Obama's Big Leverage: (Un-)Constitutionality of the Debt Limit

This subject was brought up in the comments a couple of weeks ago, and while I didn't know of anything explicit in the Constitution to make the debt limit unconstitutional, I wanted to look into it. Given Congress' nearly plenary power over the budget, it did not seem likely, but I did find it rather curious that Congress can authorize the Treasury to get into debt obligations without authorizing it to pay for it. Think about it: what other entity in the world gets to say, "I am authorizing you to collect this much revenue, requiring you to spend that much, but that does NOT mean I'm authorizing you to borrow the difference." Uhh, what?

But it does look though that the 14th amendment may nullify Congress' power to set a debt limit separate from its spending and taxing plans. Particularly, this part of the 14th amendment:
Section 4. 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.
A Congressional refusal to raise the debt limit would result in immediate default on about $30 billion in US Treasury bonds. What's a default? It's the lack of paying debt - in other words, questioning the validity of the public debt of the United States. There is a pretty strong case that the debt limit itself is unconstitutional if it prevents the United States from paying its debts. I am no Constitutional scholar of course, but the language of the 14th amendment seems extraordinary and very broad in its scope.

Constitutional scholar and The Atlantic columnist Garrett Epps thinks so too, and provides us with a fascinating perspective. You see, the 14th Amendment itself was a response to southern conservative attempts to duck from taxes to pay the nation's debt in the aftermath of the civil war.
The Lincoln administration had borrowed freely to finance the war machine. As Reconstruction dawned, white Southerners complained bitterly that they would now be taxed to repay the funds that had been borrowed to defeat their cause. "What, ruin us, and then make us help pay the cost of our own whipping?" one asked a Northern journalist in 1865. "I reckon not."

Southerners were used to having their way in Congress--they had dominated the institution from 1787 until secession in 1861--and many believed that when their representatives arrived in House and Senate, they would be able to tear up the nation's IOUs.


Section Four was the response; its language is extraordinary. First, it does not simply say that the national debt must be paid; it says that its "validity ... shall not be questioned." Only one other section of the Constitution--the Thirteenth Amendment's proclamation that "[n]either slavery nor involuntary servitude ... shall exist within the United States, or any place subject to their jurisdiction"--is as unqualified and sweeping.

Second, it suggests a broad definition of the national debt: "...including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion."

From this language, it's not hard to argue that the Constitution places both payments on the debt and payments owed to groups like Social Security recipients--pensioners, that is--above the vagaries of Congressional politics. These debts have to be paid, the argument would be, in full, on time, without question. If Congress won't pay them, then the executive must.
Bruce Bartlett, historian and Reagan domestic policy adviser, agrees, while also pointing out that that Republicans are mad because President Obama made complete fools out of them in the deal earlier this year to avert a government shutdown. Bartlett says that the Constitutional option, following the 14th Amendment, is clearly available to the President in the event of Congressional petulance against raising the debt limit, and he says that the President should exercise that option. Lawrence O'Donnell interviewed Bartlett last night:



This - along with the fact that the President is shifting the entire frame about taxes in the public consciousness to one of investment - is the President's biggest leverage against the Republicans as they demand their latest unicorn: cutting enough spending to bring us to fiscal health (it's not possible unless you cut out everything we use as a civil society along with our social safety net). That is why we saw in Tuesday's news conference a President that was calling the Republicans' bluff. Think about this scenario, which is quite likely to be playing out in some form:
Obama: John, you're going to have to give something on the tax and revenue side.

Boehner: No! We only want spending cuts! Agree to our plan to end Medicare!

Obama: Really?

Boehner: Really. Or we will let the country default.

Obama: Will you now? How about I get a buddy of yours from Wall Street on the phone and you tell him that?

Boehner: What? Don't do that!

Obama: Better yet, there's this 14th Amendment. Looks to me that you really can't stop us from paying our obligations, and this whole debt limit thing, it's kinda unconstitutional. At least, I'd be on very strong grounds to just ignore it to abide by the letter of the Constitution. So the way I see it, you either play by the rules and reach a reasoned compromise, or I can do this my way.

Boehner: You're mean! {starts sobbing uncontrollably.}
This doesn't happen often in politics, but Obama's quite likely got the Republicans by the nose here. Poor bastards. One would think they'd learn better by now, you know - every time they come all out and think they've got one over the President, he cleans their clock.