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“Arrest Me. I Question the Validity of the Public Debt.”

So begins Michael Abramowicz’s 1997 law review article, Beyond Balanced Budgets, Fourteenth Amendment Style, 33 Tulsa L. J. 561 (the quote is from the placard of a whimsical protester in Lafayette Park).  His thesis is that the original meaning of the first sentence of Section Four of the Fourteenth Amendment, if it were to be revived and taken seriously today, would have surprising and dramatic consequences for the conduct of federal finances.

The first sentence of Section Four provides that “[t]he 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.” As Abramowicz notes, this provision is so obscure that no one previously had bothered to give it a name, an omission he remedies by terming it the “Public Debt Clause.”

The primary impetus for the Public Debt Clause seems fairly clear.  The Republicans who controlled Congress in the aftermath of the Civil War wanted to make sure that a future Congress (one that might be controlled by a coalition including representatives of readmitted Confederate states) could not (a) use federal funds to pay off Confederate debts, (b) repudiate Union debts or (c) insist that Confederate and Union debts be treated equivalently. Accordingly, the second sentence of Section Four states categorically that all “debts, obligations and claims” incurred “in aid of insurrection or rebellion” are “illegal and void,” while the Public Debt Clause makes clear that the public debt of the United States, including that related to “suppressing insurrection or rebellion,” shall “not be questioned.”

Whether the Public Debt Clause was to have any effect beyond this is unclear. It is certainly true that the literal terms of the Public Debt Clause encompass all public debt, not merely that incurred in support of the Union cause. But this is entirely consistent with reading the Clause as reaffirming a preexisting understanding of the inviolability of the public debt, while removing any possible doubt as to whether such inviolability extended to Union debt. Indeed, the only Supreme Court case to consider the Clause, Perry v. United States, 294 U.S. 330 (1935), seemed to adopt such a reading, treating the Clause as merely “confirmatory” of the following constitutional principle:

The Constitution gives to the Congress the power to borrow money on the credit of the United States, an unqualified power, a power vital to the government, upon which in an extremity its very life may depend. The binding quality of the promise of the United States is of the essence of the credit which is so pledged. Having this power to authorize the issue of definite obligations for the payment of money borrowed, the Congress has not been vested with authority to alter or destroy those obligations.

Perry involved a holder of a federal bond with a “gold clause” providing that the bond was payable in gold coin (thus protecting the bondholder against depreciation of the currency). However, at the outset of the Depression, Congress banned the use of gold as legal tender and required that bonds be payable only in paper currency. The Supreme Court, in true Marbury-like fashion, gave with one hand and took away with the other. The Court found that Congress had unconstitutionally violated the bond’s gold clause; however, it also held that the bondholder had suffered no damage because the gold coin he was due would have been illegal to sell and therefore could not have profited him. (FWIW, Professor Currie believed that the Court was wrong on both counts.  See David Currie, The Constitution in Congress: The Federalist Period 1789-1801 76 & n. 167 (1997)).

Perry suggests that the Public Debt Clause imposes a fairly minimal external constraint on Congress, even in cases involving bondholders. As Justice Stone observed in his concurrence, the government “has rendered itself immune from liability” and “relieved itself of the obligations of its domestic bonds.” Moreover, the Court noted that Congress could always escape liability for debt repudiation by withdrawing its waiver of sovereign immunity.

Abramowicz nonetheless argues that the most persuasive reading of the Public Debt Clause would have it impose two broad constraints on Congress. First, he argues that the term “public debt” should be read to include more than just bonds. He focuses on the Clause’s reference to “payment of pensions and bounties of services.” Persons owed such payments, or who have a similar claim to government payment (such as federal employees who are owed a pension), should also fall within the Clause’s protection.

This argument is not implausible, although I think one could make at least as strong an argument for limiting the scope of the Public Debt Clause to money owed to creditors (which is normally what we think of as “public debt”). Section Four refers to Confederate “debts,” “obligations” and “claims,” which are declared illegal and void. The Public Debt Clause, however, covers only “debts.” Thus, the non-debt obligations of the United States do not fall within the Clause. This inference is strengthened by an earlier version of the Clause, which would have provided that “all debts or obligations . . . incurred . . . for payment of bounties or pensions . . . shall be inviolable.”

It seems that the framers of the Fourteenth Amendment deliberately decided to exclude “obligations” from the Public Debt Clause. Abramowicz agrees, but argues that the term “debt” can be read to encompass any sum of money due by certain and express agreement. This may exclude sums promised unilaterally or without consideration, but should include monies due under a contract.

The legislative history of Section Four is too sparse to shed much light on the subject. Whether the term “debt” should be read to extend beyond creditors seems to me to be an open question.

Abramowicz’s second point is that the word “questioned” should be read broadly to reach not only actions which directly repudiate the public debt, but also those which jeopardize (i.e., bring into question) the future ability of the United States to repay the debt. His argument is premised largely on the fact that the Public Debt Clause uses the peculiar phrase “shall not be questioned” (a phrase also used in the rather different context of the Speech or Debate Clause), rather than simply saying that the debt is valid or shall remain valid.

I think Abramowicz’s argument here is weak. If the framers of the Fourteenth Amendment wanted to say that the government should take no action that would jeopardize the repayment of debt, surely there were more straightforward ways of saying so.

The literal terms of the Public Debt Clause certainly do not prohibit actions that increase the likelihood of a default on the debt. If I conduct my financial affairs in such a way as to make it unlikely or impossible that I can repay all my creditors, I am acting irresponsibly, but I am not questioning the validity of my debts. Even a failure to pay a debt, if caused by inability rather than refusal to pay, cannot be said to question the debt’s validity.

Abramowicz points to draft versions of the Public Debt Clause, which stated that the public debt was “inviolable” or would “remain inviolate.” He contends that the earlier language would have been sufficient if the framers merely wanted to avoid a repudiation of the debt, and thus surmises that they must have wanted to achieve more. In his view this support the notion that the “shall not be questioned” language should be read broadly to prohibit undermining debt repayment, regardless of whether Congress deliberately repudiates any debts. Thus, congressional action or inaction which substantially prejudices debt repayment would violate the original intent of the Public Debt Clause.

Trying to discern the intent of the Public Debt Clause from this change of language seems rather speculative, particularly since there is at least one floor statement indicating that the change of language was not intended to change the meaning of the provision. But it seems to me that the most persuasive explanation for the final language in the Public Debt Clause is simply this– it expresses exactly what the framers of the Fourteenth Amendment were trying to accomplish. They wanted to prohibit future Congresses from questioning the validity of the public debt. Specifically, they wanted to prohibit future Members of Congress from arguing that Union debt was invalid because there was no constitutional basis for making war on states that wanted to secede from the Union.

But how, one might ask, could the framers of the Fourteenth Amendment expect that such a provision be enforced? This question assumes a fact not in evidence, namely that the framers expected the provision to be enforced outside of Congress. In fact, despite Abramowicz’s contention that the courts could enforce the Public Debt Clause under current jurisprudential doctrines, it surely would not have crossed the minds of the framers that any such enforcement would take place. They would have expected (understandably, and, as it turns out, correctly) that the only effect of the Public Debt Clause would be the impact that it would have on the consciences of future Congresses. Seem in this light, it is not surprising that the Public Debt Clause is phrased in a broad, hortatory and essentially unenforceable way.

If the framers of the Fourteenth Amendment had anticipated even a remote possibility that the Public Debt Clause would be subject to judicial enforcement, they certainly would not have drafted it in the broad manner that Abramowicz suggests. If courts were empowered to decide if a particular congressional action or inaction (such as new spending or a failure to raise taxes or increase the debt limit) jeopardized creditors, it would be the equivalent to turning over the power of the purse to the courts.

To be fair, Abramowicz himself does not contend that the courts will, or should, enforce the Public Debt Clause. He acknowledges that attempting to enforce the Clause at this juncture would introduce dangerous uncertainty about the structure of government. After all, Congress has spent the century and a half since the enactment of the Fourteenth Amendment making commitments without anyone apparently being aware that the Public Debt Clause had the meaning or import that Abramowicz ascribes to it. Instead, Abramowicz treats his reconstruction of the Clause’s original intent as a kind of thought experiment to shed light on how we might craft a new constitutional amendment ensuring that Congress better keeps to its fiscal commitments in the future.

So why, I hear you ask, should anyone care about this?

I’m getting to that.

 

 

 

 

 

 

2 Comments

  1. Tricia says:

    Oh, those whimsical protesters!

  2. [...] Legislative history: As Michael Stern has pointed out, Congress rejected an earlier version of the clause that would have protected “debts or [...]

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