President Obama says that he has seen this movie before, and he is not interested in sitting through it again. He will not negotiate over increasing the debt ceiling, he says, because doing so would simply allow the Republicans to engage in the same kind of hostage-taking that they successfully employed in the summer of 2011.
The President’s negotiating position is correct, both as policy and as politics. What it does not tell us, however, is what he will do if the Republicans carry through on their threats not to raise the debt ceiling. We do not know what the President will do, in other words, if push really comes to shove, and we reach the point where there is simply no more money to pay for authorized spending.
Unfortunately, the public discussion of this issue has been somewhat muddled by the presence of two distinct constitutional arguments. One argument, based on Section 4 of the Fourteenth Amendment, has been summarily rejected by the White House. Whether or not that was a good decision for the Administration to make, the important point to remember is that there is a second, independent constitutional argument on which the White House could rely.
We developed that argument, which we refer to as “the trilemma,” during and after the debt-ceiling debacle of 2011. It is not based on a little-known provision of a constitutional amendment, but rather on pure separation-of-powers principles enshrined in the central provisions of the Constitution. (Interested readers can find the law review articles in which we lay out the legal basis of our arguments here and here.)
In this column, we explain why a President must—as a matter of constitutional imperative—choose to issue debt in excess of the statutory limit, if the budget otherwise requires him to do so. We also explain why even Republicans in Congress should actually want the President to issue more debt, if Congress itself is unable to find a way to do its duty and increase the debt ceiling as needed.
Understanding the Trilemma: Congress’s Powers and the President’s Responsibilities
The President is required to faithfully execute the duly-enacted laws of the United States. The financial operations of the government are authorized in the federal budget, which specifies how money must be spent and how it can be collected in tax revenue. These two powers—the powers of spending and taxing—are quintessentially legislative powers, and Article I of the Constitution thus gives those powers to Congress. Similarly, the power to borrow money is also bestowed upon Congress in Article I.
Under normal circumstances, Congress’s budgetary enactments dictate how much money to spend (and on what) and how to collect money in taxes (and from whom). In addition, if the authorized spending is greater than the authorized tax revenues, then Congress authorizes the President to issue debt—that is, to borrow money—to cover the difference.
The debt-ceiling statute purports to limit the amount of borrowing that the government can undertake. Even though the spending and taxing laws themselves clearly limit how much debt the President can issue, the debt ceiling separately states how high the debt can rise.
These three laws should not be in conflict, but Republicans, in the last few years, have decided that they can pass budgets with spending and taxing levels that require more borrowing than the debt ceiling allows. They then claim that the President must agree to renegotiate the already-passed budget to reduce the spending that Congress has authorized.
If Congress does not raise the debt ceiling in the coming weeks, it will present the President with what we call the “trilemma”: he can, at most, faithfully execute two of the three laws in question, but not all three. He could, for example, spend what Congress ordered him to spend and borrow no more than the debt ceiling specified, but that would mean that he would have to collect more taxes than Congress authorized him to collect.
For reasons that are unclear, people in Washington have simply assumed that the President must choose a second option: Collecting no more in taxes than Congress authorized, and borrowing no more than the debt ceiling specifies, thus requiring him to refuse to spend the money that Congress has ordered him to spend.
We believe that the Constitution requires the President to follow the third path: Collect the taxes that Congress allowed, spend the money that Congress commanded be spent, and issue debt in an amount exceeding the debt ceiling. He should, in other words, obey Congress’s budgetary commands, and set aside the debt ceiling if it is in conflict with those commands.
Choosing Among Unconstitutional Options: Limiting the Damage to the Separation of Powers
Why is it the debt ceiling that must give way? How, indeed, can we say that one unconstitutional choice is more unconstitutional than any other? Is that not akin to being “a little bit pregnant”? Like pregnancy, constitutionality seems to be a dichotomy. And if Congress has put a President into a position where he must violate the Constitution, are all bets off, with the President suddenly free to do what he likes—safely ignoring everything that a dysfunctional Congress has ordered him to do?
The answers to these questions are all informed by the central importance of the separation of powers in the Constitution. The presumption by Beltway insiders that the President should simply cut spending, even though that spending was authorized by Congress, fundamentally misunderstands the high degree of discretion that such spending cuts would require.
It might be helpful here to distinguish between budget cuts and spending cuts. The difference is subtle, but constitutionally essential. Cutting the budget is a matter of prospective legislating, wherein Congress (and the President, in his law-making role) agree to reduce future spending on certain programs, based on political goals and compromises.
Cutting duly authorized spending, by contrast, would see the President altering the spending compromises that Congress has already made. And nothing could cut to the heart of legislative power more than the ability to cancel or reduce spending that Congress has authorized.
No congressperson, after all, is happy with every item of spending in a budget, but she agrees to vote for a budget when she believes that her priorities will be met, given the political and economic constraints at the time.
For example, imagine that two members of Congress disagree about the importance of spending on anti-poverty measures versus anti-drug measures, with each Member thinking that one program is over-funded and the other is under-funded. If they both sign onto a budget that specifies certain levels of spending for both programs, it will be because both legislators have concluded that their specific priority will be met (perhaps minimally). For each program, therefore, Congress is not saying, “Spend up to X dollars on this program,” but rather, “Spend X dollars, no more and no less.”
If the President later seizes the authority to start cutting authorized spending, then those legislative compromises will suddenly be thrown out the window. The President would then be imposing his priorities on the budgetary balances that Congress enacted into law.
This, indeed, is why the Constitution requires that spending be made in full, rather than “up to” a certain amount. Allowing the President to reduce spending, at his discretion, would give him legislative power that he should not wield. The courts held that President Nixon violated his authority when he tried to “impound” funds forty years ago, and the Supreme Court held during the Clinton Presidency that even Congress itself cannot give the President the authority to cut spending at his discretion, through a line-item veto.
Moreover, reducing spending in an across-the-board fashion is not an option, because some spending must be deemed “essential” at all times, to prevent catastrophes that would otherwise occur, if key government services were suddenly unavailable. That means that any spending cuts must necessarily be unbalanced, and that the President would be exercising unconstitutional discretion.
The Modesty of Issuing Debt
Why, then, would the President be on firmer constitutional ground if he knowingly exceeded the debt ceiling? It is important to repeat here that doing so would, indeed, be unconstitutional. That is why he would be facing a trilemma. Even so, not all unconstitutional actions are created equal. As we have just explained, a President would be undertaking an unconstitutional action of enormous consequence if he became a “legislature of one,” altering the spending priorities that Congress itself set up in its budgetary resolutions.
This, by the way, is why we find it truly odd that a Republican-controlled House of Representatives would even consider putting President Obama into a trilemma in the first place, if Republicans think that his only choice would be to cut spending. Surely, his discretionary choices and priorities must differ from theirs, one would think. Our argument is non-partisan and our advice to congressional Republicans is be careful what you wish for.
Be that as it may, the important point, from a constitutional perspective, is that the President would be exercising the minimal amount of discretion possible by issuing debt beyond the ceiling, rather than unilaterally cutting spending or raising taxes. Two arguments are especially potent here.
First, the issuance of debt involves virtually no exercise of discretion. True, there are questions about the term of different debt instruments—three-month Treasury Bills or ten-year Treasury Bonds, for example—but the number of moving parts is quite limited. The President would not, therefore, be upsetting Congressional compromises that are a necessary part of any legislative process.
Second, if Congress is unhappy with the President’s decision to issue more debt, it maintains the power to undo what the President has done. As we noted above, the Congress sets an effective limit on the debt by passing budgets that increase or decrease the debt of the United States. If Congress decides that the debt is too high, then it can make it a priority, in its next budget, to bring that level of debt back down. It would do so, importantly, by exercising its constitutional authority to decide what budget lines to cut, and by how much.
It would do so, in other words, by acting like a legislature. This is what the President should not do. If Congress forces him into a trilemma, then the President must still minimize the damage to the country and the Constitution. The least bad choice open to him would be to obey Congress’s orders regarding taxing and spending, and issue the additional debt that those orders require him to issue.