Obama and the Debt Ceiling

The debt ceiling is the last leverage that Republicans have to prevent out-of-control Federal spending and on various policy issues. Liberals know this: even as Senate Democrats talk of ending the right of Republicans to filibuster, liberals are seeking to defang the Republican House of Representatives as well. They are also now peddling a new theme that the debt ceiling itself is unconstitutional under Section 4 of the 14th Amendment. Therefore, President Obama may simply ignore the debt ceiling.

The looming debt ceiling fight could allow Republicans to soundly defeat Obama's overspending. In the "fiscal cliff" deal, Republicans succeeded by making most of the temporary Bush tax cuts permanent, but failed to get spending cuts. Yet now, Republicans could use the debt ceiling vote to slash spending. The overall result could be serious deficit reduction at lower permanent tax rates. But this requires Republicans to stand united and refuse to raise the debt ceiling.

Section 4 of the 14th Amendment requires: "The validity of the public debt of the United States, authorized by law... shall not be questioned." Liberals argue that if Congress has authorized spending, this automatically gives the president the power and even the obligation to borrow whatever it takes to spend all the money for which Congress voted. When Congress votes to spend money, this includes the obligation of the chief executive to take whatever actions are necessary to pay the debts of the United States Government. That is because "the validity of the public debt" ... "shall not be questioned." Thus, any debt ceiling law violates Section 4, they argue.

Suddenly the appeal for Washington to abandon the U.S. Constitution from Georgetown Law Professor Louis Michael Seidman in the New York Times makes sense. Seidman's pitch on December 30 that the Constitution is obsolete and unnecessary is not likely to be accepted in full. But Seidman argues that it is more important to do whatever is convenient for the moment than to be bound by the U.S. Constitution. To the liberal elites and the low-information voters, this helps prepare the debate for Obama ignoring the law "to get things done."

Barack Obama appears to have landed on this theory with both feet. On January 1, 2013, President Obama commented:

"Let me repeat, you can't not pay bills that we have already incurred. If Congress refuses to the United States government the ability to pay these bills on-time, the consequences for the entire global economy would be catastrophic-far worse than the impact of a fiscal cliff."

And:

"I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills, they have already racked up through the laws they have passed."

Republicans need to be ready with a response. Like all liberal views of the Constitution, the theory seems to make sense at first, but after a little thought is revealed to be preposterous. But Obama could build up the momentum to get away with it unless Republicans act swiftly to expose the scheme.

First, Section 4 refers to public debt "authorized by law." Debts that exceed the debt ceiling are not "authorized by law." Period.

Second, the debt ceiling enacted by Congressional power under Section 5 modifies Section 4. Section 5 of the 14th Amendment provides: "The Congress shall have power to enforce, by appropriate legislation, the provisions of this article." So when Congress enacted the debt ceiling, it changed whatever effect Section 4 might have here.

Third, a promise to make a gift in the future is not a debt. Planning to donate money to someone at some future time is not legally binding in the sense of establishing a "debt." Even planning to build a bridge or highway in the future is not a debt until a contract is officially signed. Even a signed contract can often be cancelled according to its own terms, especially before the work is started. Promising price supports for wheat farmers in future years is not a debt if it is cancelled long before that year's crop is even planted.

Fourth, the liberal theory involves borrowing new debt. Clearly, Section 4 does not empower the Executive Branch to borrow any more money or incur any new debt. It refers to the validity of already-existing debt.

It will be said that if the government owes a debt to a vendor, contractor or employee then the president must pay that debt to impatient creditors even if that requires borrowing money from more patient lenders. So they would swap debt for debt under Section 4. This is a strained and forced misinterpretation.

Fifth, the theory twists the 14th Amendment:

"The 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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void."

Reading Section 4 as a whole, it is clear that it refers to the debts incurred in fighting the Civil War. The 13th, 14th, and 15th Amendments were enacted after the Civil War to settle many of its issues. Reading the entire Section it is clear that it does not empower a president to borrow money.

Section 4 presents a contrast between debts incurred by the Confederate States in fighting against the United States with debts of the United States. The contrast clarifies what Section 4 is about. The United States is not going to pay for the war fought against it. But this does not authorize new debt.

Sixth, the liberal argument hangs on confusing "confidence" with "validity."  They argue that if lender confidence is shaken, then the "validty" of public debt has been "questioned." Section 4 contrasts debts that will never get paid, because they are illegal and void, from those legally valid. It says nothing about when debts will get paid or how happy lenders may feel.  Ironically, the liberal argument would mean that the downgrading of the nation's credit rating in 2011 violated Section 4, if impairing faith in the government's creditworthiness violates Section 4.

The real question is whether any State Attorney General or prosecutor or Federal judge will have the guts to enforce the law against whatever government bureaucrat is spending money in excess of the Congressional debt ceiling. Keep in mind that Obama will not personally be spending the money illegally, but lesser officials will have their head on the block.

On the other hand, the "Anti-Deficiency Act" makes government bureaucrats personally liable if they incur liabilities not legally authorized. So to get contracting officers to stick their neck out, Obama would need to give them some very strong cover. At what point will anyone in Congress have the spine to talk impeachment? Recall that Congress can impeach Cabinet members and lesser officials, not only a president.

The debt ceiling is the last leverage that Republicans have to prevent out-of-control Federal spending and on various policy issues. Liberals know this: even as Senate Democrats talk of ending the right of Republicans to filibuster, liberals are seeking to defang the Republican House of Representatives as well. They are also now peddling a new theme that the debt ceiling itself is unconstitutional under Section 4 of the 14th Amendment. Therefore, President Obama may simply ignore the debt ceiling.

The looming debt ceiling fight could allow Republicans to soundly defeat Obama's overspending. In the "fiscal cliff" deal, Republicans succeeded by making most of the temporary Bush tax cuts permanent, but failed to get spending cuts. Yet now, Republicans could use the debt ceiling vote to slash spending. The overall result could be serious deficit reduction at lower permanent tax rates. But this requires Republicans to stand united and refuse to raise the debt ceiling.

Section 4 of the 14th Amendment requires: "The validity of the public debt of the United States, authorized by law... shall not be questioned." Liberals argue that if Congress has authorized spending, this automatically gives the president the power and even the obligation to borrow whatever it takes to spend all the money for which Congress voted. When Congress votes to spend money, this includes the obligation of the chief executive to take whatever actions are necessary to pay the debts of the United States Government. That is because "the validity of the public debt" ... "shall not be questioned." Thus, any debt ceiling law violates Section 4, they argue.

Suddenly the appeal for Washington to abandon the U.S. Constitution from Georgetown Law Professor Louis Michael Seidman in the New York Times makes sense. Seidman's pitch on December 30 that the Constitution is obsolete and unnecessary is not likely to be accepted in full. But Seidman argues that it is more important to do whatever is convenient for the moment than to be bound by the U.S. Constitution. To the liberal elites and the low-information voters, this helps prepare the debate for Obama ignoring the law "to get things done."

Barack Obama appears to have landed on this theory with both feet. On January 1, 2013, President Obama commented:

"Let me repeat, you can't not pay bills that we have already incurred. If Congress refuses to the United States government the ability to pay these bills on-time, the consequences for the entire global economy would be catastrophic-far worse than the impact of a fiscal cliff."

And:

"I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills, they have already racked up through the laws they have passed."

Republicans need to be ready with a response. Like all liberal views of the Constitution, the theory seems to make sense at first, but after a little thought is revealed to be preposterous. But Obama could build up the momentum to get away with it unless Republicans act swiftly to expose the scheme.

First, Section 4 refers to public debt "authorized by law." Debts that exceed the debt ceiling are not "authorized by law." Period.

Second, the debt ceiling enacted by Congressional power under Section 5 modifies Section 4. Section 5 of the 14th Amendment provides: "The Congress shall have power to enforce, by appropriate legislation, the provisions of this article." So when Congress enacted the debt ceiling, it changed whatever effect Section 4 might have here.

Third, a promise to make a gift in the future is not a debt. Planning to donate money to someone at some future time is not legally binding in the sense of establishing a "debt." Even planning to build a bridge or highway in the future is not a debt until a contract is officially signed. Even a signed contract can often be cancelled according to its own terms, especially before the work is started. Promising price supports for wheat farmers in future years is not a debt if it is cancelled long before that year's crop is even planted.

Fourth, the liberal theory involves borrowing new debt. Clearly, Section 4 does not empower the Executive Branch to borrow any more money or incur any new debt. It refers to the validity of already-existing debt.

It will be said that if the government owes a debt to a vendor, contractor or employee then the president must pay that debt to impatient creditors even if that requires borrowing money from more patient lenders. So they would swap debt for debt under Section 4. This is a strained and forced misinterpretation.

Fifth, the theory twists the 14th Amendment:

"The 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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void."

Reading Section 4 as a whole, it is clear that it refers to the debts incurred in fighting the Civil War. The 13th, 14th, and 15th Amendments were enacted after the Civil War to settle many of its issues. Reading the entire Section it is clear that it does not empower a president to borrow money.

Section 4 presents a contrast between debts incurred by the Confederate States in fighting against the United States with debts of the United States. The contrast clarifies what Section 4 is about. The United States is not going to pay for the war fought against it. But this does not authorize new debt.

Sixth, the liberal argument hangs on confusing "confidence" with "validity."  They argue that if lender confidence is shaken, then the "validty" of public debt has been "questioned." Section 4 contrasts debts that will never get paid, because they are illegal and void, from those legally valid. It says nothing about when debts will get paid or how happy lenders may feel.  Ironically, the liberal argument would mean that the downgrading of the nation's credit rating in 2011 violated Section 4, if impairing faith in the government's creditworthiness violates Section 4.

The real question is whether any State Attorney General or prosecutor or Federal judge will have the guts to enforce the law against whatever government bureaucrat is spending money in excess of the Congressional debt ceiling. Keep in mind that Obama will not personally be spending the money illegally, but lesser officials will have their head on the block.

On the other hand, the "Anti-Deficiency Act" makes government bureaucrats personally liable if they incur liabilities not legally authorized. So to get contracting officers to stick their neck out, Obama would need to give them some very strong cover. At what point will anyone in Congress have the spine to talk impeachment? Recall that Congress can impeach Cabinet members and lesser officials, not only a president.