As the noise level rose about the so-called “Constitutional option” for the debt limit, the invocation of the 14th Amendment, Section 4, it has turned into a partisan football. In the Senate, Republicans prepared a resolution affirming the Constitutionality of the debt limit, even while one of their colleagues, Sen. Chuck Grassley, a member of the Senate Judiciary Committee, said that the Constitution may trump it:
“So people are looking at the fact that maybe the debt ceiling bill that Congress presumably has to pass for the government to borrow more maybe is contrary to that constitutional provision, and that the administration may take out [loans] on their own — just to borrow money — and say that they can ignore the law,” he said.
Grassley said that he was personally supportive of the debt ceiling, because it focuses attention on spending, but that if its existence was unconstitutional, there was nothing he or his colleagues could do. “I think it’s a discipline that Congress uses effectively from time to time, maybe not to cut down on the amount of spending but to have a refresher course,” he said. “It’s a good discipline, so it bothers me if the Constitution provision would trump it, but that would be up to the courts to say. But who’s going to argue against the Constitution? It’s the basis of our government; it’s the law of our land, and everybody has to abide by it.”
But the fact that a Republican Senator affirmed that the Constitution holds precedent over statute will not get as much attention today as the NYT op-ed from Laurence Tribe, perhaps the legal scholar closest to President Obama, who simply dismisses the Constitutional option entirely.
The Supreme Court has addressed the public debt clause only once, in 1935, in the case of Perry v. United States. The court observed only that the clause confirmed the “fundamental principle” that Congress may not “alter or destroy” debts already incurred.
Some have argued that this principle prohibits any government action that “jeopardizes” the validity of the public debt. By increasing the risk of default, they contend, any debt ceiling automatically violates the public debt clause.
This argument goes too far. It would mean that any budget deficit, tax cut or spending increase could be attacked on constitutional grounds, because each of those actions slightly increases the probability of default. Moreover, the argument is self-defeating. If it were correct, the absence of a debt ceiling could likewise be attacked as unconstitutional — after all, the greater the nation’s debt, the greater the difficulty of repaying it, and the higher the probability of default.
Tribe continues that Article I, Section 8 of the Constitution, which grants Congress the power to “borrow money on the credit of the United States,” takes precedence over the 14th Amendment and bans the executive from engaging in borrowing. Furthermore, he argues that new bonds issued under executive authority would come with a legal cloud that would raise interest rates due to investor loss of confidence, and that a judicial decision resolving the matter would be hard to obtain, because nobody really has standing to sue.
This misreads how interest rates on government debt work; they are set by the Federal Reserve. It also ignores the fact that Treasury can issue coins. But the biggest thing lacking in Tribe’s op-ed is any sense of the legal issues involved in what OTHER options Treasury has once the debt limit is reached. Contractors and Social Security recipients and bondholders all have the legal right to be repaid by the United States. Prioritization of payments or any other options violate the law, perhaps as much as ignoring the debt limit. Sen. Mike Lee (R-UT) makes the unique reading that Section 4 of the 14th Amendment prioritizes bond payments, but there’s no reason to actually believe that, and furthermore there’s case law that a line-item veto, which amounts to what Lee wants (where the executive picks and chooses what debt to pay), is unconstitutional.
Bruce Bartlett, another Republican and a leading advocate of the Constitutional option, provided his testimony on this issue to the Democratic Steering and Policy Committee yesterday. And he got into a fight with Barney Frank over it:
In a testy exchange with Rep. Barney Frank (D-Mass.), Bartlett and the former Financial Services Committee chairman tangled over whether President Obama could choose to simply ignore the debt ceiling.
Frank said that he could not, arguing, “I think that for the president to announce that the government has to ignore the debt limit would be a terrible mistake and it would cause a great crisis in our democracy.”
Moreover, he said, were Obama to invoke the 14th Amendment, the Tea Party Republicans who are refusing to vote to raise the debt limit would not face any consequences for their obstruction. Those lawmakers, Frank said, are behaving with “total irresponsibility.”
Barlett, in response, said that no course of action post-default would be a good, legally sound option.
“The language says ‘the debt of the United States shall not be questioned’ — that is a much broader statement [than others imply it is],” Bartlett said. “You have a situation where the president must violate the law; the question is which law?”
Precisely. But now that the Tribe has spoken, the media will simply make this a he said/she said issue, and every Republican will point to Tribe’s op-ed to show that the debt limit is indeed Constitutional. And I think the Administration’s perspective has been made clear. They’re not going to use the Constitutional option, because they don’t really want to. They want a deal and they’re far too cautious to go this route. Of course, in the event of an emergency, perspectives could shift. “I certainly would not advise the president to act until the last possible moment,” Bartlett said yesterday.
UPDATE: I do want to strongly correlate with Matt Yglesias’ op-ed in the American Prospect. We have a broken system of government, and it leads people who want to see government function to root for, in many cases, end runs and expansion of executive power. That’s a dismal state of affairs, which should be remedied on its own terms rather than constantly inventing ways around the problem.