In my Verdict column this past Thursday, I argued that the federal debt-limit statute is both unwise as a matter of policy, and unconstitutional as a matter of law. The constitutional argument is based on Section 4 of the Fourteenth Amendment to the U.S. Constitution, also known as the Public Debt Clause, which requires that “[t]he validity of the public debt of the United States . . . shall not be questioned.”
The day after my Verdict column was published, the editorial board of The New York Times endorsed the view that the debt limit is unconstitutional. On their op-ed page, however, the Times ran a column by Harvard Law School Professor Laurence H. Tribe, who argued that President Obama should not try to avoid a government default by relying on the constitutional argument against the debt limit.
Because Professor Tribe is one of the country’s leading constitutional scholars, his views understandably carry great weight in public discussion. Moreover, because he is known as a leading liberal voice, when he says something supportive of the Republican position on an issue, his opinion takes on even greater significance. Therefore, a full response to his arguments is necessary, and in this column, I offer that response.
A Constitutional Objection Does Not “Wish Away” a Problem
Tribe’s column is alternately titled “A Ceiling We Can’t Wish Away” or “We Cannot Pretend the Debt Ceiling Is Unconstitutional,” on different Times web pages. Although titles at times are not fully within authors’ control, both versions of the title suggest a surprising level of dismissiveness. This is not a promising start to the discussion, and unfortunately, things do not improve from there.
For example, Tribe suggests that “[s]everal law professors and senators” are hoping to use the Public Debt Clause as “a silver bullet,” which he then dismisses as “false hope.” Later, he refers to people who believe the debt limit to be unconstitutional, as I do, as “proponents of a constitutional deus ex machina.” Those of us who believe that the Constitution negates the debt limit are not merely wrong, Tribe suggests; we are apparently engaged in wishful thinking and pretense.
Even the Extreme Version of the Constitutional Argument Is Actually Valid
To open his case, Tribe describes a version of the constitutional argument against the debt limit that borders on being a straw man. He writes, “Some have argued that this principle prohibits any government action that ‘jeopardizes’ the validity of the public debt. By increasing the risk of default, they contend, any debt ceiling automatically violates the public debt clause.” But, Tribe says, “[t]his argument goes too far,” because it would mean that any fiscal policy change of any kind could be deemed unconstitutional if it “slightly increases the probability of default.”
Tribe’s argument, therefore, is the classic slippery slope. If the debt limit can be said to “jeopardize” the validity of the public debt, then we can stretch the definition of the word “jeopardize” to include seemingly benign policy changes. And if we can stretch words that far, then, according to Tribe, “the argument is self-defeating,” because “the absence of a debt ceiling could likewise be attacked as unconstitutional—after all, the greater the nation’s debt, the greater the difficulty of repaying it, and the higher the probability of default.”
This is simply false. All U.S. government obligations (both debt instruments and other payments due) are denominated in dollars, which the U.S. government has the sole legal right to create. An increase in the nation’s level of debt does nothing to increase the probability of default, because the definition of default is the inability to repay obligations on the terms to which the parties have agreed. No matter how large the debt, the possibility of default remains zero, so long as there is no debt limit.
Although creating large amounts of dollars might (or might not) be bad policy, the ability to do so means that the federal government cannot default on its obligations, no matter how numerous they might be. Tribe cannot, therefore, even defeat a caricatured form of the constitutional objection to the debt limit.
The Debt Limit Prevents the President From Carrying Out His Duties
Tribe then moves on to assess “a more modest interpretation of the public debt clause, under which only actual default (as opposed to any action that merely increases the risk of default) is impermissible.” This accurately describes the position that I and others are taking. The point of the debt-limit statute—if it were ever applied—is to guarantee a default on some government obligations. The debt limit is not unconstitutional because it increases the risk of default, but because it would actually require one. Tribe allows, at least, that this version of the argument “makes more sense.”
Indeed, this argument makes so much sense that Tribe does not disagree with it in any way.
Instead, he immediately moves on to object to the “next step” of that argument, “that, because default would be unconstitutional, President Obama may violate the statutory debt ceiling to prevent it.” Tribe then argues that the President would violate the separation of powers if he were to issue debt over Congress’s objection, and thus “usurp legislative power to prevent a violation of the Constitution.”
There is, however, nothing in my argument that requires the President to spend money that has not been legislatively appropriated, nor to engage in borrowing that has not been authorized by law. The debt-limit statute, in its current form (31 U.S.C. § 3101(b)), states that the face amount of public debt “may not be more than $12,394,000,000,000, outstanding at one time.” Normally, after Congress duly enacts a bill with spending or taxing implications, it will be carried out by the President in accordance with normal budgeting procedures, including borrowing when required. The debt limit, however, purports to override what Congress has otherwise enacted.
If the debt limit is unconstitutional, therefore, it ceases to be operative as a limitation on the borrowing authority of the federal government. That means that the spending, taxing, and borrowing that would otherwise be required by law could then proceed as specified, without being negated by the debt limit. For the President to continue to borrow money under those circumstances is no violation of the separation of powers. It is simply the Executive Branch carrying out its duties under the law.
The President’s Duties Include Avoiding Crises
Indeed, the perversity of the federal debt-limit statute is that it sets up a potential conflict with other laws, putting the President in the position of having to choose between (1) honoring his obligation to take care that the laws enacted by Congress are carried out effectively, or (2) violating those obligations in order to obey the debt limit. Because the debt limit is unconstitutional, however, the President would violate his oath of office if he refused to fund the federal government, as specified by law.
Tribe then offers another slippery slope argument, claiming that “the argument that the president may do whatever is necessary to avoid default has no logical stopping point.” He raises the prospect of a President usurping Congress’s powers to “pay debts not only by borrowing more money, but also by exercising its powers to impose taxes, to coin money or to sell federal property. If the president could usurp the congressional power to borrow, what would stop him from taking over all these other powers, as well?”
This argument is rather puzzling in the current context, where (as Tribe notes) the federal government reached its borrowing limit on May 16 of this year. Ever since then, the President has (without objection from any relevant party) been engaged in “juggling the books” to allow more time for the nation’s leaders to resolve their self-imposed crisis. One of the acknowledged strategies for doing so is, indeed, to sell some federal assets.
We currently, therefore, seem not to be viewing the President’s actions to avoid exceeding the debt limit as a violation of his powers. But if Professor Tribe thinks so, he has not said as much.
Again, however, the more important point is that the President would not be usurping Congress’s prerogatives by borrowing money, because he would be doing so under valid laws that cannot be nullified by the unconstitutional debt-limit statute.
The Far Greater Harm Would Come From Default, Not From Negating the Debt Limit
Having concluded his argument that the debt limit is constitutional—or, more accurately, that we can do nothing about it, even though it is unconstitutional—Tribe moves into a discussion of economic policy. He argues that, if the President were to ignore the debt limit and issue debt sufficient to have the government pay its bills, “a legal cloud would hang over any newly issued bonds, because of the risk that the government might refuse to honor those debts as legitimate.” This, Tribe argues, would cause investors to lose confidence in U.S. debt, raising interest rates and causing “a fiscal disaster that would cost the nation tens of billions of dollars.”
There is much to this argument—except that it again imagines that the government would not pay its debts, which assumes the very result that Tribe is trying to prove. Moreover, it ignores the alternative. That is, Tribe says that ignoring the debt limit would cause a crisis of confidence, increasing interest rates and the cost of running the government. The problem is that abiding by the debt limit does all of that, too, and to a greater degree. Whereas financial markets would surely look with suspicion upon a government that is run by people who cannot agree on which laws the President must execute, they would surely run away from a government that has defaulted on any of its obligations. The United States has had constitutional confrontations before, but it has never in its entire history thus far defaulted on its legal obligations.
If we are worried about economic harm, therefore, it is not enough to say that one alternative is unattractive. If there is no agreement to increase the debt limit, there will be a crisis, and our already-struggling economy will be damaged. The irreversible harm, however, would come from the loss of this country’s record for always honoring its full faith and credit.
The Real Solution Still Lies in the Political Realm
There is, however, one issue on which we can all agree with Professor Tribe: As he writes, “Only political courage and compromise, coupled with adherence to traditions that call upon Congress to fulfill its unique constitutional duty, can avert an impending crisis.” Courage and compromise, however, do not require agreeing to enforce an unconstitutional law. Moreover, we must expect the President to fulfill his unique duties under the Constitution as well, which in this case would require him to do what he would have done under the law, with no debt limit.
As I argued in my Verdict column last week, the removal of the debt limit is hardly an answer to the larger political problem. A highly-motivated Republican majority in the House continues to have the power to make budgetary demands during the course of normal legislating, potentially engaging in a government shut-down to try to force Democrats and the President to give in. The debt limit is, therefore, not even necessary to achieve the objectives of anti-government politicians.
As it stands, the Treasury has now announced that it will not try to avoid the debt-limit statute, even if a compromise cannot be reached. We can only hope that this is a negotiating position, offered by the Administration to try to expedite an agreement within the next few weeks. When push comes to shove, however, the President should not hesitate to declare the debt-limit law unconstitutional.
Moreover, even if we pass through the current crisis relatively unscathed, the debt-limit statute will remain on the books. At some point, we will have to confront that law’s illegitimacy. By removing the threat of default from the Republicans’ arsenal, we will not solve the disagreements over the size and scope of government. We will, however, remove an unconstitutional and dangerous weapon from the negotiating table.