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July 01, 2011

The Debt Ceiling And The Fourteenth Amendment

Well, the Democrats are actually paying attention to the Constitution for once, trying to use it to argue that the entire notion of a debt ceiling is unconstitutional and that the government actually has unlimited borrowing power that cannot be checked. The argument has been put forward by Secretary of the Treasury Timothy Geithner, and taken up by others on the Left as Barack Obama continues to indicate his intransigent opposition to budget cuts and his hopeless infatuation with tax increases.

At a briefing with reporters on Wednesday, President Obama was asked whether he believed that the debt ceiling was constitutional or whether the 14th Amendment required the government to meet all of its obligations regardless of the debt-limit statute.

Obama dodged the question. "I'm not a Supreme Court Justice, so I'm not going to put my constitutional law professor hat on here," he said about the debt ceiling and a question on the war in Libya.

Treasury Secretary Tim Geithner, however, is less afraid of wearing that hat. At a Politico Playbook breakfast on May 25, Geithner was asked by host Mike Allen about the negotiations over default and the debt ceiling.

"I think there are some people who are pretending not to understand it, who think there's leverage for them in threatening a default," Geithner said. "I don't understand it as a negotiating position. I mean really think about it, you're going to say that-- can I read you the 14th amendment?"

Now let's look at the relevant portion of the Fourteenth Amendment.

Section 4. 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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Now the whole Fourteenth Amendment argument is an interesting one, but I don't think it works (Professor Balkin's view of the matter not withstanding). After all, nobody would be questioning the validity of the debt or the fact that it is owed. Indeed, the US government would continue to acknowledge the obligation to pay. What would be at issue would be the ability to pay as scheduled due to a crisis of liquidity.

Of course, as you point out, the ability to pay those debts ON TIME would still exist -- as you point out, that would simply require cutting from that portion of the government spending not dedicated to serving the debt.

Now there are two clearly constitutional options here:

There is, of course, a third option, one that is more contentious from a constitutional point of view -- Obama and Geithner keep borrowing in defiance of the debt ceiling. That will result in two things:

Ultimately, the ball is in the Democrats' court. They can act like responsible grown-ups and begin making the cuts that are necessary to preserve our nation's long-term financial solvency -- or they can argue that there is no limit to what the government can borrow and that the Executive Branch has the authority under the Constitution to take the United States deeper into debt than Congress has authorized. And that, my friends, undoes a key element of the separations of powers designed by those who wrote the Constitution in 1787.

UPDATE -- Here's a great article that explains this point clearly, concisely, and with reference to the entire Constitution.





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Comments on The Debt Ceiling And The Fourteenth Amendment

"Obama and Geithner keep borrowing in defiance of the debt ceiling."

If I understand this the Constitution trumps any other law like the debt ceiling.

The debt ceiling raise is needed not for new spending but that that has been already authorized by Congress, ie by law and thus the President has 2 duties:
1) Uphold all laws that have been passed
2) The debt has already been committed to over many years so it is valid and "shall not be questioned.

That makes using the 14th a no brainer.

The Presidential oath also requires the President to protect and defend the Constitution. If he does not follow it as laid out above one could argue you could impeach him as well.

In fact all members of Congress took a similar oath so their inaction to provide the debt ceiling action needed to fund the laws passed by them could be deemed a violation of their oath of office subjecting Boehner in particular to impeachment. Right?

The other issue here is that failure to protect the nation's financial system from a meltdown is akin to "war" and the President again is bound to protect the nation as well. Keeping the nation from falling into a deeper recession, higher borrowing costs, higher deficits due to a double dip and the world losing faith in the US as a reserve currency makes his inaction on the 14th impeachable to me.

Failure to act has been estimated to cost the US $50B minimum directly for even a few day default due to increased debt rollover costs and as much as a trillion over a decade not to mention higher borrowing costs for consumers and business as well.

The President has put forth $2T in cuts and asked for $400B in tax loopholes being closed. Every deficit reduction plan that Reagan, Bush I and Clinton did required a combination. Why can't the Repubs simply negotiate in good faith and get this done?

If they do not they will get hung out to dry by the President being forced to act under his Constitutional duty. That surely isn't going to help them defeat Obama. It might just sew up his re-election before they even have a primary.

If they think he isn't tough enough to do this. Just remember the Sunday nite we found about Osama or the Somali pirates that were taken out right after he took office.

If he needs to he will act and get the job done as he should, no doubt about it.

|| Posted by John N, July 2, 2011 03:05 PM ||

John -- here's where your argument fails. The mere fact that Congress has authorized spending does not make it a debt or obligation under the Fourteenth Amendment. If there is not sufficient cash to spend on the actual debts and obligations (our bonded indebtedness and pensions), then that spending does not become obligatory. Indeed, at that point it becomes obligatory for the executive to NOT spend that money, because the Executive Branch cannot borrow one penny more than Congress has authorized it to borrow -- hence the debt ceiling.

Why not raise taxes (which is what "closing a tax loophole" really is)? Because unlike the earlier situations you mention, the United States is in such massive debt as a proportion of GDP that we cannot sustain the spending level and the tax increases will merely make the situation worse by slowing down the economy in the midst of the Great Dem-Pression that is currently in progress.

|| Posted by Rhymes With Right, July 4, 2011 11:13 AM ||
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