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Legal Scholars Support Ignoring the Debt Limit If Congress Fails Its Constitutional Responsibility

30 Jul 2011
Posted by Bruce Bartlett

Some time in the next week or so, President Obama will be forced to break the law. Either he must break the law by refusing to pay bondholders the interest or principal they are legally entitled to, or he must refuse to pay government contractors, government employees, Social Security recipients and millions upon millions of other people and businesses that are also legally entitled to payments from the Treasury. Republicans say he can just pay the bondholders and screw everyone else. But the president is just as legally obligated to make other payments required by appropriations and other laws as he is to make interest payments. Indeed, there is a law, the Congressional Budget and Impoundment Control Act of 1974, which says that it is illegal for the president to fail to spend money that Congress has appropriated. Furthermore, the Supreme Court ruled in the case of Clinton v. New York that the president may not impound funds even if Congress says he can. Therefore, there is no possible way that Obama can avoid breaking the law once the Treasury runs out of cash to pay its bills, which will happen shortly unless the debt limit is raised.

 
For several months, a number of legal scholars have argued that section 4 of the 14th Amendment to the Constitution empowers the president to disregard the debt limit in the event that the Treasury runs out of cash and the president is forced to break the law. I have pulled together a considerable amount of material in support of the idea that the debt limit is constitutionally invalid. I have exluded arguments to the contrary by Prof. Laurence Tribe and others because my point is not to make a legal argument, but rather to show that there are a number of reputable legal scholars who support preemption of the debt limit if it is not raised in time, which seems likely at this point. There is no evidence that President Obama will ignore the debt limit; he and his spokesmen have said repeatedly that this is not an option. If, however, he should change his mind, he will have considerable support.
 
The following material is in chronological order.
 
Constitution of the United States, Amendment 14, section 4 (1868).
 
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.
 
Perry v. United States, 294 U.S. 330 (1935). The only Supreme Court case that has ever referenced sec. 4. The relevant passage is on page 354:
 
The Fourteenth Amendment, in its fourth section, explicitly declares: “The validity of the public debt of the United States, authorized by law,…shall not be questioned.” While this provision was undoubtedly inspired by the desire to put beyond question the obligations of the Government issued during the Civil War, its language indicates a broader connotation. We regard it as confirmatory of a fundamental principle, which applies as well to the government bonds in question, and to others duly authorized by the Congress, as to those issued before the Amendment was adopted. Nor can we perceive any reason for not considering the expression “the validity of the public debt” as embracing whatever concerns the integrity of the public obligations. [Emphasis in original.]
 
John McGuire, “The Public Debt Clause and the Social Security Trust Funds: Enforcement Mechanism or Historical Peculiarity?” Loyola Journal of Public Interest Law, vol. 7 (Spring 2006), pp. 203-34. Excerpt:
 
Several factors argue for a more lasting constitutional presence for the Public Debt Clause. Most notable is the phrasing and grammatical structure of the Clause. Several drafts of this clause were introduced, and all differed dramatically from the version that was ultimately accepted. The discarded drafts contained much narrower language that focused on the specific debts garnered during the Civil War. Unlike these earlier versions, the accepted version refers to the public debt generally, and then adds a subordinate clause to include the war debt.
 
Thomas Geoghegan, “Dear GOP, Default is Unconstitutional,” Politico (March 31, 2011). Geoghegan is a Washington lawyer. Excerpt:
 
The drafters of the 14th Amendment properly feared that, on readmission to the Union, legislators from the red states — I mean the Confederates — might try to impair the credit of the United States.

Nothing could be more inimical to U.S. national security. Ask any war leader — from Henry II to Winston Churchill. Unless the validity of the public debt is unquestioned, especially by the government’s elected officials, there is great difficulty even in putting an army in the field.

Without our nation’s unimpaired credit, we might have lost to the Confederacy. We might have lost to the Axis in World War II. No, the validity of the public debt should not even be questioned in the weeks ahead.
 
Garrett Epps, “Our National Debt ‘Shall Not Be Questioned,’ the Constitution Says,” The Atlantic (May 4, 2011). Epps is a professor of law at the University of Baltimore. Excerpt:
Southerners were used to having their way in Congress – they had dominated the institution from 1787 until secession in 1861 – and many believed that when their representatives arrived in House and Senate, they would be able to tear up the nation's IOUs.  
Section Four was the response; its language is extraordinary. First, it does not simply say that the national debt must be paid; it says that its “validity ... shall not be questioned.” Only one other section of the Constitution--the Thirteenth Amendment's proclamation that “[n]either slavery nor involuntary servitude ... shall exist within the United States, or any place subject to their jurisdiction” – is as unqualified and sweeping.
Second, it suggests a broad definition of the national debt: “...including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion.”
From this language, it's not hard to argue that the Constitution places both payments on the debt and payments owed to groups like Social Security recipients--pensioners, that is – above the vagaries of Congressional politics. These debts have to be paid, the argument would be, in full, on time, without question.  If Congress won't pay them, then the executive must.
Jonathan Zasloff, “If the Debt Ceiling is Unconstitutional, How Would Anyone Know?” The Reality-Based Community (May 19, 2011). Zasloff is a professor of law at UCLA. Excerpt:
Garrett Epps thinks that the debt ceiling is unconstitutional; Bruce Bartlett agrees. I’m not so sure; the question would turn on whether  appropriations and entitlements that the Treasury would need to borrow to pay for would be regarded as “public debt” within the meaning of Section 4 of the Fourteenth Amendment.  You could argue it both ways.
But if the administration takes the position that it must continue to borrow to comply with the Fourteenth Amendment, who would stop it?  Put another way, who would have standing to sue?  Taxpayers clearly would not. Individual members of Congress?  No: the Supreme Court’s 1997 decision in Raines v. Byrd would seem to foreclose that. Congress as a whole? Perhaps; but what would it require for Congress as a whole to bring the lawsuit? A joint resolution would be blocked by Senate Democrats. That leaves the House to bring the lawsuit, and one could easily argue that one house would not have standing any more than individual members of Congress would.
I think that Raines, and really the whole line of conservative standing decisions in the last two decades, were wrongly decided. But that’s what conservatives get by trying to slam the courthouse door shut. The right-wing judicial activists that now populate the Supreme Court have little compunction in violating precedent, even precedent of their own making, that do not comport with their policy preferences, and perhaps this will be another example of it. But there is a pretty strong argument that if the Treasury just goes ahead and blows through the debt ceiling on constitutional grounds, the courts will rule that no one has standing to challenge them. I’m looking forward to John Yoo having a tantrum about executive overreach.
Michael Abramowicz, “Train Wrecks, Budget Deficits, and the Entitlements Explosion: Exploring the Implications of the Fourteenth Amendment’s Public Debt Clause,” Social Science Research Network (June 29, 2011). Abramowicz is a professor of law at George Washington University. Excerpt:
 
Part I argues that the Public Debt Clause applies beyond Reconstruction. Although there are few historical records available to help us discern the Framers’ intention, the history of the Clause’s adoption shows that Congress did not intend to limit its applicability to Civil War debt, but rather sought to embed fiscal honor within the Constitution. The Supreme Court has considered the Clause in just one case, but its decision in that case reaffirms the Clause’s vitality and legitimizes its future development.
 
Part II argues for a broad reading of the Clause. The language and history of the Clause show that the “public debt” can include more than just bonds, and that formal repudiation need not occur for its validity to have been questioned.
 
Part III applies the Public Debt Clause to problems in the budget process. The most obvious consequence of taking the Clause seriously would be that a governmental failure to make debt payments…would be unconstitutional. More broadly, the Clause renders unconstitutional the federal debt-limit statute that makes default possible.
 
Jonathan Adler, “Is the Debt Limit Constitutional?” The Volokh Conspiracy (June 30, 2011). Adler is a professor of law at Case Western Reserve University. Excerpt:
 
The Huffington Post reports that some Democrats are urging the White House to ignore the debt ceiling on the grounds that it is unconstitutional. The basis for this argument is Section 4 of the Fourteenth Amendment, which provides “The validity of the public debt of the United States, authorized by law, . . . shall not be questioned.” Under this provision, some argue, the federal government is prohibited from defaulting on its debt obligations. Therefore, the argument goes, the President could violate the debt ceiling imposed by Congress if necessary to pay existing obligations.
 
This is an interesting argument, and one that is unlikely to be resolved by the Courts. There is no indication that President Obama is willing to embrace this argument. If he did, it’s not clear what anyone could do about it. Were the White House to authorize the assumption of debt above and beyond that authorized by Congress, it is not clear that anyone would have standing to challenge this action in federal court. As a consequence, the question would be left to the political branches.
 
Jack Balkin, “The Legislative History of Section Four of the Fourteenth Amendment,” Balkinization (June 30, 2011). Balkin is a professor of law at Yale. Excerpt:
 
Like most inquiries into original understanding, this one does not resolve many of the most interesting questions. What it does suggest is an important structural principle. The threat of defaulting on government obligations is a powerful weapon, especially in a complex, interconnected world economy. Devoted partisans can use it to disrupt government, to roil ordinary politics, to undermine policies they do not like, even to seek political revenge. Section Four was placed in the Constitution to remove this weapon from ordinary politics.
 
Jack Balkin, “The Debt Limit Debate and the War Powers Debate,” Balkinization (July 7, 2011). Excerpt:
 
In today's Washington Post, Larry Chapman notes that, if pressed, Obama might simply invoke the April agreement to fund the government through the end of the current fiscal year (i.e., September 30) and argue that this implicitly gives him authority to issue new debt, because the two laws are in conflict and the later law (the April authorization) supersedes the earlier law (the debt ceiling limit). (This would put us in Youngstown box 1-- the President acts with authorization, so his power is at its greatest.).

This is a clever solution, although it only takes us up to September 30th. And it has a few problems, which I'll discuss in a moment. My reason for mentioning it that this argument essentially recapitulates the Clinton Administration's constitutional defense of the Kosovo operation in 1999. The Republican-controlled Congress did not want to authorize the President's Kosovo intervention and the War Powers 60 day limit ran out. So the Clinton Justice Department argued that an appropriation of money for the Kosovo operation was equivalent to an explicit authorization.


The analogous argument in the debt ceiling debate interprets the April continuing authorization to also authorize extending the debt limit. This is tricky because there is very strong evidence that this was not Congress's intent, and nobody in the debates believed that they were raising the debt limit. In addition, if the argument works, then separate legislation creating a debt limit is almost always superfluous, because Presidents can usually interpret the last appropriation as authorization to borrow money above the debt limit and issue new debt as they need it; moreover, they can do so even if there is no emergency! Whether or not this is good public policy, it's not consistent with what we know about congressional intent.
 
Sanford Levinson, “Will Obama Drive Us Over the Cliff While Proclaiming His Constitutional Purity?” Balkinization (July 8, 2011). Levinson is a professor of law at the University of Texas. Excerpt:
 
So let's review the bidding: Laurence Tribe, who remains the country's leading academic constitutional lawyer, backed by Jack, argue that the President is without legal resources should congressional Republicans continue to behave like latter-day Jefferson Davises and risk the destruction of the national (and world) economy (and, according to Bruce Bartlett, vital American national security interests). So are we going to go over the cliff, with Obama, the legendary former professor of constitutional law at the University of Chicago and president of the Harvard Law Review, saying, like Buchanan, "I know this is terrible, but what do you expect me to do, since I've sworn to uphold the Constitution?" Or will he, like Lincoln (and other predecessors), decide that driving over the cliff in the name of constitutional fidelity, when faced with a Congress that is traducing their own such duties, isn't really such a great idea? If that is the decision, will he do by becoming, almost uniquely, a Type I "constitutional defier" (violating the Constitution in order to save the American order, which Michael Stokes Paulsen argued, incidentally, was a power given by the Oath of Office, which is how he defended Abraham Lincoln and, more recently, George W. Bush). Or will he, like most political leaders, decide that there might be some merit in the Section Four argument for presidential authority after all, whatever grade it would receive from his mentor at the Harvard Law School?
 
Jack Balkin, “Secretary Geithner Understands the Constitution: The Republicans Are Violating the Fourteenth Amendment,” Balkinization (July 8, 2011). Excerpt.
 
The current strategy of congressional leaders in the Republican Party violates the Constitution because they are threatening to take us over a cliff in order to push their radical policy agenda. Threatening to undermine the validity of the federal debt in order to gain political points is precisely what section 4 was designed to prevent. Secretary Geithner does not believe that the President is allowed to violate the Constitution himself to stop congressional Republicans, but it does not follow that what the Republicans are doing is constitutional.

The press so far has been asking whether the debt ceiling is constitutional. The correct question they should ask is whether the Republican strategy of hostage taking violates the Constitution. It does.

You may ask: what good is saying that the Republicans are acting unconstitutionally if President Obama is unwilling to threaten to raise the debt ceiling by himself? The question answers itself: If the public believes that the Republican Party is violating the Constitution and the President is defending the Constitution, that puts a different sort of pressure on Republicans.

The problem that the Obama Administration faces, in my view, is that it has not made this constitutional claim early enough and often enough in the past several months. Instead, the President has proceeded in public as if there are no hostages, and therefore there is no unconstitutional threat. The President may believe that this approach will make it easier for him ultimately to strike a deal. But if the public believes that the Republicans are violating the Constitution, and that as a result the economy is about to collapse, this would seem to give him a bargaining advantage of a different kind.

Moreover, by not denouncing the Republican strategy now on constitutional grounds, President Obama virtually guarantees that this same hostage taking strategy will be used repeatedly whenever a House of Congress controlled by one party wants to stick it to a White House controlled by the other. Indeed, one can expect that the Republican Party will continue to use this very same strategy as soon as the next debt ceiling is reached, for if it made President Obama roll over the first time, why not try it again and again?

The President should take a constitutional stand now and insist in any deal that is struck that Congress automatically raise the debt ceiling whenever it appropriates new expenditures, as was the practice until recently. This approach would prevent a future Congress--or even this one--from violating the purposes behind section 4 of the Fourteenth Amendment.
 
Joe Conason, “Exclusive Bill Clinton Interview: I Would Use Constitutional Option To Raise Debt Ceiling and ‘Force the Courts to Stop Me,’” The National Memo (July 19, 2011). Excerpt:
 
Former President Bill Clinton says that he would invoke the so-called constitutional option to raise the nation’s debt ceiling “without hesitation, and force the courts to stop me” in order to prevent a default, should Congress and the President fail to achieve agreement before the August 2 deadline.
 
Sharply criticizing Congressional Republicans in an exclusive Monday evening interview with The National Memo, Clinton said, “I think the Constitution is clear and I think this idea that the Congress gets to vote twice on whether to pay for [expenditures] it has appropriated is crazy.”
 
Lifting the debt ceiling “is necessary to pay for appropriations already made,” he added, “so you can’t say, ‘Well, we won the last election and we didn’t vote for some of that stuff, so we’re going to throw the whole country’s credit into arrears.”
 
Having faced down the Republican House leadership during two government shutdowns when he was president -- and having brought the country’s budget from the deep deficits left by Republican presidents to a projected surplus -- Clinton is unimpressed by the GOP’s sudden enthusiasm for balanced budgets. But he never considered invoking the Fourteenth Amendment -- which says “the validity of the US public debt shall not be questioned” – because the Republicans led by then-Speaker Newt Gingrich didn’t threaten to use the debt ceiling as a weapon in their budget struggles with him.
 
According to Clinton, the Gingrich Republicans thought about that tactic before rejecting it -- and Treasury officials who served under Clinton commissioned legal research on the president’s power to raise the debt ceiling without congressional approval. While some legal scholars believe the Fourteenth Amendment requires Congress to fund the debt that results from its appropriations, and therefore empowers the president to raise the debt ceiling, others vehemently disagree.
 
[…]
 
 “Here’s what happened, as I remember – but let me back up a second,” Clinton said. “I have read accounts of that time where people at Treasury have been interviewed, and they say they did look into [the president's authority to raise the debt ceiling without congressional approval].” As for the Republicans, “they did think about doing that" -- withholding approval of a higher limit -- "and I knew they were thinking about it.” But the question ultimately did not arise for Clinton, he says, because his opponents in Congress decided “they didn’t want to get caught” in a position where they appeared to be repudiating the debt incurred by their own party’s two previous presidents.
 
“The reason that raising the debt limit is so unpopular is that people think you’re voting to keep [increasing] deficit spending, instead of voting to honor obligations that were already incurred,” he said. “I think [the Gingrich Republicans] figured I’d be smart enough to explain to the American people that they were refusing to pay for the expenses they had voted for when Ronald Reagan and George H.W. Bush were president. And that would make ‘em look bad.”
 
Obama could offer precisely the same explanation in the present circumstances, where most of the current debt can be traced to the profligate military spending and tax cuts of the last Bush administration. Just as the nation’s debt had tripled or quadrupled between 1981 and 1993, in the dozen years of Republican rule before Clinton’s first inauguration, as he points out, so the second Bush administration plunged the budget from surplus to deep deficit before Obama spent one penny on economic stimulus or anything else.
 
Neil H. Buchanan, “Some Further Thoughts About the Debt Limit,” Dorf on Law (July 15, 2011). Buchanan is a professor of law at George Washington University. Excerpt:
 
For the past few weeks, I have been one of the people arguing that the debt-limit statute is unconstitutional. One reason that readers should hope that this is correct is that a constitutional resolution is the best hope for preventing this circus from becoming a regular part of our political scene. There is no hope whatever that this or any future Congress would simply eliminate the debt-limit law, even though doing so would do nothing to limit Congress's ability to control the level of federal debt. It is simply unthinkable that any politician would be willing to be known as someone who "voted to let the debt go up without limit."

Fortunately, the Constitution does require that the debt-limit law be declared invalid. Section 4 of the 14th Amendment had the immediate effect of preventing politicians from playing games with the budgeting process to achieve inappropriate political goals. (The question was whether the post-Civil War federal government's debts could be defaulted upon, to prevent the losing side in the reunified nation from paying a share of the winning side's debts.) Under current circumstances, Section 4 prevents the debt-limit law (and politicians' refusal to raise the ceiling in line with their enacted budgets) from causing the federal government to default on any of its legal obligations.

Everyone agrees that, without the debt-limit law, current law would allow the government to borrow the money necessary to cover its obligations. If that were not so, then we would not be in danger of exceeding the debt limit. That is, if the spending laws had not been written to include the authority to increase borrowing, then those laws would currently not be enforceable even in the absence of an overall debt limit. The very premise of the debt-limit standoff, therefore, is that the otherwise-valid spending laws would lead to an increase in debt above $14.3 trillion. The debt-limit statute purports to prevent the government from paying those other obligations, which violates Section 4.

Because of problems with standing, justiciability, and other issues, however, it is highly unlikely that the Third Branch will declare the debt-limit law unconstitutional, meaning that the ongoing political process -- the very source of the crisis -- must somehow find a way forward. The constitutional argument is unappealing to President Obama and most/many Democrats, because they worry that they could pay a price for "wanting" to have more debt.
 
Jack Balkin, “Why Bill Clinton Would Invoke Section 4 of the Fourteenth Amendment (and Obama Won’t),” Balkinization (July 19, 2011). Excerpt:
 
It's important to recognize that Clinton is making both a political argument and a constitutional argument.

The political argument is that he would use the constitutional text as a weapon in the debate with Republicans early on to explain why they are being unreasonable and why they should back down and raise the debt ceiling.

The constitutional argument is that, aside from these political considerations, the President has the right to act without further Congressional authorization because the money is already appropriated.

Under some circumstances, the political argument might be quite powerful: The President portrays himself as the defender of the Constitution, and he portrays the Republicans as violating the Constitution either for selfish reasons (their wealthy contributors don't want to pay more taxes) or because they are ideological zealots. By doing this early, as soon as the issue is raised, Clinton hopes to nip the potential hostage situation in the bud. Then the two sides can have a debate about budgets, spending, and taxes. At least, this is what Clinton thinks would have happened if he had been President. However, because Clinton didn't face a Republican Party strongly affected by a Tea Party caucus, we don't actually know what he would do in these circumstances if he were President.

The constitutional argument Clinton is making is a bit less unclear. There are many ways of interpreting what Clinton said. One one [sic] reading, he seems to be saying that the debt ceiling is constitutionally superfluous. That is, once you authorize expenditures, you've also authorized borrowing to pay for expenditures, regardless of the text of the debt ceiling statute. Put so starkly, I'm not sure it's right. Surely in a wide range of areas, including foreign policy and even in the conduct of warfare, Congress may tell the President: "Do X but don't do Y to accomplish it." For example: detain terrorist suspects but don't violate the Geneva Conventions. Or: engage in electronic surveillance but only under the terms authorized by the Foreign Intelligence Surveillance Act. Anybody who is worried about George W. Bush's unilateralism after 9/11 should be worried about unilateralism by a later president, whether Democratic or Republican.

The President has a duty, under the Take Care Clause, to try to abide by all of the laws to the extent he can. So if he can abide by section 4 of the Fourteenth Amendment, and the debt ceiling, and appropriations statutes, he has a duty to try to do so, through whatever legal, financial and accounting methods he has at his disposal.

But what if he can't? What if the markets start to melt down and he has exhausted all other alternatives?

The best version of Clinton's argument is a little different than the one he is quoted as making. It's an argument for emergency powers: If all else fails, and we are in an emergency situation, the President may act to stabilize the situation. He can then get official authorization later on, or as Clinton says, "force the courts to stop me." It's very unlikely that they would.

Obama has not made the constitutional argument, and the reason, I believe, is that he doesn't actually want to make the political argument, and adopt Clinton's political strategy. It's worth noting that although the problem (and the threat by Republicans) was understood well in advance, Obama has not tried to nip the debt ceiling crisis in the bud by acting as Clinton said he would. Rather, Obama believes that he can turn what looks like a hostage situation into a opportunity to resolve concerns about government spending and to secure entitlement programs for many years to come. This might be a wise strategy or a foolish strategy given his political opponents. Nevertheless, it appears to be what he is doing. Therefore, it's important to understand that Presidents make (or do not make) constitutional arguments both for legal reasons and for political reasons. This explains why Clinton's approach is very different from Obama's.

Eric A. Posner and Adrian Vermeule, “Obama Should Raise the Debt Ceiling on His Own,” New York Times (July 22, 2011). Posner is a professor of law at the University of Chicago, Vermeule is a professor or law at Harvard. Excerpt:
 
PRESIDENT OBAMA should announce that he will raise the debt ceiling unilaterally if he cannot reach a deal with Congress. Constitutionally, he would be on solid ground. Politically, he can’t lose. The public wants a deal. The threat to act unilaterally will only strengthen his bargaining power if Republicans don’t want to be frozen out; if they defy him, the public will throw their support to the president. Either way, Republicans look like the obstructionists and will pay a price.
 
Where would Mr. Obama get his constitutional authority to raise the debt ceiling?
 
Our argument is not based on some obscure provision of the 14th amendment, but on the necessities of state, and on the president’s role as the ultimate guardian of the constitutional order, charged with taking care that the laws be faithfully executed.
 
Jennifer Epstein, “Clyburn: Invoke the 14th Amendment,” Politico (July 27, 2011). Excerpt:
 
Rep. James Clyburn and a group of House Democrats are urging President Barack Obama to invoke the 14th Amendment to raise the debt ceiling if Congress can’t come up with a satisfactory plan before the Tuesday deadline.
 
Clyburn, the third-ranking House Democrat, said Wednesday that if the president is delivered a bill to raise the debt ceiling for only a short period of time, he should instead it and turn to the phrase in the Constitution that says the validity of the U.S. government’s debt “shall not be questioned.” 
“If that’s what lands on his desk, a short-term lifting of the ceiling, the debt ceiling, he should put it on his desk next to an executive order,” Clyburn said at a press conference. “He should sign an executive order invoking the 14th Amendment to this issue.” The Associated Press reported that he was applauded when he suggested the idea at a caucus meeting earlier in the day.
 
Lynda Waddington, “Tom Harkin Argues Obama Can Raise Debt Ceiling By Executive Order,” Iowa Independent (July 28, 2011). Excerpt:
 
U.S. Sen. Tom Harkin told reporters on a conference call Thursday afternoon that he believes legal precedent and non-action by Congress could culminate to provide an avenue by which President Barack Obama could act alone to raise the nation’s debt ceiling by executive order.
“I believe that the 14th Amendment and the finding in Perry v. US gives him the authority to do that,” Harkin said, noting that such an outcome would depend on whether or not Congress took action.
 
“I think he would need to wait until the last minute — like maybe next Monday or Tuesday — but he could [at that point] say, ‘Well, Congress has not acted and since we cannot go into default, I’m issuing an executive order to raise the debt.’ I think most members of Congress would probably applaud that … most members of Congress don’t like voting on raising the debt ceiling anyway, so they’d probably like that they wouldn’t have to vote on it.”
 
Jack Balkin, “3 Ways Obama Could Bypass Congress,” CNN (July 28, 2011). Excerpt:
 
If the president reasonably believes that the public debt will be put in question for either reason, Section 4 comes into play once again. His predicament is caused by the combination of statutes that authorize and limit what he can do: He must pay appropriated monies, but he may not print new currency and he may not float new debt. If this combination of contradictory commands would cause him to violate Section 4, then he has a constitutional duty to treat at least one of the laws as unconstitutional as applied to the current circumstances.
 
This would be like a statute that ordered the president to hire 50 new employees provided that none of them is a woman. The second requirement violates the Constitution, so the president can hire the 50 employees and ignore the discriminatory provision.
 
Here the president would argue that existing appropriations plus the debt ceiling create an unconstitutional combination of commands. Therefore he chooses to obey the appropriations bill -- which was passed later in time anyway -- and ignores the debt ceiling. He orders the secretary of the Treasury to issue new debt sufficient to pay the government's bills as they come due.
 
The big test would be whether the markets treat these new bonds just like older bonds. If they do, or if they demand only a slightly higher interest rate, the president will have avoided economic Armageddon and saved the country's economy -- and the world's. The president and Congress can then move on to the real issue: fighting about future appropriations and revenues.
 
At this point, the president should ask Congress to ratify his actions by raising the debt ceiling. If they do not, he can continue the process until they do. His actions might set a precedent: Knowing that the president will invoke Section 4, congressional threats of using the debt ceiling to extract political concessions will become a defunct strategy in the future.
 
In fact, this was one reason why Section 4 was put into the Constitution in the first place.
 
Jennifer Bendry, “Hoyer Backs Obama Using 14th Amendment to Resolve Debt Crisis,” Huffington Post (July 29, 2011). Excerpt:
 
House Minority Whip Steny Hoyer (D-Md.) on Wednesday night became the highest ranking Democratic leader to throw his support behind the idea of President Barack Obama using the 14th Amendment of the Constitution to raise the debt ceiling on his own.
 
That option is "arguably in his power," Hoyer said on MSNBC's "The Ed Show."
 
"Very frankly, if it came down to his looking default in the eye on Tuesday or taking this action, as President Clinton said, it would be better to take the action and find out later that perhaps he went beyond his authority but … protected the creditworthiness of the United States of America."
 
House Budget ranking member Chris Van Hollen (D-Md.) also lent support to the constitutional approach.
 

 

If I weren't already married

you'd be my man.

Thanks, Bruce. Great work.


Thanks for putting all the analyses in one place

There is also the simple fact that we are a nation fighting not one but two wars.

Between the balanced budget amendment, the focus solely on spending, and the requirement that the "debt ceiling" comes up again in a few months (not to mention Stan's point about the 2012 budget fight), Boehner's bill deserved to be voted down, and quickly.

Notably, a senior economist from Brookings/UI spoke to the NEC about "spending in the tax code" of which surely there is enough.

I think we as a nation are going to have to look at the tax code, right quick, because the simple fact of the matter is that with 9%+ unemployment, government revenues, and government spending, will pose challenges. I rather doubt we need more commissions - the ideas are already on the table and concretely - more bipartisanship, and leadership from both parties, I'd say.


What happens to the budget if

What happens to the budget if Obama ignores the debt limit?

On Oct 1, the government will shut down because the Ryan Budget, passed by the House, is unacceptable to the Senate. Without the GOP moneybags pressuring House GOP to cut a deal (because of the debt ceiling crisis) what would pressure a deal that would not shut down the government?

Many in the Tea Party would consider a government shutdown to be a victory that would achieve many of the goals they could not achieve otherwise.

Absent a deal now, how does the budget get resolved?


The short answer

The short answer is we will move immediately from the debt ceiling drama war to the budget drama war, there probably will be a government shutdown for a few days as a result, and the "solution" will be a CR that probably takes us to calendar year end.

The longer answer involves a series of manufactured crises from now through November of 2012. It's partly election year politics and partly a deliberate attempt to get all eyes off the economy and job market.


This thing just gets better and better . . .

Turns out the next interest payment on the federal debt -- $31 billion worth -- isn't due until August 15th. But Treasury has to pay out $23 billion in Social Security benefits on August 3. If it stiff everyone else, it might be able to cover that payment out of cash flow on Aug 8 -- five days late.

But if it pays the seniors, it almost certainly won't have enough money to cover the vig on Aug 15th.

What this means, of course, is that without a debt limit deal Treasury will be put in a position where, if it intends to prioritize interest payments -- as it reportedly plans to do -- it will have to cut grandma off without a dime (as well as a lot of other people) then hoard most its incoming cash for another 12 days, so it can pay the moneylenders their pound of flesh.

And if you think the same teabagger morons who caused this fiasco won't be spending that time screaming bloody murder about how that evil closet commie Muslim Obama is trying to starve grandma and grandpa so he can pay off the Wall Street fatcats, then you haven't been paying attention.

I tremble for my country when I think that God has a really dark sense of humor.


Outstanding; thank you.

Outstanding; thank you.


Your Excellent Summary on The Debt Limit and the Constitution

Outstanding work Bruce!

You have become my go-to guy for understanding this and many other issues.


And there is a simple answer to this...

The President cannot logically appropriate funds that have not been obtained. QED, he is not in violation of either law if the funds to spend are not available.

Title X of the impoundment control act assumes that funds have been obtained to be spent.




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