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Public Debt Clause Roundup

There have been a number of Public Debt Clause developments over the last couple of days.

Freakonomics. Michael Abramowicz weighs in with some thoughts on the current debate. Among his interesting observations: if one accepts his broad reading of the Public Debt Clause, it is not only the debt limit that would be unconstitutionally suspect. Any statute that would result in default if left unchecked violates the Clause under this reading. Thus, he says, Medicare would be unconstitutional under this view.

Abramowicz has some kind words for this blog, noting: “Michael Stern has written some thoughtful posts on the other side (here, here, here, and here). One argument that Michael makes that is particularly intriguing is that, if I am correct that a default would violate the Public Debt Clause, who is to say that the appropriate remedy is for the President to ignore the debt limit? After all, it is the combination of the debt limit and our taxation and spending policies that would lead to default. Could the President not unilaterally cut spending or raise taxes instead?”

For this reason he suggests that the President take a “modest approach.” Rather than declaring the debt limit facially unconstitutional, he should declare it unconstitutional only as applied to prevent payment on existing debt. Thus, the President would authorize the Treasury Secretary only to issue new debt to the extent necessary to pay off old debt, rather than to fund general obligations of the government.

I am frankly not sure why this qualifies as a “modest approach.” If one accepts the chain of legal reasoning that leads to the President having either the constitutional authority or obligation to ignore the debt limit, surely that authority or obligation is limited to the need to pay the “public debt,” whatever that might be. Of course, it is possible that the President has the authority, but not the obligation, to pay the public debt, in which case he might decide to pay bondholders but not pay others (say federal retirees) who arguably fall within the same category. Perhaps this is what Abramowicz means.

CNN Money. Among other things, this article indicates that Secretary Geithner is starting to cite the Public Debt Clause, suggesting that the administration could be considering declaring the debt limit unconstitutional. It also cites this blog, noting that any such action “could run counter to Congress’ constitutional role”: “Just because the Constitution directs the president to ‘safeguard the national debt’ doesn’t mean he can go ‘snatching the power of the purse’ from Congress, wrote Michael Stern, who specializes in congressional legal issues, wrote in his blog PointofOrder.com.”

The article also cites Garrett Epps, who is also sounding a bit more cautious about the advisability of using the Public Debt Clause, noting that “ignoring the debt ceiling would and should be at most a last-minute thing, like a tourniquet on a wound, where the choice is between losing a leg and losing a life.”

Hot Air: This post indicates that we can add Senator Schumer to the list of those considering the Public Debt Clause argument. It also raises a significant practical point: “If the goal here is to reassure creditors that the U.S. will never default on its obligations in order to avert a market panic and skyrocketing interest rates, how exactly would a power grab involving an utterly novel constitutional theory achieve that? Does a bitter court battle, with the legality of payments issued on Obama’s unilateral order hanging in the balance, sound like a smart way to put investors at ease?”

Balkinization: Jack Balkin has a rebuttal to my post of yesterday. I will work on surrebuttal tomorrow.

 

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