Musings on the Debt-Ceiling Controversy and the (Related) Limits of Arguments Sounding in Stare Decisis

Posted in: Politics

Like many other points of contention in modern America, the disagreement between the left and the right over raising the debt ceiling straddles constitutional law and politics. On the constitutional law side, various government actors and commentators have been weighing in on whether President Joe Biden can and should simply ignore the debt limit in place today, and seek to borrow money on behalf of the United States even when the current limit is reached, on the ground that the Fourteenth Amendment says that “[t]he 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.” President Biden himself just yesterday publicly stated he thought he had such a power (but that he didn’t believe he had time to litigate over it.) I freely admit am no expert on the historical purposes and public understanding of this particular clause of the Fourteenth Amendment. But I can say, as a relatively experienced constitutional lawyer, that on the face of things this provision doesn’t seem particularly dispositive of the debt-ceiling question at hand. Let us bracket whether default on a debt is “questioning the validity” of such debt (or instead is simply not making payments on debt whose validity remains unquestioned and binding, as some conservative commentators have suggested). I for one would think that a federal default would mean the debt is being “questioned,” given the federal government’s sovereign immunity from damage liability (a dubious concept embraced by many of the same conservative commentators I advert to above)—something ordinary folks who default on debt but who still are obligated to pay it down the road do not enjoy.

But even if the federal government’s failure to pay debt obligations does (as I would guess) amount to “questioning the validity” of such debt, certainly failure to spend on future federal operations—even operations for which money has been authorized but not yet spent—can’t easily be considered default on (or questioning of) “debt.” That is to say, not paying federal workers for work they have been authorized to do in the coming months but have not yet performed, or not paying safety-net benefits that have been authorized but haven’t yet been sent out, would not seem to involve delinquency. Thus, so as long as incoming revenues are sufficient (and the federal government has the logistical accounting capacity, which even our Luddite government must) to keep paying interest and principal on already-issued federal government bonds, and perhaps also to keep paying government-pension obligations—which could constitute debt for services already rendered under a reasonable definition of “debt”—then the federal government can, technically, avoid default on (or “questioning the validity of,” under anyone’s definition of the term) existing federal debt. (As a potentially important aside about a different kind of legalistic argument, I do wonder whether serious thought has been given to the notion that authorization in spending enactments that post-date the most recent debt-ceiling enactment might constitute an implicit partial repeal of that debt-ceiling limitation, on the ground that a later-in-time authorization might be understood to authorize borrowing necessary for that specific purpose, even if such borrowing would exceed the earlier-enacted borrowing limitation. Such an analysis would of course require careful attention to how and when particular spending authorizations were worded. I also note that this kind of argument would be different from the suggestion, that I have seen floated, that all authorizations automatically permit borrowing regardless of whether they were adopted before or after a debt-ceiling enactment.)

If past debts can continue to be repaid according to schedule but no new money can be borrowed without raising the current debt limit, we may have exhausted constitutional law terrain and landed smack dab in the middle of politics. And in that political turf war, Democrats accuse Republicans of playing dirty, of taking the American economy hostage, of reneging on already agreed-upon deals, and the like. While my initial instinct as a Democrat might have been to embrace this narrative, I’m not sure, after a bit of reflection, that the account really fits. Perhaps it can be said that the Republicans are irresponsibly risking a (major) recession or a crippling widespread shutdown of federal government services by demanding that, say, work or job-training requirements be attached to the provision of safety-net benefits that have not yet been paid out. And in this regard, the kind of shutdown we are confronting may be worse than a “normal” shutdown—of the kind we have had and may face again this fall without a continuing spending resolution. This is so because the law surrounding a “normal” shutdown (when there is cash but no ongoing authorization to spend) allows for maintenance of “essential” federal operations, whereas a debt-ceiling-inspired shutdown (when there is legal authorization to spend but inadequate cash) may not be as orderly and may cut into federal services more deeply. But even if it can be said that Republicans are being reckless in risking such a major shock to the economy, cannot it also be said that the Democrats are similarly (equally?) guilty of irresponsibly risking that same recession/shutdown by their insistence that no work or job-training requirements of the kind the Republicans want be adopted?

To be clear, I am not remotely suggesting the Republicans’ policy prescriptions are wise or just; I’m suggesting only that these policy initiatives need to be engaged (and, where appropriate, defeated) on the merits, by taking the various competing arguments to the American public. Relying instead on the idea that one side in particular is holding the economy hostage, or that one side is acting improperly by seeking to revisit things already decided, just isn’t convincing to those who pay close attention.

In many respects, the rhetorical moves that have been made by Democrat leaders in this debt-ceiling drama—complaints about unfair disruption of the status quo, protestations about unfair reconsideration of decisions already made, and predictions of dire slippery slopes going forward—parallel the moves that progressive Justices on the Supreme Court have been making in recent years when they complain about the (unfair) disregard conservative Justices have displayed towards the doctrine of stare decisis. As I have written in several earlier columns (including this one), overruling a past Supreme Court constitutional case, that today we see as having been wrongly decided as a matter of first constitutional principle, cannot in and of itself be a problem. (If I weren’t right on this point, Brown couldn’t have overruled Plessy, Lawrence couldn’t have overruled Bowers, Nebbia couldn’t have repudiated Lochner, and Brandenburg couldn’t have (effectively) dispatched the anti-Red cases from the 20s and 50s. And the Bill of Rights could not have become “incorporated” against the State and local governments in the mid-twentieth century.) Overruling a past constitutional interpretation that by hypothesis we think was wrongly decided is problematic only where there has been a kind of detrimental reliance on (and not just an expectation of continuation about) the past ruling—reliance that we deem worthy of protection.

If we import these concepts of stare decisis back to the debt-ceiling debate, then certain kinds of commitments made by the United States in past decisions must be honored. The “debt” of which the Fourteenth Amendment speaks is one of them, and the detrimental reliance inherent in monetary debt makes unsurprising the fact that the text of the Constitution itself prevents reconsideration of decisions to promise to pay back loans. So too, to some extent, might be Social Security and Medicare obligations that enticed many Americans to invest less in their retirement and elderly health care than they otherwise would have. (I’m not suggesting as a legal matter such payments would have to be preserved in the event of a debt-ceiling-caused shutdown, but I could imagine strong fairness arguments for preferring such payments, cash inflow permitting. In “normal” shutdowns, for example, such payments continue to be made.) And, going back to the earlier discussion, it seems that the United States brings in enough money to pay interest and principal on bonds and pay government pensions, as well as Social Security and Medicare entitlements.

But are there really any meaningful reliance interests concerning the actual topics over which the parties are haggling? Have recipients of food stamps (or even Medicaid) been enticed into detrimental reliance by the absence (until now) of the kind of work requirements the Republicans propose? (Again, I’m not suggesting such work requirements are a good idea—I’m saying only that they need to be litigated, if you will, on the merits rather than resolved by a status quo ante reflecting past legislative decisions.) Or that there has been detrimental reliance on the overall discretionary spending cap in place for the next year? Or an even clearer example: the expenditure of Covid-relief moneys that were authorized but never spent. Why would it be unprincipled (in the way Democrats often suggest ANY conditions on a “clean” debt-ceiling-increase bill are unprincipled) to revisit this spending decision that was already made but that, with the benefit of today’s wisdom, would seem wrong to continue to implement?

As a general matter, I think the left—on and off the Court—would be well-advised to dig in to engage the merits of these political (and, on the Court, constitutional) questions rather than invoking the “the other side is unfairly trying to undo things that have already been decided” argument. Because in fiscal politics and constitutional law, the status quo is not nearly as easy to identify or rigid as some would suppose, and very few decisions are in fact immune from reconsideration.

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