What happens when one side of a potentially life-altering political dispute brings nothing to the table, not merely lacking serious policy proposals but also not even bothering to try to make non-embarrassing arguments based on evidence and logic? Although that question could apply to many questions—from climate change to election denialism to LGBTQ+ rights and beyond—Republicans and their enablers are making especially foolish statements about the debt ceiling.
And it is not the same on both sides. Two Sundays ago, The New York Times published a guest op-ed from Laurence Tribe, the eminence grise of liberal constitutional scholars, who explained “Why I Changed My Mind on the Debt Limit.” Professor Tribe described having read some scholarship that I have co-authored with my Verdict colleague Michael Dorf, which Tribe described as “the most insightful literature on the debt ceiling,” and he ably laid out our arguments not only from the law review article to which his article links but from other pieces of our work as well. Tribe explained why those arguments had convinced him that, if the Republicans were ever to refuse to increase the debt ceiling, President Joe Biden would need to issue debt rather than fail to pay the nation’s bills.
The following Sunday, The Times published what was apparently meant to be a riposte: “The Case for Violating the Debt Limit Is Dangerous Nonsense.” Professor Michael McConnell’s name is on that piece, but I confess that I am almost tempted to think that it was written by ChatGPT, because there were only a few points in the piece in which it was possible to discern any attempt at an argument, and more importantly, at no point did the piece address the actual Buchanan-Dorf arguments that Tribe summarized.
I should note that maybe-McConnell did not even read Tribe’s piece, much less anything by Dorf and/or Buchanan, even though the real McConnell is fully aware of our work, having argued with us publicly about these issues. Admittedly, McConnell might have forgotten about those events, because they occurred more than ten years ago, and nothing in his most recent piece contains anything new. In any case, he dismissed an entire range of arguments by referring only to “a far-fetched interpretation of Section 4 of the 14th Amendment propounded by some academics.”
Even with all of that, McConnell’s essay is what The Times chose to publish as a statement defending congressional Republicans’ posture regarding the debt ceiling. Unless The Times was deliberately choosing to publish a vacuous essay to undermine the conservative side’s credibility, non-conservatives have nothing to worry about.
The Constitutional Law Professor as Financial Advisor
I will start with what is in some ways the least important among McConnell’s points, because it is so revealingly empty. Toward the end of the essay, in trying to convince us that the President should not issue the bonds necessary to prevent default, McConnell tosses off this assertion: “Sensible investors would not purchase such bonds or would demand such a high risk premium as to make them uneconomical.”
That sentence is actually an improvement on something that McConnell told Politico in an article that was published the same day as the Times op-ed: “If the president, on his own authority, ordered the issuance of new bonds, they would not be backed by the United States and investors would be foolish to buy them.” Based on what he wrote in The Times, at least McConnell has apparently been told that non-foolish investors purchase assets across the risk spectrum all the time and that they price any risk into their bids. So the only question is how big the premium would be. How high is too high?
This question is especially important because the Federal Reserve can use so-called Dealer Banks to indirectly buy Treasuries, and because mega-banks could also step in and stabilize the market. In neither case would there need to be a risk premium at all. Why would the Fed or the banks buy bonds issued in technical violation of the debt ceiling? Because they have every reason to want to prevent the financial markets from collapsing, and systemically important banks can be reasonably confident that they will be made whole after the fact, while being made whole is not even a meaningful concern for the Fed.
And even if there were a premium on the bonds, what does it mean to say that the risk premium is so high “as to make them uneconomical”? McConnell has no expertise in this area, and he offers no basis on which to assess what is ultimately an empirical prediction, making this bald assertion read more like scaremongering than serious analysis.
The Constitutional Analysis: Stuck on the Fourteenth, Again
When it comes to McConnell’s one known area of expertise, constitutional law, the analysis goes from sloppy to simply puzzling. Professor Dorf wrote a Twitter thread in response to some of McConnell’s claims, which I commend to readers. The most general response that one can offer to the op-ed, however, is that it seems almost deliberately to miss the point.
In particular, at no point does McConnell seem to be aware of the fact that there is a Constitution-based argument that is not based on the Fourteenth Amendment. This obliviousness is especially clear when he claims that that amendment does not, on its own terms, authorize the issuance of debt. “Only public debt ‘authorized by law’ — meaning by statute” is constitutionally binding, he says. Professor Dorf pointed out that in fact the debt ceiling statute is a separate section of the U.S. Code from the congressional authorizations to borrow, which means that if the debt ceiling statute is unconstitutional, the authorization to borrow would be severable and thus legally valid.
So even on its own terms, McConnell’s piece is wrong about the law. More to the point, however, the Buchanan-Dorf “least unconstitutional option” analysis is explicitly a response to this very question: What should a President do if every option—unilaterally increasing taxes, floating new bonds, or failing to pay statutorily required bills—is illegal? We have argued that the most modest response is for the President to float the necessary number of new bonds. McConnell says, in essence: “But the choice you’re making from only illegal options is illegal!” Brilliant. Politico also quotes McConnell thus: “I don’t think it’s very complicated.” I have every reason to believe that he was telling the truth, but only because he has not bothered to deal with any inconvenient complications.
It is also notable that McConnell insists that the Fourteenth Amendment’s requirement that the validity of the debt shall not be questioned could only be violated if Congress itself tried to pass a law explicitly repudiating existing debt. What would happen if the President were prevented from paying bills (including principal and interest on Treasury securities), leaving people without the payment that was due to them and instead holding what at that point would merely be a piece of paper with an unfulfilled promise on it? Never fear, says McConnell: “When borrowers fail to make payments on lawfully incurred debt, this does not question the validity of those debts; their debts are just as valid as before. The borrowers are just in default.”
As my students might say: Wow, just wow. The response to non-payment, we are told, is not to question whether the promise on which we relied is valid. After all, the promise—which has already been breached—has not been explicitly retracted. But that cannot possibly be what “questioned” means in this context. In McConnell’s terms, the only time that the validity of a debt is in question is in fact when there is no longer any question at all: when it has been unambiguously canceled!
Furthermore, McConnell would have us believe that the Reconstruction Congress that wrote the Fourteenth Amendment was not concerned about the possibility that senators and representatives of the states of the former Confederacy would prevent Congress from paying the Union’s Civil War debt, so long as they did not say the magic words “we repudiate.”
To repeat, however, nothing in McConnell’s essay responds to any of the arguments other than his Fourteenth Amendment strawman. He is silent on, for example, the Supreme Court’s holding in 1998 that Congress itself cannot give the President line-item veto power, even if done so explicitly. (The lead opinion in that case was joined in full by Chief Justice William Rehnquist and Justice Clarence Thomas, among others.)
The Negotiating Process: The Kidnapper Is Simply Looking for an Agreement!
Perhaps the reason that McConnell does not bother with an analysis of the consequences of default is that his position is ultimately based on neither the law nor financial reality but instead is a naked effort to give Republicans cover. He asserts that there is simply no option at all for President Biden but ultimately to accede to House Republicans’ demands. That is, there can be no default under this view because Biden is required to cave.
Am I overstating or mischaracterizing here? I wish I were. McConnell says: “Mr. Biden has only one real choice if he wishes to avoid default: He has to negotiate with Congress, the branch of the government with authority over borrowing and spending. If that means agreeing to spending reductions, that is hardly a disaster.” But what does it mean to negotiate over paying bills that have already been enacted into law?
Republicans say that they are only asking for concessions in a normal back-and-forth negotiation, and McConnell assures us that “[t]he House of Representatives has already passed a bill that would raise the nation’s debt limit by $1.5 trillion, coupled with proposed spending cuts, and its Republican leaders have signaled a willingness to negotiate.” Of course, many House Republicans have subsequently said that they only voted for their package as a first step, where the second step will involve even larger cuts (the opposite of normal negotiating tactics). And there is reason to doubt that House Majority Leader Kevin McCarthy can get at least 218 members of his caucus to support anything at all. How does a President negotiate in that situation?
More to the point, there is no logical stopping point to McConnell’s view of these negotiations. House Republicans demand $1.5 trillion in cuts? Biden has no choice but to negotiate, goes the argument, and if the other side stands pat, the President must give in. How about $3.5 trillion in cuts? How about $5 trillion in cuts and a nationwide ban on abortion by federal law? Or a presidential declaration that the 2020 election was stolen from Donald Trump, that the District Attorney in Manhattan is a big meanie, and that E. Jean Carroll is not Trump’s type?
The point is that President Biden and the Democrats are not trying to renegotiate old deals, but the Republicans are, because they are saying that the appropriations laws that currently govern the United States will only be honored if they get what they want when it comes to the rest of their agenda.
To put it differently, what McConnell sees as Biden’s intransigence in refusing to negotiate over the debt has a limiting principle: When we make legal commitments to pay people and businesses, we also commit to being able to make those payments. If Biden wins on this negotiation, there is no parade of horribles. We would simply go back to the situation in which the parties negotiate over upcoming spending and taxation, not on whether we will pay for what has already been enshrined in the law.
By contrast, if Republicans are able to use the debt ceiling to renegotiate duly enacted laws, that completely perverts the very idea of negotiating. McConnell insists that what Republicans are doing is “not hostage taking” but merely “the ordinary stuff of politics.” But what do hostage takers say? I don’t want to kill your family, and it’s completely up to you whether I end up whacking ‘em. This is just the ordinary stuff of negotiation, the art of the deal. Just because one side says that they are being reasonable does not make it so. Even mobsters call themselves merely capitalists.
McConnell’s essay in The Times ends on this note: “The idea that the 14th Amendment gives the president unilateral power to borrow is dangerous nonsense.” On that, we can all agree, but again, that is because his entire argument is a strawman. No, the 14th Amendment of course does not give the President that power. But because McConnell does not even attempt to make serious arguments, merely providing the most inadequate fig leaf for Republicans’ willingness to endanger people’s livelihoods for political gain, one must ask who is truly peddling dangerous nonsense.