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  • No, the President Can’t Violate the Debt Ceiling

    For some partisans—especially those who believe in the “living Constitution”—the Constitution sanctions all they favor and forbids all they oppose.  So it is with the debate over the debt limit.

    All of a sudden, politicians who have never cared much for constitutional fidelity are citing a little-known section of the Fourteenth Amendment as grounds for President Obama to evade the congressionally-imposed debt ceiling.  Their goal is to punt on spending reductions that would be part of any debt-ceiling deal and are essential to putting the budget in order.

    No surprise, their legal arguments are as fast and loose as their irresponsible spending plans.

    The Fourteenth Amendment prohibits legislation that repudiates the Nation’s debt. Section four states: “The validity of the public debt of the United States, authorized by law . . . shall not be questioned.”  The Supreme Court held that this means “the government is not at liberty to alter or repudiate its obligations.”

    But it does not follow that the debt ceiling is unconstitutional.  The Fourteenth Amendment does not specify any particular manner by the obligation to honor the Nation’s debt may be met.  Congress may, for example, raise taxes, cut spending, redirect appropriated funds, or reduce other payments that are not necessary to satisfy “public debt.”  There is no constitutional requirement that it borrow.

    Indeed, unilateral action by the President to borrow money would be an unconstitutional usurpation of the legislative power.  The Constitution vests the power to “to pay the debts and provide for the common defense and general welfare of the United States” and the power “to borrow money on the credit of the United States” in the Congress, not the President.  The President lacks the authority to, on his own accord, make expenditures which have not been authorized by Congress (because Congress has imposed a debt ceiling that supersedes any such authorizations) or to undertake borrowing that has not been authorized by Congress.

    Just think for a moment about the argument to the contrary.  If the president could borrow on his own accord, notwithstanding a law that sets a debt limit, why couldn’t he simply choose to raise taxes, instead?  The answer is the same: that power is vested in Congress, not the president.

    In any case, most of the federal budget is not subject to the Fourteenth Amendment.  As the Supreme Court has stated, it applies only to payments required to satisfy debts incurred “by virtue of the power to borrow money on the credit of the United States.”  The Supreme Court has specifically held that “contractual arrangements, including those to which a sovereign itself is party, remain subject to subsequent legislation by the sovereign”—i.e., the federal government.  While the federal government is obliged to make good on its debts, it is not constitutionally committed to carrying out other spending.

    So let’s look at the numbers: Expenditures to satisfy the Nation’s “public debt” comprise only a small proportion of total federal spending.  Less than ten percent of total federal spending in the President’s 2012 budget would go to satisfying net interest on the national debt, and some additional percentage would go to satisfying other accrued debts.  Looked at another way, deficit spending constitutes about 43 cents of every dollar of federal spending.  That means, even with no deal to raise the debt ceiling, 57 cents of spending on the dollar could continue unimpeded.  In other words, the federal government would have to live within its means.

    The bottom line is that section four of the Fourteenth Amendment is a limit on Congress’s power to repudiate the Nation’s debt, and not (almost literally) a blank check for the President.  Fair-weather constitutionalists take note: sometimes the Constitution doesn’t get you where you want to go.

    Posted in Economics [slideshow_deploy]

    29 Responses to No, the President Can’t Violate the Debt Ceiling

    1. Jeff says:

      actually my reading of it seems to say that the government may not choose to default on the debt, i.e. It must be paid first or at least not last …

    2. Old Turkey says:

      Would we be here if the Congress had passed a budget back when they were suppose to? I think the reason no budget was pasted by the Democrats while they controlled House, Senate and Presidency was to avoid any restrictions on spending. Un-controlled government is just that, UN-CONTROLLED.

      • Brian P. Rabbit says:

        Except, had the Democrats done so while still dominating both chambers and occupying the White House at the time, the issue of "controlled spending", whatever that phrase means, would not have come up.

    3. Brian P. Rabbit says:

      The phrase “by virtue of the power to borrow money on the credit of the United States” comes from Perry v. U.S. How do We reconcile the claims of this post with another assertion by the same court in the same case, "Obligations cannot be legally avoided by prohibiting the creditor from receiving the thing promised", especially in light of the fact the spending authorized by law constitutes a legal obligation: the Congress has directed by law how the money is to be spent and the President is constitutionally bound to execute such law or, in other words, to spend those funds in accordance with Congress's instructions.

    4. Bobbie says:

      No, the President Can’t Violate the Debt Ceiling! There's lots of things the president can't do that he does! Please make sure he doesn't do what he can't!!!

    5. Merrill Friend says:

      If Congress is vested with providing the money for paying the nations bills, and Congress has to pass the bills that result in the spending that isdone, why is the President being criticized for spending the money that Congress authorized?

    6. Cletus Amlung says:

      Here's the problem.. By freezing the debt ceiling, should it be breached, Congress is willingly abrogating its power to the administrative branch. They already appropriated the spending. It's law. Now they are freezing the means to pay for those appropriations. If the president lacks the authority to make expenditures not authorized by congress, how can the president have the authority to decide which expenditures that are authorized by Congress get paid?

    7. Thrasymachus says:

      Assuming that the debt ceiling itself is constitutional (a pretty big "if"), It strikes me that President Obama can still avoid violating it by ordering the Treasury to print up and distribute cash and/or Demand Notes redeemable in cash upon presentation to the U.S. Treasury to every party which would otherwise have been issued a standard check.

      Large defense contractors, in particular, could be paid with such Demand Notes. . . if any of them actually went so far as to present them to the White House for payment, the President could order the Bureau of Printing and Engraving to crank out however many shrink-wrapped bricks of $100 bills are required to meet the obligation.

      Once the debt limit is raised, the Federal Reserve could retroactively agree to honor these instruments. . . but if not, they'd still constitute valid payment as long as the Treasury honors its pledge to redeem them for cash. And as to that, well, the U.S. Mint can keep running our presses until either Congress recovers its sanity or the planet runs out of green ink.

    8. cs11 says:

      Defaulting by not raising the debt limit would destroy our economy – and leave retirees, vets, soldiers, etc. without a paycheck. It would incerase the long term deft massive amounts due to insterest rate increase.

      If you by something on credit care, you have to pay for it. If you get a home or car loan, you have to pay for it. If not, your finances take a huge hit. This is not different.

      Thouse opposing rainding the debt limit should be tried for treason – for trying to detroy our country. They must be thrown out of office. Republicans in Congress have the lowest poll numbers of all, and it's because of this ignorant stance and stickign by ideology over stats and numbers and facts.

      It's obvious we have a deficit and debt problem and that needs to be fixed – but sabotaging the country and all our future is abotu the worst answer there is.

    9. Scott says:

      This is a pretty decent argument but it really just juggles the basic question around without really answering it: Congress is currently refusing to raise the debt limit to allow for borrowing to service all the various spending obligations it has incurred, including debt service, and at the same time refusing to restructure spending in line with revenues. As far as I know, no one in Congress, Republican or Democrat, has even suggested such a solution. If they had, there is almost certainly not enough time to implement it even if the votes could be found.

      So we'll get to August 2nd without a solution to the logical impasse presented by Congress legislating expenditures of x amount without authorizing collection of revenues to x amount. As Cletus points out, this does throw the whole Constitutional mess over to the Executive branch: it has been legally required to make certain expenditures, has not been provided the money to make them, and is being told it cannot borrow to make up the difference. In the real world, a choice has to be made at that point which is not going to be legal in some way or other. Since, if we get to that scenario, it appears that Congress will itself have violated the 14th Amendment (by failing to provide revenues for debt service), doesn't it follow that the other two branches have a responsibility to enforce it somehow? I mean, what's the point of the document if it can't be enforced? I have no idea what the mechanics would look like, but it seems like the executive would end up with considerable leeway in an extraordinary situation… quite possibly including borrowing in defiance of the debt ceiling, sanctioned by a court presented with fairly clear language in the 14th Amendment and probably very little desire to insert itself otherwise in the minutiae of budget questions.

      To me, that's the real question: if Congress isn't going to do it, who enforces the 14th Amendment and what does that look like? It's not really as simple as saying that the money is somehow available; as you have boiled it down, it also depends on spending and revenue authorizations, and without legislation that at this point has no time to materialize, something extra-Constitutional just about has to happen one way or another.

    10. sigmund derman says:

      The plain reading of the Constitution supports the view that the debt ceiling in unconstitutional. If the ceiling is not raised in time, I hope that President Obama simply directs the United States government to keep paying. If the conservatives on the Supreme Court are true to their principles, they would support this. But there is hardly anyone with the legal standing to challenge this anyway. Perhaps the people betting against our solvency via credit default swaps could challenge it. Here is a proposed speech that the President might give: http://www.theatlantic.com/politics/archive/2011/

    11. John Nail says:

      If I understand this the Constitution trumps any other law like the debt ceiling.

      The debt ceiling raise is needed not for new spending but that that has been already authorized by Congress, ie by law and thus the President has 2 duties:
      1) Uphold all laws that have been passed
      2) The debt has already been committed to over many years so it is valid and "shall not be questioned.

      That makes using the 14th a no brainer.

      The Presidential oath also requires the President to protect and defend the Constitution. If he does not follow it as laid out above one could argue you could impeach him as well.

      In fact all members of Congress took a similar oath so their inaction to provide the debt ceiling action needed to fund the laws passed by them could be deemed a violation of their oath of office subjecting Boehner in particular to impeachment. Right?

      The other issue here is that failure to protect the nation's financial system from a meltdown is akin to "war" and the President again is bound to protect the nation as well. Keeping the nation from falling into a deeper recession, higher borrowing costs, higher deficits due to a double dip and the world losing faith in the US as a reserve currency makes his inaction on the 14th impeachable to me.

      Failure to act has been estimated to cost the US $50B minimum directly for even a few day default due to increased debt rollover costs and as much as a trillion over a decade not to mention higher borrowing costs for consumers and business as well.

      The President has put forth $2T in cuts and asked for $400B in tax loopholes being closed. Every deficit reduction plan that Reagan, Bush I and Clinton did required a combination. Why can't the Repubs simply negotiate in good faith and get this done?

      If they do not they will get hung out to dry by the President being forced to act under his Constitutional duty. That surely isn't going to help them defeat Obama. It might just sew up his re-election before they even have a primary.

      If they think he isn't tough enough to do this. Just remember the Sunday nite we found about Osama or the Somali pirates that were taken out right after he took office.

      If he needs to he will act and get the job done as he should, no doubt about it.

      Here is the case law to support it:

      PERRY V. UNITED STATES, 294 U. S. 330 (1935)

      The government’s contention thus raises a question of far greater importance than the particular claim of the plaintiff. On that reasoning, if the terms of the government’s bond as to the standard of payment can be repudiated, it inevitably follows that the obligation as to the amount to be paid may also be repudiated. The contention necessarily imports that the Congress can disregard the obligations of the government at its discretion, and that, when the government borrows money, the credit of the United States is an illusory pledge…

      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.

    12. Stirling says:

      This Administration would like the consitution to be gone, so that they can spend like a monarchy.. The choice of Raise the debt ceiling or default are False choices given to continue the spending (investment, stimulus,robbing of our childrens future, etc). This country will never go bankrupt, but will need to prioritize it's spending to balanced budget levels. The consitution is the only protection any modern society has to stop a government from financial enslaving its' people.

    13. Craig Green says:

      Bobbie hit the nail on the head — "There's lots of things the president can't do that he does!"

      Presidents can do what they get away with. So can the other two branches.

      Free lunches have bribed voters.

      Every President, Congress and Supreme Court in our lifetimes has re-interpreted and/or ignored the Constitution to suit political agendas. Congress created the Fed and now enjoys unlimited funding. The President no longer asks for a declaration of war to send soldiers to die for a decade. The Supreme Court rarely, if ever, has to admit its past mistakes, enshrined in their stupidity by the god of "legal precedent."

      One possible way out of this mess, though not yet widely supported by enough voters, is more state lawsuits against the federal government under the Tenth Amendment.

      I wish I could be more confident this will work, but a majority 60 percent of "taxpayers" get more from the government than they pay in, while the minority 40% foots the bill. See http://libertyalumnidiscussions.blogspot.com/2011… .

    14. dexter60 says:

      sigmund::
      Your interpretation is one of a self-serving opinion, which I am sure you cannot really benefit from yourself. Since what has been and is being spent is merely fiat money and has reached the point where no such amount of real money even exists in the world, it means your own personal 'wealth' and property may be forfeit.
      The govt. pays for nothing — the people who work do the paying, even for those who merely spend money for a job. Hope what you wish, but you obviously do not get it.
      "…there is hardly anyone with the legal standing to challenge this anyway." this phrase matches the wisdom and insight of 'credit default swaps' used in begging the question.
      Good luck with the philosophy of the doomed.

    15. Realist says:

      Arguing that arbitrarily raising taxes is the same as ignoring the debt ceiling shows a shocking lack of understanding of even basic economics. The debt ceiling is not about revenue or expenses, it's about cash flow. By not raising the debt ceiling, Congress will be requiring the president to arbritrarily prioritize spending. Do we pay our foreign debts first and stop social security payments? Do we pay our military? The Treasury Department will only be able to pay 58% of the bills. Which bills to pay? It's a pretty simple argument really for the President to say, "the Executive Branch should not be arbitrarily deciding which expenses (or taxes) that the Congress has authorized are more important than others. That's Congress's responsibility and authority. Congress may not authorize more expenses than revenues, and then not authorize the payment of those expenses. I, thereby, instruct the Treasury Department to borrow enough money to maintain adherence to Congress's last budget until Congress changes that budget."

    16. justalawstudent says:

      "For some partisans—especially those who believe in the “living Constitution”—the Constitution sanctions all they favor and forbids all they oppose. So it is with the debate over the debt limit."
      –Well, let me know when you don't fall into that group. Seriously, whenever someone starts a column allegedly predicated on legal merits with that kind of sentence, you know that you're gonna get some objective analysis(note: sarcasm).

    17. justalawstudent says:

      –OK, the second fallacy with this authors argument is that the President would NOT be usurping the Congress. Congress has already approved the spending which now requires that the debt ceiling be raised..Congress is in effect, double counting. Furthermore, the analysis of the Perry case was "fast and loose" especially when you consider that fact that the Sup Ct dealt with a slightly different factual scenario and that the Sup Ct also noted that later Congress' cannot alter their obligations when it becomes, "inconvenient" and that furthermore, it is the responsibility of the President to do Congress' bidding in executing the laws they pass(and that includes the $$ to be spent). I think another commenter noted that same passage.

    18. justalawstudent says:

      … I think its important to note that it wasn't the Presidents choice to exceed the debt limit–sure, he recommended and pushed for laws, but it also took Congress to authorize said spending. The implication that spending what Congress has already approved will lead to tyrannical-esque abilities to raise taxes at will is simply un-intellectual and shows a fundamental misunderstanding of what honoring the U.S.'s obligations really entails. And I can assure you, that doing so would set NO precedent for raising taxes or spending at will–because by doing so, the President would not be spending in the sense of unauthorized expenditures, he'd be spending what has already been authorized.

    19. justalawstudent says:

      "The bottom line is that section four of the Fourteenth Amendment is a limit on Congress’s power to repudiate the Nation’s debt, and not (almost literally) a blank check for the President. Fair-weather constitutionalists take note: sometimes the Constitution doesn’t get you where you want to go."
      –I don't think anyone disagrees that that is not what the 14th Amdt was intended for. However, raising the debt limit would still not be the equivalent of a blank check moving forward because the President would still need Congress to approve the spending, if not the limit on said spending–though it stands to reason that a vote to pass X legislation implicitly authorizes and approves a debt limit increase to accomodate the dollars it will take to fund X legislation, but I digress.

    20. justalawstudent says:

      …Furthermore, it is important to look at Perry beyond the mechanical canvass of analyzing a case. That case was about the US's ability to alter its obligation to a citizen via a law. Sure, that law created a direct and appreciable financial obligation on the US for those who took advantage of it, but who isnt to say that other laws (outside Medicare, Medicaid, S.S., etc.) do not do exactly the same thing–what I am saying is, are not the recipients of the benefits of our laws also quasi-creidtors of the US?

    21. justalawstudent says:

      That is an interesting take on it for sure, and though I am not well-versed in the area of govt obligations and liabilities, it would stand to reason that there is some law obligating the US to do what it says it will(so long as the law is not repealed/retracted/etc.) so the notion we could just continue to ignore everything else, as the author suggests, is absurd on its face. But, it remains to be seen what will happen. However, consider this: 1) Who would have legal standing to challenge the Exec. if they did "ignore" the debt ceiling? (Oh, whoa is me… Pres. Obama and Sec. Geithner saved me from economic calamity but my ideology doesn't like it… ERRR, sorry) 2) Even if someone had standing, what court would issue a preliminary injunction to prevent the Exec from doing this, especially in the face of potential(in my opinion, certain) economic calamity?

    22. JBBnntt says:

      Even without raising the debt ceiling, the US is capable of continuing to pay its creditors. THAT IS WHY IT IS IMPERATIVE TO CUT SPENDING IN OTHER AREAS. There's a lot of unnecessary spending going on. Cut some entitlements. Cut redundant departments and services. Can anyone argue that every dime spent by this country is absolutely positively necessary? Ridiculous.
      Why isn't anyone talking about the excessive debt that we already have, which, if continued would further downgrade our credit rating? That's pretty dangerous too and will destroy the dollar. HOW CAN WE KEEP SPENDING MONEY THAT WE DO NOT HAVE? and then spend more in pork. You cannot cut spending by spending, which seems to be this president's approach.
      Yes, we pay our debts. Yes, we cut unnecessary expenditures. And no, we certainly do not borrow more money and put ourselves in an even bigger pit.
      Why won't the president even consider cutting anything? He wants it all and that is just not possible. Politics comes in here…he needs to keep spending to satisfy his special interest groups who pay to help him stay in office.

      • Donny says:

        Our government could certainly be adapted to current management practices. You mention redundant departments in you post, and that is a good point. At one point early in the year I read an article saying that Obama has not met with a good number of the cabinet members (I know, poor citation). An executive would meet with all of the cabinet members (Vice Presidents) in a company and find out what their project portfolios look like, and how much money they are spending. Then, the executive would make certain that all of the spending was aligned directly with the strategy of improving goods and services, and lowering costs. I am going out on a limb to say that Obama's conversations with the cabinet members he did meet with ran more along the lines of questioning whether the department employees can be counted on to fill his desired $1 Billion campaign fund, and not asking executive management questions such as how many employees are working on this project, and are they necessary for the success of the project or not.

        We are living in a new world, and the government needs to adapt to keep our nation competitive. Politicians lack the management skills they need to handle the presidency. Candidates must be capable of aligning every cabinet with strategic plans, but this requires effective communication and collaboration with cabinet members and the development of plans that meet constitutional muster. I find it very sad that the political parties are not seeking out qualified candidates, and are instead striving to solidify political power through the arcane system of bureaucratic and administrative management systems developed and proven ineffective and inefficient for decades.

    23. Donny says:

      What is wrong with the critical thinking skills of the Congress and constituents? Section 4 of the 14th Amendment has written in it clear constraints on public debt of the United States. How limited the comprehension of people are that they are incapable of continuing the sentence clearly stating what are Constitutional requirements for these payments are "pensions and bounties for services in suppressing insurrection or rebellion." That is the crux of the amendment. I could go on to define each of these payments, but readers are certainly intelligent enough to figure them out on their own. My frustration is with the fact that the argument that the debt ceiling must be raised because of the fourteenth amendment is completely ignoring the obvious constraints written therein. The only logical argument is that the people of the United States will rebel if they do not get their government checks. While that may be true, it means we have slipped too far into Communism and need to change course immediately. Perhaps people require a masters degree to understand this, but I certainly hope not because rule by executive fiat is the only conceivable end to the failure to read and obey what is clearly written within the U.S. Constitution. "Power corrupts, absolute power corrupts absolutely."

      • justalawstudent says:

        1) Anyone invokign communism loses credibility. 2) Your argument about contraints re: the 14th Amdt is simply untenable. The 14th Amdt states, "The validity of the public debtof the [US], authorized by law, INCLUDING debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." See the commas? Those seperate one thought from another in the sentence, and its pretty simple interpretation (English grammar, really) that the validity of the public debt was a broad and sweeping definition of such and that the inclusion of pensions and bounties was included by the legislature so there would be no question as to the validity of those obligations as well. So, before you question the intelligence of others in this debate (many of them legally trained) I suggest you double-check your own work.

    24. Donny says:

      English sentences contain a predicate and a subject, not separate thoughts. Separate thoughts in the same sentence is schizophrenic, and is the foundation of liberalism. The commas only separate the subjects, which adds strength to my interpretation. Therefore, 1) anyone making conclusions based on faux pas literary interpretation loses credibility, and 2) your intelligence is still in question.

      • justalawstudent says:

        The commas do not strengthen your argument. Let me show you how this works; there are two ways to state the 14th AMdt re: debt. 1) The way I wrote it before, in full. 2) "The validity of the public debtof the [US], authorized by law… shall not be questioned." See how the commas do create two different thoughts(I dont know what else to call them really)? One is a very broad and sweeping statement on the public debt in general while the second contains that same broad and sweeping statement but, for good measure I suppose, INCLUDES the validity of the obligations incurred as a result of those bounties, etc. Furthermore, there is the transition word, "including." How you read that to be an exclusive statement of the law (as in, the debt includes ONLY bounties, etc) and not an inclusive statement (as in, the debt shall also include bounties, etc.) is beyond me. And if you don't agree with me…. thats fine; it is your right. But, I have the support of the US Sup Ct because in PERRY V US, they pretty much echoed what I have been trying to tell you.

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