The flavor of the moment in the increasingly bitter and high-stakes gamesmanship over the debt ceiling appears to be the notion that the whole concept of a debt ceiling is unconstitutional. Here, for your reference, is the source of the argument. Paragraph 4 of the 14th Amendment:
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.
The origin of this provision is of course uncertainty over obligations incurred during the Civil War, but the effect of the provision has been held in a 1935 case to extend to all debts of the United States.
It doesn’t seem to me that this provision helps those arguing against the concept of a debt ceiling very much. The problem is the second clause: “authorized by law.” The plain meaning of this paragraph (and the plain meaning is about all we have to go on, as there has been very little litigation over this provision) seems to me to be: if debt was validly issued according to the law on the books at the time, subsequent developments cannot affect the validity of that debt.
But that obviously doesn’t solve the debt ceiling problem. Because the whole point of the debt ceiling is that it’s a duly-enacted law that limits the amount of outstanding debt the U.S. may have at a given time. If debt is issued in excess of the existing statutory debt ceiling, that debt would not seem to have been issued in a manner “authorized by law.”
Now, perhaps the argument is that, under this provision, the U.S. can’t default on existing debt, and therefore the U.S. has to be able to continue to borrow money to pay off existing obligations notwithstanding the statutory ceiling. But I don’t think that follows. The premise is correct – existing debt, validly issued, remains valid and enforceable against the United States [see UPDATE below]. But the conclusion – that the U.S. therefore can issue more debt despite a statutory debt ceiling – seems to me a non sequitur, because obviously discretionary spending could be slashed in order to meet existing obligations, or emergency taxes could be put in place to generate the necessary revenues. Either of those options would probably be bad public policy, for a variety of reasons, but both would be legal.
[UPDATE: As I think more about it, and along the lines of centralmassdad’s comment, the premise isn’t even correct. Debt that is in default is still valid – that, after all, is why we have legal remedies like foreclosure. So even if the U.S. goes into default on outstanding debt, that does not (and, under the 14th Amendment, cannot) affect the validity of the debt. It just makes it harder to collect. But the 14th Amendment doesn’t say anything about that.]
In any event, any sort of constitutional confrontation along these lines would surely spook the markets, which would probably result in exactly the effect it was supposed to avoid: panic, and consequently, perhaps, a market crash. I don’t know what the answer is to finding a resolution to this seemingly intractable political problem, but I doubt it’s ignoring existing law based on an obscure, untested and, it seems to me, not directly on-point constitutional provision.
centralmassdad says
I was unaware that this trial balloon had floated. There was an interesting Planet Money podcast on this some weeks back that gave a little historical background on this, and I recommend it. (Can’t link it though, at the moment).
This issue is that the spending power strictly belongs to the Congress, which means that the borrowing power also strictly belongs to the Congress. For the first century of the republic, this was no big deal as the government was small, and borrowed little.
After the Civil War, the government began to grow, and it became burdensome for Congress to specifically consider each and every proposed debt obligation. The Army Corps of Engineers needs to borrow $X to maintain a dam on some river, etc.– and Congress had to deal with the nitty gritty details of the borrowing: what interest rate? how are the bonds denominated? maturity date? etc.
The creation of the Federal Reserve created a place where the nitty gritty could be worked out by people who understood it, and without getting gummed up in the Congress. But the Federal reserve wasn’t the Congress (I’m not sure it is executive, either; it is neither fish nor fowl).
So how to retain the ultimate spending/borrowing power in the Congress, where it belongs? Answer: the debt ceiling, established by the Congress.
What’s more, no one to my knowledge on either side of this issue– even the most radical Tea Partiers– has suggested that existing federal debt is invalid, so it is hard to see how the provision above is even relevant to the debt ceiling. What is contemplated is that existing debt will be valid, but in default.
SomervilleTom says
I believe the relevance is to the debt ceiling is that when the day of reckoning comes (current estimates seem to be August 2, 2011), then anything spent after that will contribute to new federal debt. Thus, the impact of the debt ceiling is to stop the government from creating new debt (and spending anything at all). Proponents of this proposition apparently argue that such a ceiling is an unconstitutional restriction on the government.
If the government cannot issue new debt, it cannot spend money. If it cannot spend money, it is shut down. This is worse than the insanity that Newt Gingrich and company tried during the Clinton era.
Constitutional or not, it is insane and suicidal to not extend the debt ceiling.
SomervilleTom says
Among the spending that would be blocked by not extending the debt ceiling is spending to service existing debt. Thus, the inability to create new debt in turn guarantees that the United States will default on existing debt.
It is difficult for me to imagine a more colossally self-destructive public “policy”.
centralmassdad says
Valid, but defaulted.
And obviously there cannot be new debt without legal authorization.
Of course, the administration could prioritize debt payments by stopping lots of other payments, and thus prevent default. Sorry folks, no social security this month. Courts are closed. No medicare. Call your Congressman.
I hope they have the stones to do that rather than try to blame a post-default mess on the GOP.
The Republicans think they win that confrontation, a bet they have lost before.
JimC says
… GOP Senators, all of them, are advocating a balanced budget amendment.
Not a bad idea really. But I highly doubt that they’re serious.
tedf says
I agree with you, David. Leaving aside the “spooking the market” point, Article I, Section 9 of the Constitution provides:
How does this provision interact with the relevant language in the Fourteenth Amendment? I don’t want to find out!
cos says
#1: The legal argument has two planks that work together, and you’re looking at just one of them in isolation. The other half of the legal argument is that the debts being incurred are the direct result of appropriations that have already been passed by Congress – a Congress that was well aware at the time they passed those appropriations bills that they’d need to be funded through borrowing.
#2: The political strategy: By making noise about taking this to court if the House doesn’t act in time, Democrats partly defuse Republicans’ threat of brinkmanship. In effect they’re saying “we don’t actually need to ensure that you pass this by the deadline; it’d be good, and we really want it to happen, but if you insist on obstructing, so be it.” Whether they mean it or not, Republicans can’t be sure, which means they have a motive to play “chicken” just a little bit less, and give in at a point somewhat short of where they’d give in otherwise.
ms says
All the GOP wants to do now is ruin the economy to elect a GOP President.
Appropriations have already been made for many programs.
It is to be constured from the 14th Amendment, Section 4 that these obligations must be honored.
Stare down the GOP’ers and go to court.
And tell the public EXACTLY WHAT IS HAPPENING MONEYWISE WITH THIS.
Get spokespeople to say:
Your programs are being defunded and eliminated so that the super-wealthy and the sitting-on-cash corporations can get tax cuts.
The Republicans, who are doing this by not raising the debt ceiling are doing this to ruin the economy, and make more people be unemployed and broke, to elect a Republican President.
If there is a Constitutional crisis, it was going to happen anyway. Besides, under Citizens United, the Congress is totally owned by rich elites, anyway, so is what is there now worth defending too hard?
Probably not.
The GOP’s strategies, in recent decades, have been bolder than the Democrats. They take a position and push it to the max. Therefore, they get their way.
It is time for the Democrats to fight back boldly, fighting as hard as possible and using the hardest tactics, because hardball works.