A Way Out of the Debt Ceiling Debacle

While most of the country is embroiled in debate over the government shutdown and subsequent talks about the future of the Affordable Care Act, a far more serious fiscal issue is fast approaching. On October 17, the United States government will run out of money to spend on its outstanding debts, and will be forced to default. Economists have warned Congress and the White House of the potentially catastrophic effects of a default, which would include skyrocketing interest rates, plummeting valuations of the dollar, and possibly a new recession.

The threat of default is not a new issue. Since 1960, Congress has raised the debt ceiling seventy-eight times. Worries this time around are more significant, however, due to the continued inability of both parties to agree on a deal. Congressional Republicans have called for serious concessions from President Obama, such as entitlement reform and approval of the Keystone XL pipeline, but the White House has refused any such compromise. At a Politico breakfast, Gene Sperling, one of the president’s top economic advisors, stated, “If you sanction through negotiation the legitimacy of somebody threatening default, then that is going to happen over and over again.”

Some constitutional law scholars have noted that President Obama has other options to avoid either conceding to the Republicans or letting the government default—namely, completely bypassing congressional authority and unilaterally raising the debt ceiling. Jack Balkan, a law professor at Yale University, claims that Section Four of the Fourteenth Amendment may give the president this executive power. The pertinent passage of this section reads, “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, shall not be questioned.”

While it was originally intended to prevent returning Southern Congressmen from forcing a default on Civil War debt, Balkan claims this passage may apply to all U.S. debt obligations. Senator Benjamin Wade, President Pro Tempore of the Senate during the passage of the amendment, would seem to agree; he proclaimed, “I have no doubt that every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress. I consider that a very beneficial proposition, which is not in the original proposition.”

In 1935, the Supreme Court arguably upheld this interpretation in Perry v. United States. In the majority opinion, Chief Justice Charles Evans wrote, “To say that the Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise, a pledge having no other sanction than the pleasure and convenience of the pledger. This Court has given no sanction to such a conception of the obligations of our government.” This ruling claims that the Constitution obligates the government to pay all its debts; in it, the Court potentially gives the president the power to pay the debt regardless of Congressional approval.

Elizabeth Price Foley, a professor of constitutional law at Florida International University College of Law, disagrees with Balkan’s interpretation, citing the fact that during the drafting of the Amendment, the term “debt” was explicitly chosen over the broader term “obligation.” Foley’s reading asserts that the law protects only debts issued to creditors, such as bonds, whereas statutory obligations like Social Security and Medicare are not. Therefore, with tax revenue of more than $200 billion a month, the United States would have enough to pay the debt owed to its creditors.

Even with different interpretations of the Amendment in mind, it is unlikely that President Obama could be challenged in court for paying the debt. To sue the federal government, the plaintiff must show that concrete and imminent harm was done; this would be nearly impossible for any non-governmental organization to prove. Congress could issue a joint resolution challenging the action, but that is also improbable, since it would require the Democrats who control the Senate to join with House Republicans and publicly challenge the leader of their own party.

Other constitutional scholars argue that the president does not need to cite this Amendment in order to raise the debt ceiling. In a New York Times opinion piece, Eric Posner, a professor at the University of Chicago Law School, claims the Constitution gives the executive broad powers to act when there are grave and unanticipated threats to the public’s well being. Tulane University law professor Stephen Griffin compares this broad executive prerogative to the special war powers used by President Abraham Lincoln during the Civil War. Again, while scholars may have different interpretations of executive powers as enumerated in the Constitution, no organization would be able to challenge the action in a court of law.

While President Obama has so far dismissed both of the above options out of hand, should he choose to pursue one of these courses of action, he would not risk his presidency. As October 17 approaches, the president may find the idea of bypassing Congress to raise the debt ceiling more and more appealing.

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