Perils for Both Sides in the Debt-Ceiling Duel



The Constitution is subtler on the matter than either Obama or the House GOP recognize.

President Obama and House speaker John Boehner.

In an unexpectedly strong statement on Sunday, President Obama raised the looming showdown over the debt ceiling from political tactics to constitutional principle. “If we continue to set a precedent in which . . . the other party can simply sit there and say, ‘Well, we’re not gonna pay the bills unless you give us what we want,’ ” he declared, “that changes the constitutional structure of this government entirely.”

Mr. Obama is right: Constitutional issues are indeed at stake. The most plausible reading of the Constitution allows him—in fact requires him—to do what is necessary to avoid defaulting on the public debt, whatever Congress may do or fail to do. But the Constitution does not allow him to treat all existing statutory programs on a par with the public debt—if doing so would require him to issue new debt above and beyond what is needed to pay the principal and interest on existing debt.

The precise constitutional issue is the relation between the two terse sentences that define and delimit authority over government borrowing. Article I, section 8, provides (in part) that “The Congress shall have Power . . . To borrow money on the credit of the United States.”

Throughout our history, this has been understood as an exclusive congressional power: The executive branch is involved only to the extent that Congress, exercising its constitutional authority to make all laws that are “necessary and proper” for carrying out its designated functions, delegates to the executive branch some of Congress’s power to authorize the issuance of public debt. Until 1917, in fact, Congress voted on every new bond issue. Although the Treasury Department now determines the amount, terms and timing of debt issuance, Congress can reclaim some or all of this delegated power whenever it wishes.

The other key constitutional provision is section 4 of the 14th Amendment, which provides (in part) that “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions . . . shall not be questioned.” On their face, these words limit what Congress can do insofar as its actions affect the validity of the debt it has previously authorized. Specifically, Congress cannot act so as to make impossible the timely payments of principal required by that debt. To the extent that the debt ceiling violates that prohibition, it violates the Constitution.

This provision of the Constitution bears directly on one of our most important public programs—Social Security—whose famous trust fund is filled with government debt. Although Social Security did not exist when the 14th Amendment was drafted and ratified, it is pretty clearly a “pension.” Any congressional action or inaction that made it impossible to redeem the government debt needed to fund monthly Social Security payments would also be unconstitutional.

Suppose Congress were to act unconstitutionally concerning the public debt. What then? No doubt the issue would reach the Supreme Court in due course: Social Security beneficiaries who failed to receive their full checks as prescribed by law would have standing to bring the suit. But in the interim, section 3 of Article II of the Constitution would require the president to “preserve, protect, and defend the Constitution.” The president would have the constitutional authority—and responsibility—to ensure that government did not violate the plain meaning of the 14th Amendment.

Although the chief executive’s constitutional authority is strong, it is also limited. As I read it, the Constitution would not allow the president to borrow money beyond what is needed to maintain the good faith and credit of the United States as defined by the 14th Amendment. In practice, this means that Mr. Obama could borrow the sums needed to repay principal and interest on the debt and to keep Social Security checks flowing. It does not mean that he could issue new debt to fund in full the rest of the government.

Mr. Obama could argue, of course, that failing to pay for programs that Congress has authorized would create a chaotic situation that would call into question the validity of all the promises the U.S. government has made, including to its bond-holders, and that it was therefore his obligation to keep the entire governmental operating without interruption. The Supreme Court might accept that claim, but it would be a stretch—and a gamble. If the court rejected it, his opponents’ charge that President Obama is willing to subordinate everything, including the Constitution itself, to his legislative agenda would gain credibility.

The alternative would be for Mr. Obama to lay out clearly—for Congress and for the American people—the constitutional course he intends to follow. The responsibility for increasing economic uncertainty while disrupting every key government function except Social Security then would lie squarely where it belonged: with the congressional Republicans whose antipathy to ObamaCare blinded them to their broader responsibilities.

It’s not hard to guess how the American people would react. If today’s Republicans can’t figure it out, they might want to have a chat with Newt Gingrich.

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