The Debt Ceiling And The 14th Amendment
Resurrecting and old, and bad, idea.
House Minority Leader Nancy Pelosi is bringing up an old argument to assert that the President is essentially authorized to ignore the fact that Congressional authorization to borrow on the credit of the United States has effectively come to an end:
House Minority Leader Nancy Pelosi, D-Calif., says she would use the 14th Amendment to automatically raise the debt ceiling if she were president.
Speaking to CBS’ “Face the Nation,” Pelosi says she would bypass Congress if they are not willing to raise the debt limit ceiling in order for the U.S. to avoid default.
“The debt ceiling is about spending that has already occurred,” Pelosi toldCBS News. “Right now, we have to pay the bills that have been incurred. And if you want to say cut spending for what we do next, fine, but don’t tie it to the debt ceiling.”
The 14th Amendment states that 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.”
This isn’t a new argument, of course. It was made back during the debt ceiling debacle in August 2011 and advanced by several commentators and law professors at the time. Ultimately, the White House ended up explicitly rejecting the strategy while still in the middle of negotiations with House and Senate Republicans, a move that some Democrats criticized at the time. While the legal arguments regarding Section 4 of the 14th Amendment were interesting, it struck me back then that they were largely unpersuasive. At the very most, it seemed pretty clear that all the Amendment would authorize a President to do would be to prioritize payment in such a manner so that interest payments on the debt would have priority over other payments While broad, there’s nothing in the provision that would seem to authorize the President to create entirely new debt despite the fact that the law explicitly stated that the Executive Branch could not do so.
Josh Marshall points out another problem with the 14th Amendment strategy:
Assume there’s no constitutional problem to the President just going ahead and ignoring the debt ceiling. There’s also a market component. Simply put, the value of US Treasuries is the ‘full faith and credit of the United States’. World markets believe that promise is the closest thing in finance to certainty. And in moments of extreme uncertainty investors have even been willing to essentially pay the US government to hold on to their money for them.
But there’s never been a case before — except maybe arguably during the Civil War — when the US government has issued bonds that are somehow in intra-governmental dispute. If you’re buying US government debt, what if this particular auction is of Treasuries the sitting Congress says the Treasury Department isn’t authorized to issue? There would be Court challenges filed immediately. Surely, you’d prefer to wait for the ones that everyone agrees are OK. In practice, there’d surely be some inverse premium on these Treasury notes since they wouldn’t quite have the backing fo the full faith and credit of the US.
At a minimum that means the government would blow a lot of money simply because of that added uncertainty. But you’d also now have what amounted to two classes of Treasuries — the good ones and ones with an asterisk next to them. And as soon as you have that, at least some of the fixedness and clarity of what a US Treasury obligation represents would be blurred.
The implications of this for domestic and international financial markets are pretty easy to see, and the economic impact wouldn’t be plesant either. Rather than calming markets as the advocates of this approach seem to think, it’s more likely to create yet another level of uncertainty as parties try to figure out whether the new debt issued by Executive Decree is exactly legal, something that we wouldn’t know the answer to until the matter made its way through any numbers of complicated legal challenges. Interest rates would likely increase across the board, and the economy would slow down as assuredly as it would if the President had done nothing. But, in this case, far more damage would be done because the integrity of U.S. debt would be called into question.
There’s also an important political issue at play here. If the President takes it upon himself to arbitrarily take action that the law was never intended to allow him to take, whether it’s via this 14th Amendment scenario or the more bizarre Platinum Coin opinion, it will be yet another example of the Executive Branch assuming power that it arguably was never intended to have in the name of a national “emergency.” History tells us that these assumption of power are seldom followed by reductions in power once the so-called crisis is over. The consolidation of power in Washington in the wake of the Great Depression continued apace long after the economy had recovered. The powers assumed by the Executive Branch during the Cold War remained even after the Soviet Union ceased to exist. The actions and precedents set by the Bush Administration in the name of the “War On Terror” were quickly taken up by President Obama and, in several important respects, expanded even further. Does anyone doubt the same thing would happen if the President assumed this kind of power over the nation’s fiscal situation?
The debt ceiling issue is a serious one, and it deserves to be treated seriously. Part of that includes recognizing that there are no easy answers to the problems that face us, and that tossing aside the law and the Constitution is not the answer.
To quote Josh Barro on the debt ceiling “Republican intransigence over the debt ceiling is juvenile. There is no particular reason that the president should not use a juvenile strategy in response.” He was referring to the platinum coin option, but it applies equally to the 14th Amendment option.
The President should take no options off the table in dealing with the loony GOP on this issue, no matter how equally loony the option might be under normal circumstances. You deal with the crazies in the GOP you have—not the reasonable conservatives you might want or wish to negotiate with at a later time.
Meh, the debt ceiling is in and of itself an absurdity of the law. So I don’t see how doing something like making a trillion dollar coin makes any more a mockery of things. Both actions are enabled by the law as it exists.
Hi Doug:
I agree that the 14th amendment does not resolve the problem of the debt ceiling.
However, I am curious about how the enforcement of two contradictory laws should be resolved. For example, let’s assume that Congress passes one law stating that the president shall not borrow more than $X, and a second law requiring the president to spend $2X. If there is not enough revenue from taxes to fund the $2X mandate, how are these contradictory laws reconciled? Am I correct that the most recent law overrides earlier laws, when contradictions occur? If I am correct, does this mean that a congressional budget or continuing resolution automatically overrides an earlier debt ceiling whenever conflicts arise?
Thanks, Ron
Actually, there is a very easy answer to the debt ceiling issue – raise it and/or eliminate the need to revisit this by passing a law that provides that when Congress authorizes spending, it is deemed to carry with it the authority to borrow funds necessary to fulfill that spending requirement.
What is NOT easy is (a) dealing with the underlying issues of health care costs and defense spending that are driving the deficits or (b) the sad reality that House Republicans are behaving like terrorists and asserting they will hold the financial health of the country hostage unless they get what they can’t at the ballot box.
“The debt ceiling issue is a serious one, and it deserves to be treated seriously.”
No, it’s an absurd bit of political theatre, pushed by political nihilists, and anyone arguing that we should change policy based upon it should not be treated seriously.
Turning the debt ceiling in to a huge fight (really, having a debt ceiling at all!) is a bad idea, Doug.
So yeah, there is some flailing around looking for solutions to the manufactured crisis. And it gets silly.
There is a simple solution, though. Remove the debt ceiling entirely, and argue about spending when you pass (or don’t pass) appropriations bills. The end.
Doug is arguing that everybody should act like adults here, in view of the seriousness of the issue. I agree. Congress first . Since they’re being infantile, though, then the White House may have to respond in kind
Doug has spent a couple of articles now attacking the dubious options the White House could take against any attempt by Congress to refuse to raise the debt ceiling. He’s right-those options are not very convincing, although the letter of the law does allow the platinum coin option. Judge Scalia always harps on how its the task of the court not to change the law, no matter how foolish the wording. Its hard to see how he could rule against the White House, should they try the platinum option .
I would try a different constitutional argument. The Constitution does bind the executive. However the Constitution also binds Congress. Isn’t it unconstitutional for Congress to take action that calls into question the validity of the public debt?
I would argue that Congress’ refusal to raise the debt ceiling DOES call into question the validity of the public debt and that a Congressional vote not to raise the debt ceiling is unconstitutional, even if such a vote is permitted by the letter of the law. I’d like to see the SCOTUS consider that argument .
“What is she doing here?”
“It’s ok, Chad,” Boehner said gently, patting the aide on the arm. “I asked her to come down. Why don’t you take lunch… A long lunch. Come back for the budget meeting at 3.”
Pelosi stood aside in the doorway as the pale, thin congressional staffer glared and gritted his teeth out of the speaker’s office. She locked the door behind him once he was gone, then pulled out a cigarette.
“Where’d you find that pencil necked dweeb?” the congresswoman from California asked, as she leaned forward.
“Heritage Foundation internship,” Boehner blanched, as he used his golden lighter to light Pelosi’s viriginia slim. “Daddy donated quite a few bucks last year so now young Chad is working in the Capitol building. Even if he doesn’t know jack and gets all his news from the a holes at Breitbart.”
“You’re supposed to pawn the clowns off on the freshman,” Nancy said after a long drag. “Haven’t you figured this stuff out yet, Mr Speaker?”
“You aren’t here to talk staffing,” Boehner intoned as he undid his tie. “You’re here to talk the Fourteenth Amendment.”
“Yeah, sure, lets go with that. Fifteenth amendment,” Pelosi purred as she ran her well manicured fingers through Boehner’s chest hair.
“God I’ve missed you, Madame Speaker,” Boehner said softly, with a hint of a whimper.
Pelosi pulled his head to her chest.
“There, there Mr Speaker. You take care of me, and I’ll take care of you.” She slowly began to unzip her skirt.
Gawd almighty, I’d like to scrub my mind of the image that cd6’s post conjured in my mind. Can anyone tell me how to do that?
Also too, isn’t the cigarette for after the AAAAAAAAAAAARGH I don’t want to think it ….
@stonetools:
“Its hard to see how he could rule against the White House, should they try the platinum option .”
No, unfortunately, it isn’t. I’m sure he will come up with some rationale, if necessary adding that it only applies to the facts of that case, and cannot be cited as precedent in the future.
So Slashdot summarizes:
Now the hard question is, given degraded cognitive abilities and lower intelligence, is there any reason to believe this is ISOLATED in crime?
Do we need to wait for a new generation, without irreversible damage to the brain to come along and bail us out of our problems?
(I’ve wondered aloud for years what is making us all stupid, because collectively, we clearly are.)
@Rob in CT:
Agreed. Arguing over future spending is very different than arguing over whether we should pay for the spending we have already enacted into law. See also Kevin Drum
As a small government libertarian you should be advocating for doing away with a stupid law…which basically requires the Legislature to give itself permission to pay the credit card bills that it has run up.
Josh Barro has the reasonable solution…pass a bill elimnating the Debt Ceiling in exchange for also closeing the Trillion Dollar Coin Loophole. Two stupid things fixed at once. A banner day for Government efficiency.
@Cd6:
ABANDON THREAD! ABANDON THREAD!
I think Obama’s serious. When Boehner points a gun at his own head and threatens to shoot himself, I think Obama’s going to say “Proceed, Mr. Speaker”.
Failing the reasonable solution I advocate above…the Democrats should just ignore the petulant little Republicans. Let them threaten to crash the World Economy…then laugh when they don’t actually have the cajones to do it. To even discuss this ridiculous political theater is to give it the credence it does not deserve.
@C. Clavin:
/Pendant Alert
Its cojones. Cajones are Spanish for crates, or packing boxes. Also too , Afro-Spanish musical instruments.
I think that the House Republicans are indeed crazy enough to carry out the threat of “crashing the economy.” That’s the problem-I don’t think they’re bluffing.
Again… I cannot decide which to click in support of @Cd6’s latest missive.
@Cd6: Bravo.
No 14th Amendent fix? No PCS? Looks like the hostage is gonna get it, bam bam.
@Cd6: Is it bad that I thought about Louie Gohmert after reading that? Can you work him into a sequel?
@stonetools: Hey, if you’re going to get picky, “pedant alert”?
@ Doug
John Marshall’s analysis is flawed: whether markets are concerned or not about the validity of the Treasurys issued is not relevant to the process. We have banks which are required by law to purchase any Treasurys which do not sell on the primary market, and government supplies the cash needed to purchase them. The process is pure arbitrage, meaning those banks are guaranteed to earn a profit no matter what.
U.S. finances are not subject to market discipline. Whether or not we think that is good or bad is a different subject, but this is how the system works.
@ gVOR08.Stonetools…
Considering the subject…Pendant Alert is appropriate!!!
You are correct…it’s cojones. And Republicans don’t have any. They are just stupid.
In any case…
http://c-o-jonesct.com/
I had to give Cd6 a down vote…but I am curious about where the ORANGE stops/begins.
When leftism takes over there will be intractable problems. It’s not as if that should suprise anyone.
We’ve seen this sort of thing before, and we’re not talking about ancient history. Argentina. Other parts of South America. Now and in recent years it’s become part of current events. Part of the political lexicon. PIIGS. Most of the rest of Europe. Zimbabwe. Various other places in Africa.
It’s the same old song and dance. Spending more than you take in doesn’t work out over the long haul. Slow growth. High unemployment. Massive underemployment. Inflation. Poverty. Currency debasement. Crushing debt service burdens. When leftism as policy really takes root all of those maladies become as predictable as low student test scores and high dropout rates in big liberal cities controlled for decades by liberal Democrats.
In any case, we’ve probably reached a sort of perpetual state of impasse. One side doesn’t want the U.S. to turn into a banana republic. The other side is counting the days with bated breath. All part and parcel of the grisly U.S. decline.
Funny – you are describing Republicanism…and what was left for Obama when he walked through the door. Since then the GDP is up over 11 points. You don’t even seem to know what it is you want…much less what it is you are talking about.
@Tsar Nicholas:
There was a study reported at the WSJ recently, behind their firewall, which confirms what many of us have long suspected.
What happened to jobs in the jobless recoveries, starting in the 2000s?
China.
(Please don’t tell me you are so lead-exposed that your answer is that we should “be” China, in pay rate and pollution, to compete.)
“Not the answer”? We’ve temporarily tossed aside the law and the Constitution many times in our history. It’s just an ugly one. Not everything has to be even slightly pretty, a concept that we are sure aware of now.
@David M:
Unfortunately the President has taken this option off the table. Jay Carney has already stated Obama des not approve of a 14th Amendment solution.
How is it that bills that the government has incurred through operations which were authorized, and intended to be paid with money that was allocated, by Congress are something different than the debt instruments issued by the Treasury Department?
If the Treasury Department can’t issue debt, then it can’t pay it’s bills. It can pay some of them, but not all of them. “Bills” are “debt” and are the same thing that “shall not be questioned”.
But never mind such a recourse. Congress has allocated and authorized the spending that we’re doing now. In what sense do they get to pull the plug? They don’t. I say keep spending the money and issuing debt. Make them sue you, or impeach Obama. Just try it. Please proceed Tea Party.
@Moosebreath:
Then change the law. Until then, it cannot be ignored.
@Ron:
At that point, I think the only option a President would have would be to turn to the Courts and seek a declaratory judgment on the issue.
@Jay L. Gischer:
Not bother to craft a legal argument, not play an undignified game with a coin, both of which tacitly acknowledge the “Dept Limit”, but simply ignore it? If Irrational = Null x Void, then it’s the most elegant solution, and middle finger, available.
@Doug Mataconis:
Ignored, no.
Legally circumvented through poorly written loopholes, yes.
@Doug Mataconis:
I didn’t say the debt ceiling should be ignored. I said that “anyone arguing that we should change policy based upon it should not be treated seriously.” There’s a difference.
Do not ignore the law.
Ignore the Republicans and their attempt to default on the debt they ran up.
I can understand why Nancy Pelosi wants the president to invoke the 14th Amendment to get around the Republican House, but really …. Section 5 says that Congress has something to say here. At any rate, if Obama invokes the 14th Amendment to bypass the House, I think the House Republicans would initiate impeachment proceedings against Obama. They don’t really need a reason, they have the votes.
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.
Section 5.
The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.
I’m all for issuing the trillion dollar coin, on one condition: we put Reagan’s profile on it.
Just to rub it in the GOP’s face.
What irritates me a little about the way the article is written is that while it seems perfectly OK for Congress to pursue this previously unprecedented and constitutionally dubious option of threatening to renege on the debt ceiling, the President has to “be the adult” and scrupulously observe both the letter and the spirit of the law, because this is serious business, we shouldn’t play with the Constitution, etc. It seems that Doug just takes it for granted that the Republican Congress is CRAZY and we can’t do anything about that, but the President must stay well within the lines and has to fight fair at all times, etc, even if it costs him.
Well, I say BS to that. Essentially we’ve defined deviancy down with regard to the House Republicans, and they have profited handsomely as a result. The President should just say, ” If you don’t want to agree to raise, the way every previous Congress raised, then ALL options are on the table, mofos, including the 14th Amendment, the platinum coin, and whatever else White House counsel can come up with. I am the President, clothed with immense power and I have a duty to see that the validity of the public debt not be questioned. You don’t like it, we’ll take it to the Supreme Court and we’ll see what the Court says about YOUR actions re the validity of the public debt.”
@Doug Mataconis: Does the fed system even do declaratory judgments? If not then you seem to leave no viable alternatives but for the President to let the kidnappers off the hostage.
Shorter Doug:
The President should do the decent, serious thing and surrender, for the good of the Constiution. It’s tough, but there it is.
No, it’s a pretty stupid one.
So tell that to the Republicans. You’ve got a public platform.
There’s also talk about Obama using executive orders to impose new gun control measures. So why not here? Who needs that damned obsolete Constitution, anyway?
Boy, “checks and balances” really suck when it’s your side being checked and balanced, doesn’t it?
Checks and balances sounds very nice. In this case, you have a law that serves to “check” the government from incurring debt to cover the obligations it has incurred via laws it has passed.
The whole thing is an argument that we ought to bounce our checks. It’s utterly absurd.
I don’t like the “14th amendment option” or the “platinum coin option” any. But they’re in the discussion now because the GOP decided to use the debt ceiling for leverage. Ok, then. If they’re going to do that, the Dems should ignore the platinum coin thing because why? Because they’re supposed to be above that or something?
Ceterum censeo GOP delendam esse.
@Rob in CT: So, basically, because the GOP is playing by the rules and winning, it’s time to change or throw away the rules? The rules that are the highest law in the land, that have served so well for over two centuries?
But maybe you’re right. Screw the future generations that will have to live with trillions and trillions of debt, because we had to spend so much money on ourselves. What the hell have they done for us, anyway? That whole “preserve the blessings of liberty for ourselves and our posterity” thing — what a crock.
If you think this is “winning” I don’t even…
The GOP is exploiting a stupid law. It is indeed the law, and I want it changed because it’s stupid.
The law to which I refer to is the one that established a debt ceiling… which IIRC is roughly 1 century old. Your hysterics notwithstanding, raising the debt ceiling was never a serious issue until now. Ronnie tripled the national debt and there was none of this bullshit, while conservatives strutted around blathering about Morning in America. And so nobody much cared about this stupid law that was still on the books. Until now.
You keep conflating the debt ceiling with deficit/debt control. But the spending has already been passed. Using the debt ceiling to prevent the spending is a refusal to pay the bills we’ve already incurred.
“Screw future generations” goes many ways. Refusing to pay our bills like a bunch of deadbeats (and here I refer not only to the debt ceiling bullshit, but also the long-term gap between revenues and expenditures) is not responsible behavior. Brinksmanship over the debt ceiling is not responsible behavior (and, if it went all the way, the end result – default – would be bad for future generations).
When it comes to responsible governance for the sake of future generations, the GOP has no credibility whatsoever. Between the “2 santas” governing philosophy (tax cuts, increased spending), “starve the beast” fantasies, and excessive militarism that culminated in the Iraq debacle, they’ve utterly blown what credibility they had. So I laugh at your pious invocation of posterity.
Hah, timely (I hadn’t seen this before I made my last post):
http://www.motherjones.com/kevin-drum/2013/01/republicans-should-choose-different-hostage
Cosign.
Doug: “There’s also an important political issue at play here. If the President takes it upon himself to arbitrarily take action that the law was never intended to allow him to take, ”
The existing laws (spending, taxation and debt limit) are contradictory. Full stop. The president can not obey them all.
@Rob in CT:
No comment, just re-posting because it needs to be repeated.
@David M: When a progressive has nothing valid to say, they tend to just bash a republican.