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Has Obama Already “Invoked” the Public Debt Clause?

Jack Balkin says yes. Balkin argues that by telling bondholders that they will get paid regardless of whether the debt limit is raised, the President is implicitly invoking the Public Debt Clause.

I say no (or, rather, not necessarily). One could construe the existing statutory scheme to permit prioritization wholly apart from any constitutional issue. (Indeed, given the executive branch’s normal proclivity to expand its own power, it would be somewhat surprising if it did not do so). This point is illustrated by the GAO’s 1985 opinion referenced in my last post.

Moreover, even if the executive branch were to use the Public Debt Clause or (more appropriately, IMHO) the Perry case to construe congressional silence in favor of prioritization, this is not the same thing as “invoking” the Constitution to override a congressional command. It is perfectly possible to conclude that the Constitution requires Congress to repay bondholders without believing that it gives the President the right to steal the power of the purse.

One Comment

  1. John Puma says:

    Re Balkin’s “there will be no default on bonds. He (Obama) plans to use existing revenues to pay off interest on the debt.”

    There is no such thing as “interest” on government bonds, assumed by Balkin to be equivalent to the interest on a home mortgage that is paid and is accounted for separately from the principle.

    Government bonds are sold at a discount to face value. The return (“interest”) is realized when (now, IF) the bonds are honored, i.e. repurchased, at face value.

    On another note: what, exactly, are “existing revenues”?

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