(Update) Does the 14th Amendment preclude defaulting on the national debt?

Posted by AzBlueMeanie:

Jack Balkin at Balkinization blog posts his awaited conclusions as to whether the 14th Amendment precludes defaulting on the national debt. It is not as black and white as the media villagers and commentariat believe, it is more nuanced. Under What Circumstances Can The President Ignore the Debt Ceiling?:

The Fourteenth Amendment imposes a constitutional duty on both the President and Congress not to act in such a way as to bring the validity of the public debt into question. As I have explained in previous posts, the purpose of section 4 was to prevent the political branches from holding the validity of the public debt hostage as part of a political threat or in order to exact political revenge.

I believe that section 4 was designed to prevent what the Republican leaders of Congress are currently doing. Members of Congress should stop trying to use the risk of default to hold the country hostage in order to win concessions on ordinary matters of politics. The should simply increase the debt ceiling to match appropriations that Congress has already made. Then they should have negotiations about taxes and federal spending.

In the press and in the public commentary, however, the issue has been repeatedly posed as whether or not the debt ceiling is constitutional under section 4 of the Fourteenth Amendment.

This is the wrong question.

We have had a debt ceiling in this country for a long time. Imposing a ceiling on the amount of debt the United States can take on does not by itself violate the Constitution. Quite the contrary, doing so is an exercise of Congress's powers under Article I, section 8.

Rather, the correct question is whether either the President or Congress, or both, are acting in a way to call the validity of the public debt into question. If they are, then they have a constitutional duty to stop, and take appropriate measures. In this case, I believe that Congress is behaving inappropriately, and they should stop. In order to avoid calling the validity of the public debt into question, they should raise the debt ceiling immediately. Indeed, as a matter of good public policy, they should tie decisions about the debt ceiling to decisions about appropriations, as was the practice until recently. President Obama has complained about Congress using the debt ceiling like a gun to extract political concessions, and he is right to do so.

The duty imposed by section 4 of the Constitution exists whether or not a court could order either Congress or the President to act. There are many constitutional duties that no court can order either the President or members of Congress to perform. This may well be one of them. Congress is doing pretty much what the framers of the Fourteenth Amendment did not want them to do. But it is not clear that anyone has standing to force Congress to live up to its constitutional duty.

There is a second question making the rounds, which is equally misleading: People want to know whether the President may threaten to issue new debt if Congress does not raise the debt ceiling.

Again, this the wrong question to ask. For one thing, the President must be careful not to take any steps that might call the validity of the public debt into question. Making such threats at present might be highly counterproductive; it might actually undermine the economy because it might signal that the President believes that United States is about to default and hasten the questioning of the validity of the public debt. Moreover, the whole point of section 4 is not to engage in political gamesmanship over the public debt. (Considered in its best light, this may explain President Obama's reticence to discuss the constitutional issue.).

If Congress refuses to raise the debt ceiling, the President is bound under Article II to take care that the laws are faithfully executed. This duty includes *all* of the laws, including section 4 of the Fourteenth Amendment, the laws passed by Congress that appropriated funds and ordered the President to spend them, and the debt ceiling.

The President (and the Treasury Secretary) must therefore act in such a way as to honor all of these commitments to the greatest extent possible.

The President must use every available legal option to preserve the validity of the public debt, through accounting measures, and through selectively deciding which bills to pay and which to delay paying.

* * *

Thus, I assume that a government shut-down, in and of itself, need not violate section 4 of the Fourteenth Amendment, if the government does not default or threaten to default on "the public debt," however that is defined.

It is possible that the President and Congress may disagree about what falls within that definition. If so, the President must make the call as best he can, because he has an independent constitutional duty not to violate Section 4 of the Fourteenth Amendment. He does not have to accept Congress's view. He may view the factors that lead to questioning the public debt more broadly than Congress, because he may worry that markets will see the government's operations (and thus its creditworthiness) as interconnected.

* * *

[Assume] The President and the Treasury Secretary have come to the end of what they can do, and Congress still has not raised the debt ceiling. Then one of two things will happen.

The first is that the markets will start to melt down, and Congress, finally realizing that they have brought on economic Armageddon, will raise the debt ceiling. The President will have complied with his constitutional duty, and the members of Congress will have complied with theirs. (At least until the next showdown).

I think that this is what will happen. As soon as the markets begin to slide, Congress will make a deal. The Republicans in Congress may be stubborn, and even wrong headed at times, but I continue to believe that they are not crazy. [This is where Jack Balkin and I disagree — they really are that crazy.]

But suppose that this does not happen. Suppose that the Republicans in Congress turn out to be like Pharaoh in the Old Testament: No matter how many plagues are visited upon Egypt, his heart is still hard.

Imagine, then, that the hearts of the Republicans in Congress are as hard as Pharaoh's heart.

Then we have the second possibility: The markets are cratering. The world economy is dissolving before our eyes.

In these extreme circumstances, the President's Article II powers come into play in a different way.

The President has inherent emergency powers, at least as a default rule. Think about the President's power as Commander-in-Chief. The President has the authority to repel attacks on the country or on American citizens, and to safeguard vital American interests in times of emergency, when Congress cannot act.

* * *

[S]ometimes the President acts where it is not clear that he has power (even as a default), or where it is likely that he does not have power. When the President acts in an emergency without congressional authorization in these situations, he must ask Congress for retroactive authorization of what he has done. He is "borrowing" power temporarily, so to speak, and this debt must promptly be paid.

* * *

Under these circumstances, the President would authorize the issuance of new debt if he believed that it would stabilize the situation and prevent default and economic catastrophe.

Without Congressional authorization, this action would be of very dubious legality. Indeed, without subsequent authorization, it would be illegal. As I read the Constitution, only Congress has the power to authorize new debt.

* * *

In this extreme case, the President acts because no one else will act, but in so acting he puts himself at the pleasure and mercy of Congress.

He says, in effect: "This is what I have done to save the country. If you approve of it, then it is legal. If you do not approve, you may impeach and convict me. But now you must choose what to do. The responsibility is yours."

* * *

[This] is why it is misleading to ask whether the President has or does not have the power to issue new debt beyond the debt limit without Congressional authorization. He will indeed issue new debt if worse comes to worse, but that is because he has no other choice. And he will need Congress to authorize what he does eventually.

* * *

Such an act, in my view, is not legal when done, but it may become legal later on, if Congress approves. But it is a dangerous maneuver. If Congress does not approve it after the fact, then the President has acted illegally, and he may be impeached and removed from office.

Such an act may be necessary. It may stave off disaster. But it is no way to run a country.

* * *

It will likely never come to this. Congress will raise the debt ceiling long before the markets begin to crumble. Or, at the first sign of crumbling, Congress will almost certainly raise the debt ceiling. But if this does not happen, then I have described the very limited circumstances under which the President might act.

Note, however, that this is very different from asking whether the debt ceiling is constitutional or unconstitutional.

h/t National Lampoon January 1973 cover.