Invoking the 14th Amendment: How Not To Solve the Debt Crisis

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As the (purported) August deadline for raising the debt ceiling inches closer, with no sign of a budget deal between House Republicans and the President, pundits this past week began proposing a way to avoid a budget crisis (see also here) : invoke Section 4 of the 14th amendment to the Constitution.  Section 4 begins: “The 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, should not be questioned.”  The idea, as pushed by Katrina vanden Heuvel, Garret Epps, Bruce Bartlett and others, is that by invoking the 14th amendment, President Obama simply negates the need for Congress to vote on raising the debt limit, since under the Constitution the government is obligated to pay its debts, congressional approval or not.  Under this plan, he orders Treasury Secretary Tim Geithner to continue borrowing money to pay the government’s debts.   If the House Republicans resist, Obama can simply point to the Constitution and say that the action was necessary to prevent the nation from enduring the calamity that would occur if it defaulted on its debt.

The idea, to be succinct, is stupid.

Admittedly, I’m not a constitutional scholar.  But I do find the argument constitutionally dubious.  The clause was originally intended to reassure lenders that the U.S. government would pay the debts it incurred during the Civil War.  It may be true, however, as advocates of this approach suggest, that the Supreme Court has expanded its reading of the clause to assert that all debts incurred by the federal government are legally binding.  Fair enough. But if we read the 14th amendment in its entirety (take note, students – always read the entire article!), it concludes with this clause:  “Section 5.  The Congress shall have the power to enforce, by appropriate legislation, the provisions of this article.”

That’s Congress – not the President or his cabinet members – that is assigned the job of enforcing this clause.  And, historically, it has done so by passing a statute setting a ceiling on how much debt the federal government can incur.  That action is entirely consistent with its authority, as stipulated by the Constitution (see Article I, section 7 in particular) to control the federal government’s purse strings – authority it has zealously safeguarded against presidential encroachment since the nation’s inception.  Consistent with that authority, all previous presidents have recognized the validity of Congress’ setting a debt ceiling.  So, if Obama takes this route and invokes section 4, he not only breaks with the precedent established by previous presidents, he also runs the risk of provoking a constitutional crisis by appearing to encroach on Congress’ fiscal powers.

But even if we grant that there may some constitutional leeway here allowing Obama to act, there is a more fundamental reason why he should avoid this route by all means possible: it is bad politics in the broadest sense of the word.  The Framers created a system of shared (not separated) powers to prevent exactly the type of unilateral action vanden Heuvel, Epps and Bartlett are advocating.  Instead, by forcing the President, House and Senate – each of which caters to a different constituency – to interact in the legislative arena, policy differences are forced into the open.  The idea was to highlight disagreements, stimulate debate and resolve those differences through bargaining and compromise.  In short, if the system works as intended, we should see precisely the type of debate over raising the debt ceiling that is going on now.  Short-circuiting that debate by executive fiat is not only bad politics for Obama – it’s bad for the nation.  Of course, in the current media environment, all sorts of doom-and-gloom prognostications are aired.  All the better to raise ratings, sell advertising and stir debate.  But if you look beneath the bleatings of the punditocracy, what you see in the debate over raising the debt ceiling is a more fundamental discussion about what government does, and how we should pay for it.  This is a debate worth having, and it almost certainly will end in compromise, with Republicans conceding to raise revenue through closing various tax loopholes and Democrats agreeing to spending cuts.  Of course, it makes no sense for either side to signal their willingness to compromise until they have to.  Indeed, the history of the legislative process tells us that Congress does not legislate until the political costs of not doing so are greater.  If the sky-is-falling crowd is correct, neither side wins by allowing the U.S. to default on its debt.  So some type of agreement will be reached – if the constitutional-based system of separated institutions sharing powers is allowed to work as the Framers intended.

Could I be wrong? In this intensely polarized environment, in which elected officials of both parties pay increasing attention to the ideological extremists who fund them, aided and abetted by a media that thrives on controversy, don’t we run the risk that they would rather drive the government car over the cliff in a deadly game of budgetary chicken instead of compromising?   Certainly that’s possible.  It may be that some parties truly believe that defaulting on the debt does not pose as big a danger as the sky-is-falling crowd suggests.  Keep in mind, however, that making extreme statements is all part of the gamesmanship central to the bargaining process.  I’m not willing to discard two centuries of evidence suggesting that legislative compromise occurs only when the alternative is politically unacceptable to all parties involved on the basis of media hype and loose talk.

In the meantime, invoking the 14th amendment is a bad idea – for Obama, for Congress, but most importantly, for us.

5 Responses to Invoking the 14th Amendment: How Not To Solve the Debt Crisis

  1. Jack Goodman says:

    Matt, Stanley Fish said some of this in the NYT a few days ago. Laurence Tribe had an OpEd piece to the same effect. But you are taking all of the fun out of this game of chicken. Dont you really want both the Democrats and the Republicans to look deeply into the abyss? If they dont reach an agreement, there will be a tie for the Darwin award this year.

    Jack

  2. Matthew Dickinson says:

    Jack,

    Alas, I’ve stopped reading the Times since they went to a partial online subscription service, so I missed both Tribe’s and Fish’s contributions. But, to your point, indeed, I want both parties to look into the abyss. That’s the incentive to compromise, isn’t it? When they see their own political survival at stake, they will deal. Not before.

  3. Hunter Hutchinson says:

    Interpreting the 14th amendment to allow the president to raise the debt ceiling without congressional approval is tantamount to him governing by fiat. What next? Dictators govern by fiat.

    Any increase in taxes will cause the unemployment rate to skyrocket. We could see 12% or more unemployment, as job creators let people go to cover the higher taxes. And it won’t be just the so-called rich who will pay. The very wealth can simply export themselves and their capital out of the country. There are countries that would love to have the money of the US wealthy to create economic prosperity in their countries. Exporting capital reduces the tax base, and once the very wealth have left the country and taken their money with them, some other group has to fill in the gap. So the middle class gets it socked to them.

    If congress were to prohibit the exportation of capital, there would be those who would find a way around it. There always is a way around a restriction. So, let the Democrats have their hefty tax hike to reduce the deficit, and let’s watch the unemployment rate skyrocket. Lets watch inflation skyrocket. Let’s watch medium size businesses leave the United States for China or the Philippines, while small businesses simply shut down.

  4. Javier S says:

    … the president is obliged by the Constitution to uphold all the laws of the US. If the Treasury were to default, he would have to make selective payments on debt interest, bond maturities and the like, hence omitting to make all the payments. This would cause harm to many individuals such as SS recipients, Medicare-servicing clinics and the military. Those folks could turn around and sue the President for selective enforcement of the law since it caused them harm, with good reason. Precedent suggests the USSC would side with them. The President can avoid such crisis by increasing the debt in order to guarantee the enforcement of the 14th amendment. Since no one is harmed under that scenario then the President would not be legally liable. Moreover, while possible, the House would be reluctant to impeach him since he would be acting to defend the US economy, which all sides agree.

    Your tax argument is lame, Europe has had higher rates of taxation and I do not see their wealthy escaping to heaven locations other than Phil Collins!

  5. Matthew Dickinson says:

    Javier – since this is a cut and paste from another site, it’s hard for me to respond. In the future, submit your own comments.

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