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.

Prioritizing Payments if the Debt Limit is Reached

This CRS report from early June discusses a number of legal and policy issues (not including the Public Debt Clause) that would arise should Congress not raise the debt limit. Of particular interest is its discussion of the Treasury Secretary’s authority to prioritize payments once the debt limit is reached:

Some have argued that prioritization of payments can be used by Treasury to avoid a default on federal obligations by paying interest on outstanding debt before other obligations. Treasury officials have maintained that the department lacks formal legal authority to establish priorities to pay obligations, asserting, in effect, that each law obligating funds and authorizing expenditures stands on an equal footing. In other words, Treasury would have to make payments on obligations as they come due. With regard to this view, Treasury recently noted that an attempt to prioritize payments was “unworkable” because adopting a policy that would require certain types of payments taking precedence over other U.S. legal obligations would merely be a “failure by the U.S. to stand by its commitments.”

In contrast to this view, GAO wrote to then-Chairman Bob Packwood of the Senate Finance Committee in 1985 that it was aware of no requirement that Treasury much pay outstanding obligations in the order in which they are received. GAO concluded that “Treasury is free to liquidate obligations in any order it finds will best serve the interests of the United States.” In any case, if Treasury were to prioritize, it is not clear what the priorities might be among the different types of spending.

While the positions of Treasury and GAO may appear at first glance to differ, closer analysis suggests that they merely offer two different interpretations of Congress’s silence with respect to a prioritization system for paying obligations. On the one hand, GAO’s 1985 opinion posits that Congress’s legislative silence simply leaves the determination of payment prioritization to the discretion of the Treasury Department. Conversely, Treasury appears to assert that the lack of specific legislative direction from Congress operates as a legal barrier, effectively preventing it from establishing a prioritization system.

The missing piece of this analysis is the constitutional issue. If one believes, as some do, that the Public Debt Clause prohibits default on the “public debt,” then the President is required to prioritize those payments that fall within that constitutionally protected category. This is Jack Balkin’s conclusion.

Personally, I am skeptical that the Public Debt Clause, of its own force, requires the President to do anything, other than not to repudiate or renounce the public debt (which he would lack the authority to do anyway). However, there is a plausible argument that the constitutional principle recognized in Perry v. United States requires that the public debt be repaid in accordance with the terms on which it was borrowed. This would be an extension of Perry’s reasoning, but a plausible one. If that is the case, then the President would be obligated to interpret congressional silence in accordance with this constitutional principle. At the least, the avoidance of constitutional doubt would seem to counsel for an interpretation of the statute that allows for prioritization.

 

A Thought on the Public Debt Clause and Article VI

It seems fair to say that the Public Debt Clause will get more attention from scholars in the next few years than it did for its first 145 years of existence. In that connection, I want to suggest that Article VI, clause 1, deserves some thought. That clause provides that “[a]ll Debts contracted and Engagements entered into, before the Adoption of this Constitution, shall be as valid against the United States under this Constitution, as under the Confederation.”

If one is trying to answer the question of why the framers of the Fourteenth Amendment changed the language of Section 4 from ensuring that the public debt would remain “inviolate” to ensuring that the “validity” of the public debt would not be questioned, Article VI would be a promising start. Article VI and Section 4 are trying to address analogous problems, namely how the debts incurred under one constitutional order will be treated in another.

By using Article VI’s concept of “validity,” the framers of the Fourteenth Amendment may have been borrowing (so to speak) the original Constitution’s solution to a similar problem without necessarily reaching consensus among themselves as to what that solution would entail. In this regard it should be noted that the first Congress vigorously debated whether Article VI required full payment of creditors, particularly those who were assignees of debt instruments. See David Currie, The Constitution in Congress: The Federalist Period 1789-1801 73-76 (1997). Notwithstanding constitutional arguments made by Secretary of the Treasury Alexander Hamilton and supporters in Congress, the decision was ultimately made not to pay these creditors in full.

Whether or not the framers of the Fourteenth Amendment were specifically aware of this history, it seems reasonable that they would have had some sense that “constitutionalizing” the debt in a new way could have potential ramifications that might be difficult to appreciate fully at the time. The use of the term “validity” therefore suggests an intent to claim the security of a pre-existing legal status (while realizing the core objective of ensuring that Civil War debt would be treated the same as all other public debt) without breaking new ground on what that status would entail.

Article VI may also shed some light on what the framers of the Fourteenth Amendment meant when they used the term “debt.” As Professor Larry Tribe points out in a piece posted last night at The Volokh Conspiracy and elsewhere (in which this blog had the honor of being cited): “the word ‘debt’ appears five times in the original Constitution. In each of those instances, it would be highly unnatural to read ‘debt’ as synonymous with ‘all legally required payments.’ The alternative—suggesting that the framers or ratifiers of the Fourteenth Amendment used a word already used in the Constitution, but imbued it with a different meaning—is equally implausible.”

Scholars will have plenty of material to work through.

The Public Debt Clause and the President’s “Right to Ignore Law”

While I would like to move on from the Public Debt Clause issue, I feel obliged to remark on Katrina vanden Heuvel’s column, entitled “Invoke the 14th — and end the debt standoff,” in the Washington Post today. She writes:

President Obama may find that there is only one course left to avoid a global economic calamity: Invoke Section 4 of the 14th Amendment, which says that “the validity of the public debt of the United States . . . shall not be questioned.” This constitutional option is one that the president alone may exercise.

 If the Aug. 2 deadline arrives and no deal has been made, Obama could use a plain reading of that text to conclude—statutory debt ceiling or not—that he is constitutionally required to order the Treasury to continue paying America’s bills. In that sense, this is no just a constitutional option, it is a constitutional obligation, one that even the Tea Party will have trouble denying.

It is not entirely clear what vanden Heuvel means by the President ordering “the Treasury to continue paying America’s bills.” The debt limit does not prohibit the Treasury from paying creditors or anyone else: it simply bars it from borrowing more money. And, as we have exhaustively discussed, the “plain reading” of the Public Debt Clause in no way establishes that Congress is forbidden from putting a limit on the overall debt of the government.

Let’s put that aside, however, and assume that there is a plausible argument that the debt limit is in fact unconstitutional. Does that mean that the President can disregard it? Ms. vanden Heuvel says yes: “In Freytag v. Commissioner (1991), the Supreme Court held that the president has ‘the power to veto encroaching laws . . . or to disregard them when they are unconstitutional.’” Therefore, she claims, Obama would be on a “strong legal footing” if he were to invoke the Public Debt Clause to disregard the debt limit.

Well, let’s see. The quote from Freytag is from Justice Scalia’s concurrence, not the majority opinion. Even if it were in the majority opinion, it would be dicta, not a holding. And Justice Scalia is referring to laws that encroach on the constitutional powers of the executive (which no one claims that the debt limit does), not all laws. But, in her defense, vanden Heuvel did correctly cite the date of the case.

Giving the President the power to disregard all laws that he thinks are unconstitutional is a pretty big deal. Strangely enough, vanden Huevel does not always seem to have been such a big fan of executive power. In “The Madness of King George,” written a few years back, she expressed rather strong concern about a president’s claimed “right to ignore law.” She quoted approvingly from an ABA panel that wrote: “The President’s constitutional duty is to enforce laws he has signed into being unless and until they are held unconstitutional by the Supreme Court or a subordinate tribunal. The Constitution is not what the President says it is.”

Apparently it is now.

 

A Further Reply to Professor Balkin

Professor Balkin has replied to my critique of his analysis of the legislative history of the Public Debt Clause. It is a powerful effort, but I think the reader will conclude that its power lies more in the cleverness of its author than the merits of its argument.

At the outset, let me say that Balkin knows way more than I do about the history of the Fourteenth Amendment and its framers, and he employs this knowledge to great rhetorical effect. I am happy to accept all of his observations about the personalities involved and the broader historical context. None of these observations, however, point toward the conclusion that he wishes to reach.

The Wade Proposal. Take, for example, his description of the central importance of Senator Benjamin Wade in the politics of that time. Fair enough, but doesn’t that make the Senate’s failure to adopt Wade’s proposal all the more significant? The Senate didn’t just ignore or overlook Wade’s proposal; it made a deliberate decision to adopt Senator Howard’s proposal instead.

Balkin explains that “Howard accepted Wade’s ideas, discussed them with other Republican leaders, and reshaped them into the official proposal that was later put before the Senate, and subsequently modified by Clark.” But Howard clearly did not accept all of Wade’s ideas, and he “reshaped” Wade’s language into a very different proposal. Balkin gives no account of why these changes were made.

Bear in mind that there is no dispute regarding the core motivation underlying the proposed provision. Republicans feared that readmitted southern states would try in some fashion to disavow Union debts and they wished to forestall such an effort.

The question is how the framers of the Fourteenth Amendment decided to go about addressing this problem. At the broadest level, they might have decided that any obligation of the United States, once assumed by Congress, must continue in perpetuity and could never be altered or amended to the detriment of the beneficiary. One can understand why the framers might have been reluctant to endorse such an approach. For one thing, it would mean that whenever a court decided that an obligation had been “authorized by law,” Congress would be helpless to change it, even if the court’s interpretation was not actually what Congress had in mind.

While Wade’s proposal may or may not have been intended to go that far, the most plausible explanation for the more modest language of Howard’s proposal is that Wade’s colleagues feared that his language could put Congress in a constitutional straitjacket, with implications reaching well beyond the particular evil that they wished to address. If Balkin has a better explanation, he does not share it.

The Clark-Jackson Colloquy. Balkin’s interpretation of the legislative history places inordinate reliance on a single ambiguous exchange between Senators Clark and Johnson. After Clark offered a new version of what would ultimately become Section Four of the Fourteenth Amendment (and proposed to strike a single word of his substitute), Johnson noted, to Clark’s agreement, that “I do not understand that this changes at all the effect of the fourth and fifth sections.”

I don’t want to belabor the point, but it is not clear what Johnson meant by “this.” Balkin says that he must have meant the entirety of Clark’s proposed substitute because Johnson referred to “this” not changing the effect of the “fourth and fifth sections,” which is how the language in question was numbered in the previous draft. If Johnson had meant to refer to the change made by the single word strikeout, he would have more likely referred to “your substitute” or something to that effect.

Balkin’s reading is plausible, and probably correct, but my original point was simply that it was not clear what Johnson meant (or, for that matter, what Clark understood him to mean). It is possible that Johnson used the “fourth and fifth sections” as a shorthand for the entire provision that Clark was proposing, in which case “this” would refer to the single word change. A somewhat awkward phrasing, to be sure, but such things are quite common in verbal exchanges. It seems rather odd to attach greater importance and precision to the words used in this brief colloquy than to those used in the legally operative text of the Public Debt Clause.

If we assume Balkin is right about the meaning of “this,” we must move on to what Johnson meant by “the effect” of Clark’s proposal. Here Balkin pulls off quite a trick. He notes that there was one important difference between Howard’s language, which applied only to Civil War obligations, and Clark’s language, which appears not to be so limited. He thus disregards Johnson’s statement when it would lead to a result he disfavors, but treats it as controlling with respect to other apparent differences between the two proposals. It’s a bit like walking into a party and picking out your friends, if I may borrow a phrase.

Let’s take an example of how this works. If there is one thing that seems clear on the face of the Public Debt Clause, it is that its protections apply to “debts” but not to “obligations.” That’s because the second sentence of Section Four explicitly provides that both Confederate “debts” and “obligations” are illegal and void, while the first sentence protects only the “public debt” of the United States, including Union “debts” incurred in the Civil War. Certainly anyone reading the text of Section Four at the time it was proposed and ratified would have understood this meaning.

If anything, the legislative history of Section Four would seem to confirm that the difference in phrasing was deliberate. Wade’s original proposal, referred to the “public debt of the United States, including all debts and obligations . . . .” Clark’s proposal, which Balkin plausibly suggests was modeled on Wade’s, referred to the “public debt of the United States, authorized by law, including debts . . . .” It seems evident that Clark deliberately dropped the reference to “obligations.”

Balkin apparently would have us conclude that Clark dropped “obligations” in the first sentence either inadvertently or because it was redundant. He then would have us believe that Clark retained the word “obligations” (twice) in the second sentence, either inadvertently or for unknown reasons that Clark failed to note at the time. These assumptions, if valid, would not say much for the legislative draftsmanship of the Chairman of the Claims Committee.

And what is the basis for these assumptions? The Clark-Johnson colloquy, of course, which Balkin interprets as meaning that “debts” in Clark’s proposal must be synonymous with “obligations” in Howard’s proposal. (As opposed, for example, to the possibility that Clark decided that “debts” more accurately reflected the intent of the Senate than “obligations”). To state this position should be enough to refute it.

At the end of the day, the most we can infer from the Clark-Johnson colloquy is that these two senators believed that the Clark substitute would achieve the intended effect (or the central intended effect) of the Howard proposal. But this doesn’t tell us what they thought the intended effect was, much less provide a basis for ascribing their views to the rest of the Senate. Still less does it justify disregarding the actual language of the Public Debt Clause, which is the best evidence of what the proposers and ratifiers intended.

Balkin’s Hypothetical. To bolster his broad reading of the Public Debt Clause, Balkin argues that such a  reading is necessary to ensure that the Clause would achieve the objectives of its framers. He illustrates this point with a hypothetical in which a post-Civil War Congress, controlled by Democrats, decides not to invalidate or repudiate Civil War debts (or obligations), but to argue that the country cannot afford to pay them in full. Therefore, he suggests, “they deliberately appropriate less than is necessary to pay the debts as they come due, and they prevent the government from issuing new debt to help pay off existing obligations.”

I would first note that Balkin’s hypothetical needs some clarification. If Congress fails to appropriate money to pay off a particular debt or obligation, then it cannot be paid, even if there is a surplus in the Treasury (at least this is my understanding of the law as it has existed up until the last month or so). In addition, up until 1917 Congress had not delegated any general borrowing authority to the executive, so that each debt issuance had to be specifically approved by Congress. Thus, it would not accurate to say that Congress would “prevent the government from issuing new debt.” Absent specific congressional action, there would be no way for the government to borrow.

Having said this, one wonders what Balkin expects would happen in his hypothetical, even if the Public Debt Clause had the broad meaning he supposes. Presumably Congress would have a constitutional obligation to appropriate money and authorize new debt, but what would happen if the votes were not there to enact these measures?  There would seem to be only two possible answers. The first is that the Public Debt Clause would be effective only to the extent that Congress chose to follow its (implicit) strictures, and the second is that some other entity would be able to enforce it against Congress.

Assuming that the framers of the Fourteenth Amendment considered some hypothetical along the lines proposed by Balkin (and there is no evidence they did), they would have realized that attempting to make the Public Debt Clause broad enough to deal with such eventualities would either be futile (because it would be dependent on the good faith of a future Congress controlled by traitors they despised) or would involve ceding enormous power to the executive and/or judicial branches. As much as they may have wished to ensure that Civil War obligations would be paid, it seems highly doubtful that they would have wanted to do so at the cost of ceding congressional appropriations or borrowing authority to the other branches. This makes it perfectly understandable that they were content to propose the Public Debt Clause in the limited and largely exhortatory form that they did.

Moreover, Balkin’s reading of the Public Debt Clause would not necessarily protect against the gamesmanship of a future Congress. Consider a different hypothetical. Instead of attempting to reduce Civil War obligations, a future Congress chooses to broaden the existing pension system so that it covers everyone, including Confederate veterans. From the perspective of the framers of the Fourteenth Amendment, this might be an even greater outrage than a reduction of Union benefits. Yet Balkin’s interpretation of the Public Debt Clause could not prevent it.

To the contrary, if Balkin were correct, once Congress expanded the pension system, it would be constitutionally impossible for another Congress to undo the expansion. A Congress controlled by Southern Democrats, even for a brief period, would have the power to enact changes that could never be undone, no matter how damaging or malicious they might be.

It is not difficult to understand why the framers of the Fourteenth Amendment would not have wished to establish such a regime.

 

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.

 

“Threatening Default”: A Response to Professor Balkin

There is a plethora of Public Debt Clause news, but let’s begin with Professor Jack Balkin’s analysis of the Clause’s legislative history. Balkin contends that the key part of that history is the proposal made by Senator Benjamin Wade to insert the following language into the draft of the Fourteenth Amendment: “The public debt of the United States, including all debts or obligations which have been or may hereafter be incurred in suppressing the insurrection or in carrying on war in defense of the Union, or for payment of bounties or pensions incident to such war and provided for by law, shall be inviolable.”

Wade explained that his proposal “puts the debt incurred in the civil war on our part under the guardianship of the Constitution of the United States, so that Congress cannot repudiate it.” (emphasis added) He further noted that this “will give great confidence to capitalists and will be of incalculable pecuniary benefit to the United States, for I have no doubt that every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.” (emphasis added) Finally, he stated that his “amendment goes further, and secures the pensioners of the country [by putting] the pensions of our soldiers and their widows and children under the guardianship of the United States. They ought to be there, along with your public debt.”

Balkin argues that “[i]f Wade’s speech offers the central rationale for Section Four, the goal was to remove threats of default on federal debt from partisan struggle.” He concludes that the Public Debt Clause was placed in the Constitution to remove the “threat of defaulting on government obligations” as a weapon in “ordinary politics.”

What’s wrong with this analysis? To begin, Wade’s proposal was not the version of the Public Debt Clause that was actually proposed and ratified. In fact, it wasn’t even approved by the Senate. Instead, the Senate adopted Senator Jacob Howard’s proposal, which stated: “The obligations of the United States, incurred in supporting insurrection, or in defense of the Union, or for payment of bounties or pensions incident thereto, shall remain inviolate.”

There is no direct evidence as to why the Senate chose to adopt Howard’s version, rather than Wade’s. It seems a reasonable surmise, however, that the Senate was uncomfortable with the implication, reflected in both Wade’s proposed language and his explanation thereof, that it would be making a dramatic change in the legal status of the public debt. Even Howard’s phrase “remain inviolate” implies a more modest intent to preserve the current legal status of Civil War obligations, rather than to give them constitutional protection which did not previously exist.

The final version of the Public Debt Clause, of course, is significantly different from Howard’s proposal in that it applies to all “public debt of the United States” and is not focused solely on the Civil War. However, it is also significantly different from Wade’s proposal, a fact that Balkin largely ignores.

First, the Public Debt Clause refers only to “debt,” not to “obligations,” while Wade’s proposal did the reverse. As I have noted before, it seems clear that this was intentional and that the framers decided not to include “obligations” within the scope of the Clause. Thus, whatever protection the Clause affords, it applies only to “debt” and not to “obligations.”

An even more significant difference is that while Wade said that the public debt would be “inviolable,” the Public Debt Clause says only that the “validity” of the public debt “shall not be questioned.” It seems highly unlikely that this peculiar phrase was chosen to be synonymous with either Wade’s or Howard’s proposal.

So why was it chosen? Again, we have to engage in a degree of surmise. The language of the Clause directly addresses the evil the framers feared—namely an attempt to declare portions of the public debt (particularly portions related to the Civil War) to be invalid. But this result would have been achieved by Wade’s or Howard’s language as well.

It seems to me that the most likely explanation is that the Senate did not intend to alter the degree of legal protection that the public debt previously enjoyed, but was not of one mind regarding what that protection was. It therefore simply declared that all public debt that was valid (i.e., “authorized by law”) would remain valid. This explanation involves a degree of speculation, but it is more consistent with the actual language of the Clause, as well as the Senate’s previous decision to reject Wade’s proposal, than any other that I have heard so far.

Balkin argues, however, that we should read the Public Debt Clause as meaning the same thing as Wade’s proposal. His basis for this is a colloquy between Senator Clark, who offered the near-final version of the Public Debt Clause, and Senator Johnson. Johnson stated “I do not understand that this changes at all the effect of the fourth and fifth sections. The result is the same.” Clark responded: “The result is the same.”

With all due respect, this argument gives the use of legislative history a bad name. In the first place, it is not even clear that Johnson was referring to the entirety of the language offered by Clark, as opposed to a change that Clark had just made to strike a single word from the language, which Clark stated “does not add anything to its force.”

More importantly, however, even if Johnson meant that he saw no difference between “the result” of Clark’s language and that of the prior draft, he was obviously referring to Howard’s language, not to Wade’s. It would be far-fetched to conclude that Johnson was commenting on Wade’s proposal, which was not the then-current language before the Senate (and indeed had never been adopted by the Senate). It would border on the absurd to conclude that “the result” referred to by Johnson was the result advocated by Wade in supporting a proposal not adopted by the Senate.

Finally, regardless of what Johnson meant, it is quite a stretch to conclude that the Public Debt Clause should be read as meaning, not what it says, but what a single senator said that a proposal with very different language should be read as meaning. It’s enough to give one a Justice Scalia-like attitude toward legislative history.

But even if we forget all that, and accept Balkin’s view that “Wade’s speech offers the central rationale for Section Four,” I have a hard time making the jump from Wade’s speech to Balkin’s interpretation thereof. Wade said that his language would prevent Congress from repudiating the debt.  Balkin says that it was intended to prevent Congress from making a “threat of default on government obligations.” This is not the same thing at all.

Now I am not sure what Balkin means by “threatening default.” Was Secretary Geithner “threatening default” when he sent letters to Congress asserting that default would result unless Congress raised the debt limit? Did then-Senator Obama “threaten default” when he voted against raising the debt limit?

So let’s review. The Public Debt Clause prohibits questioning the validity of the public debt. As far as I know, no one is questioning the validity of the public debt. Senator Wade said that Congress should be prohibited from repudiating the debt. As far as I know, no one is proposing to repudiate the public debt. Professor Balkin says that Wade should be interpreted as meaning that the Public Debt Clause should be interpreted as meaning that no one should threaten default on the public debt. I don’t think that anyone is doing that either, unless “threatening default” means “refusing to do what someone else says is necessary in order to avoid default.”

In which case, everyone is threatening default.

 

 

 

He May Not Be a Witch, But He Sure Can Make Congressional Powers Disappear

Although an acquaintance (a noted constitutional scholar) emailed me today “it is difficult to believe anyone could be so far gone as to think the President can transgress a debt limit on his own authority,” he underestimates the “can-do” (or maybe it should be “can’t-do”) spirit of the U.S. Senate. According to this article, several U.S Senators are toying with the idea that the debt limit is unconstitutional under the Public Debt Clause:

“This is an issue that’s been raised in some private debate between senators as to whether in fact we can default, or whether that provision of the Constitution can be held up as preventing default,” Sen. Chris Coons (D-Del.), an attorney, told The Huffington Post Tuesday. “I don’t think, as of a couple weeks ago, when this was first raised, it was seen as a pressing option. But I’ll tell you that it’s going to get a pretty strong second look as a way of saying, ‘Is there some way to save us from ourselves?'”

It should be noted that this comes on the heels of Senator Coons’s performance in the Senate Foreign Relations Committee hearing on Libya yesterday. Questioning State Department Legal Advisor Harold Koh, who testified that the Libyan military operation did not constitute “hostilities” within the meaning of the War Powers Resolution, Coons congratulated him on making a “rather compelling case” that congressional authorization was not needed under the WPR (although, somewhat bewilderingly, Coons also described Koh’s interpretation of “hostilities” as “strained,” “very narrow,” and in “very real tension” with a common-sense understanding of the term).

Apparently Senator Coons thinks that the way to “save Congress from itself” is to outsource its power to the executive branch. When this or some future president asserts that he can both conduct and fund military operations on his own authority, regardless of what Congress says, and people wonder where he could get such an idea, perhaps Senator Coons will take a bow.

 

If the President Violates the Constitution and No One has Standing to Sue, Did he Really Break the Law?

That seems to be the question (of the “if a tree falls in the woods” variety) posed by this New Republic article entitled “The Debt Ceiling: Why Obama Should Just Ignore it.” Although the author cites Garrett Epps and others for the proposition that there is a “strong argument” that the President has the authority to ignore the debt limit, his principal focus is on the proposition that no one would have standing to challenge the action in court. In other words, who cares if its illegal if no one can challenge it?

On the standing question, the article first argues, citing Lou Fisher, that individual members of Congress would lack standing to challenge the President if he should order the Treasury Department to issue debt in violation of the statutory limit. This is certainly true (for the same reason that they lack standing to challenge the Libya war). Less clear is whether the House or Senate would have standing, but for present purposes lets assume that they would not.

Could private parties bring suit? The article suggests that perhaps holders of credit default swaps (who are betting on a U.S. Treasury default) could sue. More likely, holders of congressionally authorized U.S. bonds might sue, arguing that the values of their securities are diluted by the President’s action.

In any event, the issue of standing has nothing to do with the legality of violating the debt limit. There are many things that Presidents can do which are not justiciable (whether for lack of plaintiffs with standing or for other reasons) or which cannot, as a practical matter, be challenged in court. Presidential actions that could theoretically be prosecuted as criminal violations (like, say, violating the torture statute) will almost never end up in court since Presidents control the prosecution mechanism and the pardon power. This doesn’t make the President’s actions automatically legal. Put another way, President Nixon was wrong when he said, “when the President does it, that means that it is not illegal.”

It is of course true that Presidents have often taken actions which are of debatable legality and sometimes taken actions which are almost certainly illegal. Perhaps the author means to suggest that presidential lawbreaking may sometimes be justified by extraordinary circumstances. If so, he would not be the first. But, again, this is an entirely separate issue from standing.

Nor is Congress limited to judicial remedies for redress of presidential illegality. One important remedy is provided by the power of the purse:

 

The framers were familiar with efforts by English kings to rely on extra-parliamentary sources of revenue for their military expeditions and other activities. Some of the payments came from foreign governments. Because of these transgressions, England lurched into a civil war and Charles I lost both his office and his head. The rise of democratic government is directly traceable to legislative control over all expenditures.

The U.S. Constitution attempted to avoid the British history of civil war and bloodshed by vesting the power of the purse squarely in Congress. Under Article I, Section 9, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” In Federalist No. 48, James Madison explained that “the legislative department alone has access to the pockets of the people.” The power of the purse, he said in Federalist No. 58, represents the “most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining redress of every grievance, and for carrying into effect every just and salutary measure.”

Louis Fisher, The Politics of Executive Privilege 27-28 (2004).

Of course, were the President able to wrest the power of the purse from Congress, as the New Republic author advocates, he would have gone a long way toward making himself into the unaccountable “constitutional dictator” some fear.

If that lamentable situation were to arise, Congress would have little choice but to exercise the ultimate remedy provided by the Constitution (and which the most creative legal scholars or OLC-types have been unable to theorize away). See William Rehnquist, Grand Inquests (1992).

 

Snatching the Power of the Purse

In prior posts (see here, here and here), I argued that Garrett Epps (and, to a lesser extent, Michael Abramowicz) had adopted an overly broad interpretation of the Public Debt Clause and that this interpretation, even if accepted, could not justify invalidating the debt limit. These errors are minor, however, compared to Epps’s proposal that the President enforce the Public Debt Clause by declaring the debt limit unconstitutional and ordering the Treasury Secretary to borrow money without congressional authorization.

Epps defends this position on the grounds that the President takes an oath to uphold the Constitution and is therefore obligated to ensure compliance with the “absolute command of our nation’s fundamental law.” Although the President’s action would violate the debt limit statute, “no congressional statute can command or permit our government to violate the Constitution.”

At first blush, this sounds very much like the theories advanced by John Yoo and other advocates of executive power. A statute which unconstitutionally constrains executive power is void and therefore can be ignored.

Epps himself makes this analogy, arguing: “during the weeks after September 11, [Yoo] breezily wrote that ‘the constitutional structure requires that any ambiguities in the allocation of a power that is executive in nature- such as the power to conduct military hostilities- must be resolved in favor of the executive branch.'” Epps contends that the same rationale should apply to the debt limit: “Surely the power to safeguard the national credit is ‘executive in nature,’ too. It is commanded by the Constitution, and it concerns the national interest as fully as does military action.” Thus, Yoo’s logic should equally support a President’s decision to ignore the debt limit (“sauce for the Bush goose, an administration lawyer might argue, should be sauce for the Obama gander.”).

But Epps’s theory goes well beyond anything that Yoo has argued. Yoo contends that a statute which conflicts with presidential powers, particularly in the national security, may be invalid. But even under Epps’s reading, the Public Debt Clause does not give the President any power. It merely imposes a constitutional duty, which the President is obligated to fulfill as a consequence of his oath to uphold the Constitution. However, the President’s duty to safeguard the national debt no more enables him to assume Congress’s power of the purse than it would enable him to assume the judicial power when (in his opinion) the Supreme Court acts in an unconstitutional manner.

Moreover, even in the national security area, where the President unquestionably has wide-ranging powers, it is recognized that he must rely on Congress for funding. Even the most die-hard proponents of executive power do not question this as a general matter. See, e.g., John Yoo, Crisis and Command 196-97 (2009) (explaining how Congress used its power of the purse to curtail President Polk’s maximalist demands during the Mexican-American War, thereby “demonstrat[ing] the checks that Congress always has available against the executive, even at the height of his wartime powers.”); id. 342 (noting that President’s national security powers do not give him authority over the funding of the military) . Indeed, many observers believe that the power of the purse is the only effective check, short of impeachment, that Congress still has to rein in the executive branch.

It is ironic that Epps, of all people, would now seek to transfer this quintessential congressional power to the President. Just a few years ago, Epps warned of the danger of the “runaway presidency,” fearing that “there are no means by which a president can be reined in politically during his term.” Because of this problem, he explained, “runaway presidents have at times committed the country to courses of action that the voters never approved- or ones they even rejected.”

Epps was particularly concerned about the situation where “a president with little or no mandate uses the office to further a surprising, obscure, or discredited political agenda.” He went on to explain that “[t]he most egregious case arises when a president’s policy and leadership have been repudiated by the voters, either by a defeat for reelection or by a sweeping rejection of his congressional allies in a midterm election.”

Sounds a lot like the current situation, does it not? Yet for some reason Epps is no longer concerned about the prospect of a runaway presidency, To the contrary, he is actively promoting a runaway presidency by encouraging the President to assert a power that no president before has ever claimed, the power to borrow money on the credit of the United States.

To be fair to Epps, he seems to have some qualms about his debt limit proposal, allowing that he would prefer that Obama not have to seize this constitutional power. Yet ideas like this can take on a life of their own. Better to quash them now before some lunatic starts claiming that it is treason to “question” the public debt. Oops, too late.