Monday, January 07, 2013

Another debt ceiling argument

Following up on my recent post noting arguments in the vein of "the Constitution is not a suicide pact" in favor of President Obama's power to act unilaterally to raise the debt ceiling, in order to avert the possibility of national and global economic disaster if the Congressional terrorists pull the trigger, I wanted to note yet another argument in favor of the same conclusion.

This is an argument made by Neil Buchanan and Michael Dorf in their recent article, How to Choose the Least Unconstitutional Option: Lessons for the President (and Others) from the Debt Ceiling Standoff, 112 Colum. L. Rev. 1175 (2012).  Last month, they published on-line a handy update and short summary that is readily accessible, entitled "Nullifying the Debt Ceiling Threat Once and for All: Why the President Should Embrace the Least Unconstitutional Option," available here.

Their argument is as follows.  Suppose that it is illegal for the president to violate a Congressional command by issuing debt in excess of the authorized ceiling.  It also, however, is illegal for him to refuse to spend funds appropriated by Congress, and to levy taxes in excess of those authorized by Congress.

Hence, when the debt ceiling weapon goes off, he faces a "trilemma."  Since Congress has made it mathematically impossible for him to honor its statutory commands regarding debt issuance, spending, and taxes, he must violate one of the three commands.  In doing so, they argue that he must choose the "least unconstitutional" course, or the one which does the least harm to separation of powers concepts.

Suppose he decided to levy new taxes to make up the difference.  This would clearly be an unauthorized power grab, involving undue exercise of what are effectively legislative powers.  So it would be the wrong way to solve the trilemma.

I'm sure everyone would agree with Buchanan and Dorf about that.  But next, they argue, suppose he decides to engage in unilateral prioritizing of expenditure commands.  In effect, he decides, I'll honor spending commands A, B, C, and D.  But, since that uses up all the money I have available, I will violate spending commands E and F.

It seems to be generally agreed by others that this is what the president can and must do.  And there has been discussion (including by me) of such ideas as, say, refusing to spend any money in Congressional districts of members of Congress who are Republicans, or who oppose raising the debt ceiling, etcetera.  If the Republicans are thirsting to impeach Obama, then they presumably would just as happily impeach him for this as for breaching the debt limit.  But what exactly is he supposed to do, and on what basis?  Even if the view that he should respond to the trilemma by cutting spending is correct, there is  no law or guidance on the books regarding how he should do this.

Buchanan and Dorf argue that, purely from a constitutional standpoint, this exercise of selectivity (even if made on some more anodyne basis) would be more improper than breaching the debt limit.  They are making an argument about basic constitutional substance.  The idea is, we should think about the problem in terms of the underlying constitutional concern, which goes to separation of powers and undue exercise of legislative-type authority by the president.  Surely just issuing more debt, in order to satisfy specific statutory commands (regarding spending as well as taxes) that Congress has already sent the president does less harm to constitutional values than turning the president into a legislator who decides what to spend and what not.

As they say in the above update: "In thus violating his oath to faithfully execute the laws - all of the laws - of the United States, he would be acting unconstitutionally.  The only question [would be] which unconstitutional choice would be least unconstitutional....  A president who chose to set aside the debt ceiling in such a situation would ... be exercising unconstitutional powers in the most restrained manner possible - under the impossible circumstances that Congress would have imposed upon him....  Under the trilemma, the [decision to authorize] additional borrowing would be constitutionally invalid, but because it would be less unconstitutional than the other options, issuing additional debt would be the required choice."

Unless there is evidence of contrary statutory intent - in particular, from past debt ceiling legislation - this strikes me as a good argument to add to the mix.  (I should note here that Buchanan and Dorf agree in their update that is not the end of the matter, but raises further issues to discuss.)  Also, they appear to be arguing only that the president should issue additional debt, and cannot be constitutionally questioned for doing so, not that the debt issuance itself would be constitutionally valid.  In other words, the argument seems to suggest that the debt could be reneged by Congress more straightforwardly than other public debt, which leads to the question of how the bond markets would view it.  And I don't doubt that the Congressional terrorists would consider making bellicose statements about how this debt is not valid, will not be honored, etcetera, although one doubts that they would actually follow through on this down the road.  So we do get into the problem - also presented, however, by the Fourteenth Amendment and platinum coin options, along with my anti-suicide pact argument about presidential emergency powers - that the bond markets would have to decide, in their mysterious fashion, whether this debt was in fact as good as any other, or at least close enough to require only a very small premium.

This means, however, that we have no fewer than four distinct arguments, each one at a minimum pretty decent, towards the conclusion that terrorism must fail, and that the Congressional Republicans cannot blow up the U.S. and world economies just because they want to impose on everyone else their own minority views that were resoundingly rejected by the voters in the 2012 presidential election.  When the crunch comes, I believe that the Administration should do all four - issue platinum coins, say that it has 14th Amendment powers if needed, say that it is taking the least unconstitutional course available to it, and say that it has emergency powers if needed.  And to this it should add that it is confident Congress will end up authorizing the additional debt, if any authorization is needed, since to assume otherwise would suggest a degree of recklessness that (it can piously add) no one who cares about our country's welfare would ever seriously consider.

UPDATE: Paul Krugman suggests, as yet another option, "moral obligation coupons," which would state that the U.S. government will pay the stated amounts in a year, but with no "full faith and credit" guarantee.  Rather than offering them to the public at discount, he suggests that they be sold for face value to the Fed, which has certaily held dodgier assets in the last few years.  Or else they could be issued to vendors and the like, with the assurance that the Fed will promptly buy them for face value.

No comments: