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Some observers, including Garrett Epps, who is a legal scholar, and Bruce Bartlett, who is not, have argued that Section 4 of the 14th Amendment makes the debt ceiling invalid. That Section reads, in relevant part:
The validity of the public debt of the United States, authorized by law…shall not be questioned.
That’s it, at least for the relevant parts. The only Supreme Court case law on it concerned whether government could renege on debts it made (no), and thus whether it applies to non-Civil War debts (yes).
So what’s the argument here? Recall that if there a conflict between statutes, the standard method of resolution is the “last-in-time” rule, i.e. whichever statute was passed more recently wins. The argument is that if Congress approves appropriations after the enactment of a debt ceiling, then it is unconstitutional to refuse to spend money for those appropriations. And the Treasury can’t issue T-bills and then refuse to make good on them. Those are decent arguments, although hardly sure-fire winners. The weakest link in the chain is entitlements, in other words, Medicare and Social Security. Congress enacted those before it enacted the debt ceiling (2006 IIRC), so those might not fall under this interpretation. As I have argued previously, whatever the merits of the claim, it may be that the only body with the authority to challenge a President making the claim would be a Congressional joint resolution, which would be blocked by Senate Democrats.
But here’s the kicker: whatever the legal merits of the 14th Amendment claim, its political virtues are overwhelming. Think about it from John Boehner’s perspective: if he agrees to increase the debt ceiling without significant Medicare cuts from Obama, he’s toast. But if he doesn’t agree to do that, Wall Street and GOP contributors go nuts. What’s he going to do?
And consider it from Obama’s perspective: if he agrees to significant Medicare cuts, he’s toast. But if he doesn’t, and the nation defaults, then the economy goes nuts and his re-election is imperilled.
Now, what if Obama does as Epps suggests and just issues more debt? It’s perfect from his perspective: he doesn’t cave, pleasing his base (and anyone who cares about good policy), while ensuring that there is no default.
But it is also perfect from the Republican leadership’s perspective. They don’t cave; they don’t increase the debt ceiling; and they can rail against Presidential imperialism, Obama’s socialist-Muslim dictatorship, etc. And if I am right about standing, no one ever has to bring this to a head because no one has standing to sue!
What about on policy grounds? That’s also a winner: the United States is the only develoepd country that requires a legislative vote for this. No problem there.
Perhaps the only loser is the Constitution. But even that’s not for sure, and since Bush v. Gore, Republicans certainly have no basis for complaining about that. Besides, playing games with Constitutional text to escape political crises is as old as the Republic itself. As Congressmember Timothy Campbell once asked of President Cleveland, “What’s a Constitution among friends?”
[Cross-posted at Same Facts]
John Sully on June 05, 2011 1:09 AM:
Well, I took out my pocket copy of the constitution (supplied by a local tea party idiot) and in reading it it clearly holds that we cannot hold that debts resulting for the suppression of rebellion (the civil war or the war of northern aggression, for you southerners). However the United States shall not be held liable for debts incurred by the Confederacy in mounting the insurrection.
A 14th amendment article seems pretty weak given the subject of section 4. We won't repudiate claims incurred in the past, and we won't repudiate claims made to finance the Civil War, but we will not assume claims made by the Confederacy to mount the Civil War. IMHO, and IANAL, is a big fail.
Stephen on June 05, 2011 7:10 PM:
The constitution vests the power to borrow money in Congress, not the Executive branch. If the President starts issuing debt on his own authority, Congressional Republicans can simply respond by telling investors the new debt is constitutionally invalid, and they won't be paid back. If investors think there's even a chance this is true, it will induce exactly the crisis this strategy is intended to avoid.
Captain Dan on June 05, 2011 8:38 PM:
So John you think that "The validity of the public debt of the United States, authorized by law…shall not be questioned" seems weak!
Do you think that "Congress shall make no law..." in Amendment l is also weak?
Walker on June 05, 2011 9:15 PM:
The constitution vests the power to borrow money in Congress, not the Executive branch.
Which they effectively did by passing the budget. They still have control over the budget. If they don't want to borrow, they can just cut the budget.
Bernard HP Gilroy on June 05, 2011 10:40 PM:
Here's my thoughts on this idea people are throwing around: The debt ceiling and the 14th Amendment"
square1 on June 06, 2011 2:06 PM:
Bizarrely, everyone involved in this debate (i.e. reporters, pundits, politicians, etc.) seems incapable of distinguishing between defaulting on existing debt and failing to create new debt.
When the debt ceiling arrives, the Treasury Dept. can presumably no longer sell treasury bonds. Nothing in the Constitution allows the President to sell unlimited quantities of bonds.
However, all existing bonds would have to be honored. Any claim that the U.S. would--or should--"default" on existing debt runs afoul of the 14th Amendment.
Matt on June 09, 2011 10:21 PM:
Here's the problem:
Reasonable people can disagree about whether the 14th Amendment is primary here.
Reasonable people can disagree about which statute takes precedence.
Reasonable people can disagree about whether a budget automatically creates a debt per the 14th.
Reasonable people can disagree about whether the Treasury Dept. can issue bills under various circumstances.
Reasonable people can disagree about how the Supreme Court will rule on any of this.
And it doesn't even matter that there aren't many reasonable people on the other side of the aisle. You could Mock Court these questions for decades at any law school in the land. They're good solid argument fodder.
Meanwhile, bonds pay out in exact inverse proportion to the market's belief that they'll get paid back. Obama can declare the Aug. 3 batch of T-bills legit until he's hoarse, but he cannot declare that everyone believes him. Precisely because reasonable people can disagree, they'll sell at junk bond rates, which means they'll BE junk bonds.
I wish it weren't so, but there it is.