Legal Analysis and Commentary from Justia
Posted In Politics

Passing Bad Laws on Purpose: How to Understand the Legal Difference Between the Sequester and the Debt Ceiling

All the talk in Washington this week is about the so-called “sequester”—an arbitrary, nearly-across-the-board set of federal spending cuts that will take effect tomorrow, unless Congress and the President act immediately.  At this point, it appears that the first round of spending cuts, totaling $85 billion for the remainder of the year, will be allowed to take effect, with potentially more than an additional one trillion dollars in cuts to follow in the coming decade.

This year’s cuts alone will inflict serious pain on the people of the United States, and on the economy as a whole.  Between 500,000 and one million jobs will be lost.  Growth in gross domestic product could be reduced by more than half.  Services such as food inspections and air traffic control will be disrupted; military operations will be harmed (in ways that will cost more money to correct in the long term than will be saved in the short term); tens of thousands of children will be removed from Head Start; early childhood nutrition programs will be cut; people will become homeless as housing assistance disappears; and on and on.

None of this was necessary.  Yet it is the direct result of an interrelated triumvirate of political crises that the Republican majority in the House of Representatives has deliberately manufactured.  Those crises relate to the budgeting process (and the attendant threat of a government shutdown), the debt ceiling (and the looming possibility of default), and the damage from the spending cuts that will be required under the sequester.

In my next Verdict column, unless other events intervene, I will discuss the economic and legal issues raised by the prospect of a government shutdown.  Today, I will describe the legal differences between any spending cuts that might take effect due to our hitting the debt ceiling, and the spending cuts that will take effect under the sequester.

It turns out that cutting spending in response to the debt ceiling would be unconstitutional, whereas cutting spending under the sequester is, unfortunately, completely legal.  Bizarrely, however, the reason that the sequester meets constitutional muster is because everyone knew that the cuts were designed to be irrational and damaging.  We thus learn, once again, that the Constitution does not protect us from a dysfunctional political process.

The Republicans’ Three Contrived Political Crises: Shutdowns, Defaults, and Arbitrary Spending Cuts

When the new Republican majority took control of the House of Representatives in January of 2011, they immediately put in motion a strategy to create chaos in fiscal policymaking in this country.  The annual budgeting process is now a shambles, with the standard practice of setting tax and spending laws for a full fiscal year having been replaced by “continuing resolutions,” which allow the government to continue to operate for a few weeks or months at a time.

Currently, for example, we are operating under a continuing resolution that will expire on March 27.  Thus, rather than the once-a-year negotiations that would normally be required, we will face at least one more round of brinksmanship this year.  If another continuing resolution is not approved by then, the government will shut down, with only a small category of “emergency operations” allowed to continue.  The pain from the sequester-related cuts will look minor by comparison.

Moreover, there is, of course, no guarantee that those negotiations will actually result in a continuing resolution that takes us through the end of the 2013 fiscal year.  We might, therefore, soon find ourselves facing monthly—or even weekly—crises.  This, indeed, has been the stated goal of some of the most powerful Republican powerbrokers.  Continuing political crises serve their ultimate political goal, which is to undermine the public’s confidence in the government’s ability to function, thus paving the way for a rollback of the federal government to levels not seen since the days of horses and buggies.

The second manufactured political crisis is related to the debt ceiling.  Although the debt ceiling has existed in some form for close to a century, it was rarely more than an afterthought—an opportunity for politicians to bemoan the necessity of increasing the debt ceiling, as the federal debt grew over time (even when the debt was growing more slowly than the economy, as it was for most of the post-World War II period).

We have now had two white-knuckled confrontations over the debt ceiling in the past eighteen months, with the most recent standoff resulting in a temporary suspension of the debt ceiling until mid-May of this year.  After that suspension ends, Republicans appear to be planning to spend the late Spring and most of the Summer threatening to allow the United States to default on its obligations for the first time in history.

The earlier of those two debt-ceiling standoffs, in the Summer of 2011, resulted in the sequester.  Originally set to take effect on January 1 of this year, and then delayed until March 1, the cuts were designed to be equally unpalatable to Democrats and Republicans alike: a combination of indiscriminate spending cuts, half imposed on defense programs, and half on domestic programs.  The idea was that these cuts would never take effect, because the very awfulness of the sequester would force everyone to come together and do something more intelligent.

That has not worked.  Now that we are facing the possibility that this political staring contest will actually result in the imposition of cuts that no one wanted or expected to take effect, it is important to understand not just the economic effects of those cuts, but also the legal and constitutional differences between the debt ceiling and the sequester.

The Debt Ceiling and the Sequester: Understanding the Differences Between Unilateral Presidential Action and Congressionally Mandated Arbitrariness

In a Verdict column that I co-authored with Professor Michael Dorf last month, we summarized a series of articles that we have recently published in the Columbia Law Review.  We pointed out that the existence of the debt ceiling creates the constant threat of a “trilemma”—a situation in which the President cannot simultaneously execute the spending, taxing, and borrowing laws that Congress has enacted.

If, for example, Congress passes taxing and spending laws that would necessitate an additional one hundred billion dollars of borrowing, while the debt ceiling permits only fifty billion dollars of additional borrowing, then the President would be forced to either spend less than Congress ordered, tax more than Congress ordered, or borrow more than Congress ordered.  He would have no choice but to violate one or more duly-enacted laws.

Failing to follow any of Congress’s orders would be a constitutional violation.  Rather than giving the President carte blanche to do anything he wants in that scenario, however, we argued that the President would be constitutionally required to follow the most modest course available, which would mean opting for what we called the least unconstitutional option.  Because borrowing is easily reversible, and because it involves the exercise of the least discretion by the President, we concluded that borrowing is the least unconstitutional action. If that option was chosen, then the President would be obligated to obey Congress’s orders regarding spending and taxing, even though that would mean disobeying Congress’s orders regarding borrowing.

Even though our conclusion is based on the idea that the President should be as modest as possible when faced with nothing but unconstitutional options, some people have wrongly concluded that we were arguing that the President should “just spend as much as he wants.”  In fact, we were only arguing that he should spend exactly as much as Congress ordered him to spend.  It is Congress’s inconsistent legislating that would make it necessary for the President to follow such a counter-intuitive path.

The contrast with the sequester is stark.  Whereas the debt ceiling could put the President into a situation where he cannot possibly obey all of the laws that Congress has passed, the sequester is part of a duly-enacted law that the President could execute without violating any other laws.

Indeed, the President’s advisors reportedly suggested including the sequester cuts in the 2011 bill that ended that year’s debt-ceiling crisis.  Although that does not make this crisis “the President’s sequester,” as Republicans are now trying to spin the story, it certainly means that the President had a hand in putting us on the collision course that Congress created by passing the law.  There is no trilemma, and thus no apparent escape hatch for the President to nullify the sequester’s spending cuts—no matter how damaging they will be.

Can Congress Delegate the Dirty Work?  Understanding the Limits on How Many Gaps the President Can Be Required to Fill In, When a Law Is Incomplete

There is, however, an interesting wrinkle in analyzing how the President would be required to proceed in light of the law that created the sequester.  In particular, that law mandated that the Office of Management and Budget (which is part of the executive branch) “shall calculate and the President shall order a sequestration” of the relevant spending amounts.

Congress has thus delegated to the President the responsibility for determining the exact spending cuts that will be made under the sequester.  One way for us to know that there is some Presidential discretion allowed under the statute is that the Obama Administration has lately been announcing the specific cuts that it has determined would be required, to the professed surprise of Congress.

For example, the White House announced earlier this week that the agency in charge of immigration has been forced to offer supervised release to non-violent immigrants who had been held in prison-like detention, in order to save money under the sequester’s cuts.  Republicans in Congress immediately assailed the Administration, saying that the White House had deliberately chosen those cuts to score political points—scaring people into thinking that the cuts were more dangerous than they actually needed to be.

This is only an issue, however, because the law itself did not specify on a line-by-line basis the cuts that would be required under the sequester.  That power was delegated to the President.  This is, of course, hardly unusual.  Nearly every law provides some latitude for executive discretion in enforcement, and Congress regularly declines to exercise its power to micro-manage the specifics of our many complicated legal structures.

Is this law’s level of delegation unusually broad?  As it happens, Professor Dorf and I recently completed a third article related to the debt ceiling, which will be published next week (currently available in draft form here), that includes an analysis that bears on this issue.  As we discuss, the “nondelegation doctrine” is a line of cases in which the Supreme Court has placed some limits on the amount of discretion that Congress can confer on the President.

The current contours of the nondelegation doctrine, however, are quite forgiving.  Congress is required to offer guidance to the executive branch, explaining what goals are to be pursued in filling in the gaps in the law.  That guidance, however, can be surprisingly vague, sometimes involving little more than instructions to “regulate in the public interest.”  Some scholars have argued, in fact, that the nondelegation doctrine is so broad that it no longer serves any limiting function at all.

Professor Dorf and I, however, point out in our new article that the nondelegation doctrine at least retains two potentially binding elements, which the Supreme Court has said are necessary to create an “intelligible principle” by which the executive branch could understand its duties under the law.  The more important of those elements is that there cannot be “literally no guidance” from Congress about how the law should be executed.

Although we argue that this element has special importance in the context of the debt ceiling, the question here is whether the law that created the sequester meets this extremely loose standard.  The answer is yes, but for a surprising reason.

The President’s Responsibility to Carry Out Terrible Policies: When Congress Inflicts Pain On Purpose, What Can the President Do?

The law, as written, provides rather specific guidance as to how the spending cuts should be calculated and allocated, within broad boundaries.  But those boundaries are not too broad, because they are part of a specific statutory goal: being indiscriminate and broadly painful.  That is, the “intelligible principle” here is that the executive is supposed to be as arbitrary and unprincipled as possible, precisely to make such cuts unpalatable.

Intelligible principles, in other words, do not need to be intelligent.  They can intelligibly convey Congress’s desire to mindlessly inflict maximum pain.  The spending cuts required under the sequester, in other words, are not just terrible policy.  They are legally enforceable precisely because they are part of a deliberately terrible policy.

Surely, however, there must be some opportunity (or even obligation) for the President to override such policies when he sees a catastrophe in the making.  Especially here, where the whole point of creating the policy was to ensure that the law would never be enforced, isn’t the President in a position to avert disaster, when we would otherwise face irreversible, horrible damage?

In the worst situations, of course, we would count on Congress to step in.  If, for example, Congress had put in place an even worse incentive mechanism—such as detonating a nuclear device at a random location in the United States—then Congress and the President would be expected to prevent that outcome from happening, once they realized that neither side was blinking.

If, for some reason, the political process failed, then we would be happy if the President stepped in and violated the law.  Short of that, however, the President is obligated to follow the bad law.  Indeed, it is quite possible that President Obama sees a potential benefit from enforcing the sequester.  Specifically, he might be hoping that the public’s revulsion at the consequences of the sequester’s cuts might allow us to break out of the cycle of fiscal crises that the House Republicans have created.  He might, therefore, view this as an unfortunate, but temporary, imposition of pain in the service of a better future.

At the very least, the President’s oath of office generally requires him to obey bad laws, and even to obey bad laws that no one ever thought would need to be obeyed.  The sequester is an example of terrible lawmaking.  It is, however, pain that our Congress has decided to inflict upon us.  The President must do what Congress told him to do.

Neil H. BuchananNeil H. Buchanan, a Justia columnist, is an economist and legal scholar, a Professor of Law at The George Washington University, and a Senior Fellow at the Taxation Law and Policy Research Institute, Monash University (Melbourne, Australia). He blogs at DorfonLaw.org, and he is the author of The Debt Ceiling Disasters: How the Republicans Created an Unnecessary Constitutional Crisis and How the Democrats Can Fight Back.
Print this page
  • David1225

    This article and it’s obvious distortions and bias make me more than slightly embarrassed to be a George Washington University Law School graduate.

  • Scott Jones

    May I point out that, yes this is the Presidents Sequester. A recent article eludes to this fact that the White House is far from admitting. Bob Woodward outed the President when he was interviewed by stating that the idea and brain child of the sequester began with the President and the White House. Bob Woodward went so far as to cite the time and date and to whom this idea was delivered to in Congress. Keep in mind that Bob Woodward is definitely a Liberal but he speaks from an honest heart and mind. He does not always go with the populous opinion. With this in mind, you may want to re think your position on that argument.

  • http://twitter.com/kevinl4000 Kevin

    Sure the 2.3% cuts are bad… but not as bad as not cutting at all. We’re wasting $223 billion a year servicing a $16.6 trillion debt. I’d rather see that $223 billion go to something worthwhile.

  • jaz

    The good Professor seems to conveniently forget that this was the President’s idea to begin with. It was used, and continues to be used, to extract additional tax increases from the American populace. The President secured his tax increases, but seems incapable of reigning in his almost pathological addiction to spending. Remember, these are not true cuts, but represent a modest decrease in additional spending. Spending is still increasing, only at a slower rate. Mr. Buchanan mindlessly parrots the administration’s parade of horribles as if he is a paid spokesman. The suggestion that an $85b hit to a budget of $2.9 trillion will result in “irreversible, horrible damage” would be laughable, if not so pathetic. Mr. Buchanan ignores the opinion of many economists that recognize this as a budgetary blip. If the government cannot find a 2-3% savings in their budget, something is truly wrong. Congress has even proposed that the Administration spread the cuts over the entire budget, not just the select areas itemized in the original legislation. The offer was declined. Perhaps Mr. Buchanan has spent too much time in his ivory tower to realize that the rest of America has been forced to find these savings in their own budgets, due to a flailing economy and lack of jobs. Surely, the Administration can do the same. They owe it to the people.

    • Max Herr

      Everything Buchanan writes is directly out of the Obama playbook. Just another socialist hack with a pulpit to preach from.

  • Max Herr

    “This year’s cuts alone will inflict serious pain on the people of the
    United States, and on the economy as a whole. Between 500,000 and one
    million jobs will be lost.”

    Obama has solidified his place in history as the worst President we’ve ever had. Jimmy Carter can now sleep at night, peacefully, knowing he’s no longer in first place.

    As for the suffering of the people of the United States, the majority view this event with far less apocalyptic fear than was fostered by Y2K. We have come to expect Congress to do nothing, and they meet our very expectations. Woo-hoo!!

    Now we’ll see just how long even the Republicans can exist within the Beltway without a steady stream of new revenue, since this seems to be the only way they will stop the spending as well.

  • Max Herr

    Buchanan is, in his socialist way, nuts. We finally have a President who will go down in history as being worse than Jimmy Carter — with two terms to show for it, too.

    Why is it that for the first time in our nation’s history, have we not had an officially passed budget in four years? Is that the fault of the Repbulicans? The House has passed its budget resolution every year, and every year Harry Reid, the President’s right hand man in the Senate, refuses to bring the budget up for a vote. So we have nothing to show for it but all of these continuing resolutions that have finally concluded in the less-impressive-than-Y2K non-issue as far as most Americans are concerned.

    Why is there such a lack of concern? Because Congress is simply fulfilling the expectations of what the American people now realize — that it has no capacity to govern in a meaningful way. This is both a Democrat and Republican problem. Both sides are 100% guilty. They both spend ridiculous amounts of money the country does not have, and they have no plan to eliminate the debt they have piled up over the last 30-40 years. The deficit pales in comparison to the debt.

    Maybe, just maybe, with employee furloughs, and less spending (but even $1 Trillion less over ten years is a mere pittance — we spent that same $100 billion fooling around in Iraq in the course of just two or three months in any given period from 2002 to 2006), Congress will finally realize that government has grown too big, too intrusive, and too costly.

    And as others have said here, Congress needs to treat that money as if it were coming from their own pockets — you cannot continue to spend what you don’t have. Only a socialist economist would disagree with that fact.

 

Access this column at http://j.st/ZYeD