The Debt Ceiling Crisis Reveals a Constitutional Gap: How to Choose Among Unconstitutional Options

As this column goes to press, President Obama and the leaders of both parties in Congress have reached a deal to raise the debt ceiling and slash federal spending.  Given the events of the last week, however, there is no guarantee that the measure will be enacted in time to prevent the government from running out of money.  If the deal is derailed, President Obama would be faced with a menu of bad options.  Indeed, under one view, the President would be faced with a menu of only unconstitutional options.

Even if a majority in each house of Congress does raise the debt ceiling before the end of the day on Tuesday, August 2, the question that I address in this column—what should political actors do in the face of a choice among only unconstitutional options?—will likely recur, if not in the debt-ceiling context, then in some other circumstance.  Yet, as I show below, our constitutional tradition currently has insufficient resources for addressing this problem.

President Obama’s Trilemma

Should Congress fail to ratify the deal to which the party leaders have agreed, at some point very soon the federal government will not have sufficient revenue on hand to pay all of its bills.  At that point, there would be plausible arguments to be made that just about anything the President might do would violate the Constitution.

According to one view, recently championed by former President Bill Clinton and explained by Professor Neil Buchanan in a column on this site, Justia.com, and on posts to my blog (here and in the pages linked therein), the failure to pay any sums due under current laws would violate Section 4 of the Fourteenth Amendment, as it would call into question “the validity of the public debt of the United States.”  Thus, President Obama could not withhold Social Security and Medicare checks or delay payment to government employees or contractors without violating the Fourteenth Amendment.

To be sure, not everyone shares the view that Section 4 applies to all government obligations.  Some people say that it only obliges the government to pay bondholders, while others suggest that it only really obliges the government to repay principal to bondholders.  These are not trivial objections, but for present purposes, let us assume that they are wrong.  Let us assume, in other words, that the government’s failure to make good on any of its legal commitments would be unconstitutional.

Under that assumption, a number of politicians and commentators have urged President Obama to simply ignore the debt ceiling, and to continue to issue new bonds to pay all of the government’s obligations.  This approach might not work, of course, because lenders would be reluctant to buy government bonds that would appear to be unauthorized.  However, even if it did work, it may be unconstitutional.

Harvard Law School Professor Laurence Tribe has argued in the New York Times and on my blog (here and here) that the debt ceiling is part and parcel of the congressional authorization for the Treasury to issue bonds in the first place, so that issuing new bonds in the teeth of the debt ceiling would amount to a unilateral Executive decision to borrow money.  But Article I, Section 8, Clause 2 of the Constitution allocates the power “to borrow Money on the credit of the United States” to Congress, not the President.  Thus, Tribe argues, a decision by the President to ignore the debt ceiling would violate the separation of powers.  Let us assume that Professor Tribe is right as well.

As an alternative, the President might try raising taxes—perhaps by accelerating the expiration of the Bush tax cuts.  But this would be problematic for the same reason that ignoring the debt ceiling would be problematic.  Article I, Section 8, Clause 1 and the Sixteenth Amendment give Congress, not the President, the power to tax.  So if ignoring the debt ceiling would be unconstitutional, then a presidential decision to unilaterally raise taxes would also be unconstitutional.

Are there other ways to raise money without raising the debt ceiling?  Sure.  The President could sell corporate naming rights to the White House, or order U.S. troops in Iraq to seize that country’s oil fields and keep the revenue they produce.  But, of course, these are not serious options.

Less outrageously, Yale Law School Professor Jack Balkin recently suggested that the mint could simply coin a few trillion dollars because, while a federal statute limits the amount of paper money in circulation, no such statute limits the amount of coinage.  Alternatively, Balkin proposed that the Federal Reserve and the Treasury could exchange various financial instruments to create more money for the government without printing more greenbacks.  These exotic options may be constitutional, but it is doubtful that they would calm financial markets.  They are financially equivalent to merely printing money, which is what banana republics do when they cannot pay their debts.  I shall therefore assume that none of these hail-Mary options would be available.

Accordingly, under what I regard as plausible, if not absolutely necessary, assumptions, the President’s only real options in the event of congressional failure to act would all be unconstitutional: He could cut spending in violation of the Fourteenth Amendment, or he could unilaterally borrow or tax in violation of the separation of powers.  What should he do?

Is Constitutionality Like Pregnancy, Purely Either/Or?

To answer that question, we might think about how we choose among bad options in other contexts.  If you have no good choices, you try to pursue the least bad course. For the President, that would seem to entail picking the “least unconstitutional” of the options listed above.

The problem is that we do not ordinarily think of constitutionality as coming in degrees.  Just as a woman cannot be “a little pregnant,” so too a law or policy cannot be “a little unconstitutional,” and thus it cannot be “very unconstitutional” either.  Laws and policies are either constitutional or unconstitutional.  There are no shades of gray.

The American Hostility to Balancing

Yet that way of thinking about constitutionality is peculiarly American.  In most other constitutional democracies, courts frequently conceive of their job as balancing different constitutional values against one another.  Here in the United States, however, our courts—and especially the Supreme Court, over the last quarter century—have been hostile to open balancing.

True, a number of explicit balancing tests remain part of American constitutional law.  For example, in deciding whether a state law that imposes a non-discriminatory burden on interstate commerce satisfies the dormant Commerce Clause, the courts openly weigh the law’s in-state benefits against its burden on interstate commerce.  But this sort of test increasingly looks like a relic from the Warren and early Burger Courts.

Thus, in a 1988 case, Justice Scalia dissented from the application of the dormant Commerce Clause balancing test.  He wrote that “the scale analogy is not really appropriate, since the interests on both sides are incommensurate.  It is more like judging whether a particular line is longer than a particular rock is heavy.”

That is a good line, but it obscures an important fact:  We constantly weigh incommensurate interests.  Consider an example from daily life.

Suppose you are trying to decide what to have for dessert at a buffet lunch.  Your choices are an apple or a slice of apple pie.  The apple is better for your health but the slice of pie is tastier.  Will you be paralyzed by indecision?  Of course not.  You will decide whether, on this occasion, you want to sacrifice a little bit of health for a momentary pleasure.

In light of his other writings, Justice Scalia’s real objection to balancing incommensurate goods appears to be that the process is ad hoc, rather than governed by law.  A preference for pie over an apple, or vice-versa, is just that, a preference, not the application of some rule or standard.

But that need not be true either.  You might follow a rule or standard in deciding whether to eat a satisfying calorie-rich, fatty dessert or a piece of fruit: “I’ll usually eat the fruit,” you might say, “but roughly once a week, I’ll indulge in something more sinful.”

And likewise for law.  The judges on the Canadian, European, and other constitutional courts that balance rights and other constitutional values do not do so according to their whims.  They have carefully worked-out, multi-step procedures for weighing competing interests.  These procedures are not completely deterministic or value-free, of course, but neither are the rules and standards that American courts apply.

Balancing in American Courts

Indeed, if one looks beyond the formal labels, one can see that American courts often engage in balancing, just not expressly.  For example, when a law is challenged as infringing freedom of speech or using an illicit sex-based classification, the courts ask whether it satisfies “strict scrutiny” or “intermediate scrutiny.”  These tests require an assessment of the fit between ends and means, as well as a judgment as to whether the ends are “compelling” or “important.”  The process may best be understood as a kind of balancing with a thumb placed on the scale.  Significantly, even Justice Scalia and other critics of express balancing accept the tests that entail implicit balancing.

To be sure, the unofficial balancing that occurs in free speech or equal protection cases weighs interests to determine whether there is any constitutional violation at all.  No American constitutional doctrine authorizes balancing or any other kind of test to guide judges in making a choice among a variety of unconstitutional options.

Yet that feature of doctrine, too, may hide a deeper truth.  When constitutional values conflict, American courts find ways to define the relevant provisions so that they appear to be in harmony.  This phenomenon occurs most frequently in cases pitting claims of liberty against claims of equality.

In recent years, for example, the Supreme Court has heard a number of cases in which individuals and groups invoked freedom of association in order to resist the efforts of states and their subdivisions to enforce rules forbidding discrimination on the basis of sexual orientation.  These cases could be thought to call for weighing the competing interests of liberty and equality, but as a formal matter, the Court has sliced and diced the doctrines to avoid acknowledging that a conflict exists.

Balancing to Avoid Default

Should Congress fail to raise the debt ceiling by midnight Tuesday, and should President Obama conclude that he must cut spending to avoid borrowing beyond the debt limit, it is likely that some people or entities who do not receive the payments to which they are otherwise entitled would then sue.  Yet for such suits, success in the courts would hardly be guaranteed.  The cases could be deemed non-justiciable (that is, not susceptible to resolution by the courts); sovereign immunity might block recovery; and the courts might reject the claims on the merits.

But whatever President Obama thinks the courts would do, he would have a duty to make his own judgment about which unconstitutional course to follow.  The answer is not simple.  On one hand, there are reasons to think that, in the abstract, borrowing or taxing without constitutional authorization would be the greater intrusion into congressional prerogative—given the historical practice under which Presidents could spend less than all of appropriated monies.  On the other hand, simply ignoring the debt ceiling in order to avoid default would probably result in the least damage to the economy.

How the President should choose among the unconstitutional options is not at all clear.  Should his criteria look to “degree of unconstitutionality” in general, or should they look to something like “harm to the country”?

The problem is not so much one of incommensurability, as it is one of lack of guidance.  Precisely because the courts have for so long denied that they balance constitutional values against one another, they have not developed procedures or criteria for performing such balancing.  Had our constitutional law, over its history, been more open about balancing, courts and political actors might now have more guidance in making the sort of choice the President would face absent congressional action on the debt ceiling.

We do have one clear-cut precedent, albeit not from a court.  In defending his Civil War decision to override judicial process without first obtaining a suspension of the writ of habeas corpus from Congress, President Lincoln famously asked:  “Are all the laws, but one, to go unexecuted, and the government itself go to pieces, lest that one be violated?”

Lincoln thus laid down the following guide:  If a course of action must be followed to avert a catastrophe on the scale of the dissolution of the Union, then government actors may follow that course of action, even though it is or may be unconstitutional.

Unfortunately, our precedents and traditions provide very little guidance for choosing among unconstitutional options when the consequences are grave, but not catastrophic.  Thus, ironically, the very fear of unguided judicial discretion that has led our courts to avoid developing an explicit balancing methodology could have the effect of leaving a vital decision to the President’s unguided discretion.

It now looks likely that we will dodge the bullet of defaulting on the government’s obligations.  But even if Congress adopts what party leaders are calling a “framework” for deficit reduction and raising the debt ceiling, they will not have provided a framework for deciding how to decide among unconstitutional options.  That issue will have to be resolved in some future crisis.

Podcast: Play in new window | Download