Nancy Pelosi

Nancy Pelosi by Cosmic Smudge

While President Obama certainly dodged the question about the Constitutional option on the debt limit today, he didn’t exactly say “I don’t agree with that interpretation” or “I will never use that kind of a reading.” He merely said that he didn’t think things would have to get to that point, and Congress should do its job. Left unsaid is what happens if or when Congress doesn’t do its job. You can argue that the President would be more tactically strong by warning Republicans that he would stop at nothing to pay the country’s debts, even if he had to utilize Constitutional measures, so they’d better have a serious negotiation, but we know by now that’s not his style.

But to that end, I think Nancy Pelosi is trying to steer the President in a particular direction. Pelosi announced that the Democratic Steering and Policy Committee, basically a committee set up to hold hearings that Republicans don’t favor, will convene a meeting tomorrow about “the impact of a default on the United States economy, job creation, seniors and the middle class.” Now, I’d expect this hearing to follow the standard narrative for what happens if the debt limit is reached and the government can no longer borrow money and defaults on its debts – Social Security checks may be suspended, the financial sector could seize up, we could fall back into a double-dip recession, etc. But take a look at the witness list:

Witnesses for the hearing include:

· Bruce Bartlett, Columnist, Former Advisor to Presidents Ronald Reagan and George H.W. Bush
· Alan S. Blinder, Professor of Economics and Public Affairs at Princeton University, Co-Director of Princeton’s Center for Economic Policy Studies
· Heather Boushey, Senior Economist, Center for American Progress
· Matthew J. Slaughter, Associate Dean of the MBA Program and the Signal Companies’ Professor of Management at the Tuck School of Business at Dartmouth

I would direct your attention to Bruce Bartlett. He’s been perhaps the leading advocate of the President using the Constitutional option under Section 4 of the 14th Amendment. He was on top of this back in April, and he reiterated it again recently. In effect, most of us have been catching up to Bartlett on this one.

Since my article appeared, I have had the opportunity to do further research on this topic and now feel even more strongly that the Fourteenth Amendment trumps the debt limit. I found strong support for this position in a law review article by George Washington University law professor Michael Abramowicz. Writing in the Tulsa Law Journal (“Beyond Balanced Budgets, Fourteenth Amendment Style,” 33:2, Winter 1997, pp. 561-612), he concludes that any government action “making uncertain whether or not a debt will be honored is unconstitutional.” As Abramowicz explains:

“A debt does not become valid or invalid only at the moment payment is due. A debt’s validity may be assessed at any time, and a debt is valid only if the law provides that it will be honored. Therefore, a requirement that the government not question a debt’s validity does not kick in only once the time comes for the government to make a payment on the debt. Rather, the duty not to question is a continuous one. If as a result of government actions, a debt will not be paid absent future governmental action, that debt is effectively invalid. The high level of generality recognizes that instead of referring to payment of debts, the Clause bans government action at any time that affects the validity of debt instruments…. Moreover, there is no such thing as a valid debt that will nonetheless not be honored; a debt cannot be called “valid” if existing laws will cause default on it. So as soon as Congress passes a statute that will lead to default in the absence of a change of course, the debt is invalid (or at least of questionable validity) and Congress has violated the original meaning of the Public Debt Clause.”

To my mind, this means that the very existence of the debt limit is unconstitutional because it calls into question the validity of the debt. So would any other provision of law. That is a key reason why Congress created a permanent appropriation for interest payments at the same time that the Fourteenth Amendment was debated. Previously, Congress had to pass annual appropriations for interest.

There’s no way we get through that entire hearing tomorrow without Bartlett stating unequivocally, in front of cameras, that the debt limit is unconstitutional and that the President has the authority to ignore it. Nancy Pelosi, George Miller and Rosa DeLauro of the Democratic Steering and Policy Committee, and other House Democrats will be sitting there when he says it. Everyone knows this will happen. Democratic leaders are deliberately giving a platform to the person in Washington most intimately connected to this policy option. It’s not by accident.

It’s of course possible that this goes the way of the President’s preference, that a deal gets reached with mostly spending and a little revenue before the deadline. But in the event that there’s an impasse, House Democrats tipped their hand as to their desired solution, I think.