.”

Now, translating that into English, what that means is that Treasury Secretary Timmy Geithner has the sole authority to determine how our debt obligations are met by deciding which bills to pay and when to pay them, of course, doing it on behalf of the president.

In fact - he’s already doing this - we hit the debt ceiling and passed our debt ceiling back on May 17th and Geithner is now borrowing from federal pension funds to keep our government running.

So…if Republicans REALLY want to play hardball - the President can direct Tim Geithner to play hardball right back at them.

Instead of cannibalizing federal pension funds - he could cut federal assistance to states whose Republican Senators and Congressmen are blocking a debt limit increase.

The president could basically say, “Hey John Boehner - you don’t want to raise the debt ceiling - that’s fine. But kiss all that federal money Ohio gets every day goodbye…we’re using that money to pay off our debt”.

No more highway funds, no more medicaid funds, no more education funds, no more nothing.

Ohio, you're out of business.

Or…“Hey Paul Ryan - I know Wisconsin is struggling financially right now - but it’s about to get a whole lot worse because we’re blocking all federal grants to the state…we need to pay off our debt somehow”.

It’s a pretty simple choice really - do we use existing federal funds to finance John Boehner’s corporate pet project of an alternative F-35 jet engine - or do we use the funds to pay off our debt and avoid a global meltdown?

Do we use our money to help rebuild a road in Paul Ryan’s Congressional district - or do we use it to assure other nations that our debt is still good?

I don't know about you - but I'd rather let a few pot holes deteriorate in Wisconsin than let Republicans bring about the next Great Depression.

So Mr. President...

Ask some of the old-timers around the White House how Lyndon Johnson took Fed Chairman William Martin into his office and literally, physically beat him up, then slammed him up against the wall, and then delivered his ultimatum.

It's time for you to do the same - metaphorically at least - with Eric Cantor and the Tea Party Republicans in Congress who want to destroy your presidency by destroying the credit worthiness of our great nation.

Slam them up against the wall by pulling all federal funding to every state whose member of congress wouldn't vote to raise the debt ceiling.

And then let them try to explain to their voters why their food stamp cards don't work, why their social security checks aren't arriving and their road repairs all stopped and half their schools are closing.

Time for some hardball, sir.

Respectfully, of course.

That's The Big Picture.