In 2013, the Republican majority in the House of Representatives, the Democratic-controlled Senate, and President Barack Obama announced that they would block raising the legal limit on the national debt unless the House agreed to the GOP’s choice of drastic spending cuts. If House Republicans hadn’t blinked, the result would have been a national debt default, likely a catastrophic shock to an economy barely recovering from the 2008 financial crisis.
A last-minute compromise averted this disaster. But in less than two months, another new Republican majority will take over the House, and this time, it seems, there is no Mr. Nice Guy.
I can only hope that the White House is prepared for an unpleasant response.
In the short period of the last decade, when default actually seemed possible, the seemingly untenable constitutional idea of how to deal with it (I was one of the first to propose it) has drifted away from the dark reaches of space like a comet. is the center of national debate.
Here’s the argument: The text of the Constitution prohibits the federal government from defaulting — even a little, even for a short time. It is the case that if Congress decides to stop paying the debt, the president has the power and obligation to pay it off without Congressional approval, even if it means borrowing more. The result would be a constitutional crisis — Article I is pretty clear that borrowing and paying off debt is a Congressional, not an executive, power — but a constitutional struggle may be preferable to an economic collapse.
What is the “debt ceiling”? This is a law passed in 1917 that allows the US Treasury to borrow money to pay for government spending. One can be misled by this description into thinking that this is either an authorization to fund government programs or an actual limit on government spending.
Don’t be fooled. It is a mine that threatens to crush us all. Here’s how a budget works: Congress authorizes spending through its appropriations powers. If tax revenues don’t cover these costs, the Treasury borrows from bond buyers to cover authorized costs.
Much of what the Treasury pays is interest borrowed on prior appropriations — or on so-called entitlement programs, such as Social Security, that must be paid by law to any eligible recipient and funded each year without official appropriations. Thus, the level of debt determined by the ceiling has no relation to the level of spending determined by appropriations and entitlements.
Washington must pay interest on America’s debt on time. Failure to pay bonds, treasuries and notes in full and on time means default, and wiser economic heads than mine predict the consequences will be slightly less catastrophic than the Death Star’s attack on Alderaan. Last year, Moody’s Analytics chief economist Mark Zandi predicted that a default would “wipe out up to 6 million jobs and $15 trillion in household wealth.”
Enter the Fourteenth Amendment. Most Americans who know about the Fourteenth Amendment think of it in terms of equal protection of the laws and due process. But these provisions are only part of the first of five parts. Section 4 states that “The validity of the public debt of the United States…shall not be questioned.”
“Shall not be questioned” is very strong language; whatever that means, it doesn’t mean “if you can’t score political points against the other side by not paying, it will most likely be paid.”
Because of the dilemma facing the Republican majority of the 39th Congress in 1866, section 4 was included in the amendment, which has eerie echoes of today’s demonstration. It looked as if the GOP would lose its majority in one or both houses of Congress in the next election of 1868. Republicans feared that Democratic majorities might accept senators and representatives from Confederate states that still controlled all states. white former governments. Then the old pro-slavery Democratic Party would probably be back in power forever.
The Southern Democrats, led by the same elite who planned secession, made it clear to reporters that they would immediately cancel the national debt once they regained power in Washington. Virtually all the debt had been accumulated since 1861 to finance the war effort. Former Confederates were outraged that Union bonds were being paid when Confederate bonds were worthless. Union army pensions were made available to northern soldiers, but not to those who fought under the Stars and Bars.
Section 4 was enacted to prevent a partisan majority from defaulting on the national debt. Under its terms, no future Congress can waive the debt. From 1868 until World War I, Congress passed separate laws to authorize each new debt payment. Still, beginning in 1917, under pressure to raise money quickly to finance the United States’ entry into World War I, a new law authorized the total amount that could be borrowed before being passed.
Today’s Republicans aren’t the first to use this statutory debt ceiling as political performance art. It started during the Eisenhower years. But the first episodes were playful: the ceiling would loom, and members of Congress would bemoan the wasteful social progress of the other party and their opponents (GOP talking point) or tax cuts for the wealthy (Democratic talking point). Ultimately, both sides will agree to cosmetic spending cuts and raising the debt ceiling. A little finance by a lawyer will prevent disaster after Munchausen.
Take a look at 21st century Washington and the Republican wreckage that captured the House in 2010 and the Senate in 2014. Since 2011, the threat is very real. Fortunately, for most of that time, top Republicans—former House Speaker John Boehner and Senate Republican leader Mitch McConnell—represented, whatever their flaws, George Orwell’s “ordinary world where the grass is greener.” They understood that if Congress drove the world economy to the wall, it would say, “America is great again!” won’t come back after reading. In 2011, the two parties agreed on the Budget Control Act, which led down the road to 2013, when congressional Republicans upped the ante by demanding funding for the Affordable Care Act as a price for not derailing the world economy. Eventually, this crisis was resolved by the adults in the room.
In 2022, the Republican seniors left the building. Although the new House Republican majority is slim, it will not cause caution. Indeed, the Marjorie Taylor Greene / Matt Gaetz wing is likely to strengthen. whom The New York Times Some Republican leaders are already reportedly demanding that the Biden administration deal with Medicare and Social Security as the price of cap increases. It is not clear whether they realize that they are playing with a fire that could burn the economy back to the depths of the financial crisis.
By most estimates, we won’t be up against it until early next year—even after the country hits the debt ceiling, the Treasury can continue to manage the accounts and pay bondholders.
There’s a lot to do in a lame-duck session. A sound legislative agenda also includes repealing the debt ceiling law. If Congress can’t agree to lift the debt ceiling, they should raise it enough to delay Alderaan-level destruction for years. No party should have the opportunity every now and then to bankrupt the country by implementing policies rejected by the electorate.
If the 117th Congress breaches the debt ceiling, expect outrageous demands from the new Republican House majority. There’s little question that Biden (bless his heart!) thinks talks can solve the problem. I tend to doubt that this is true.
A Plan B is needed for the President to invoke Section 4 and pay off the nation’s debts until Congress comes to its senses.
In 2011, the view I and some other scientists expressed was complex. The language of Section 4 is implausible: it includes the word “shall not” and “is asked” to suggest that even discussing a default violates the legislators’ oaths. The section does not address any branch of government, i.e. it does not say “Congress shall” or “the President shall not”; The text order works for the entire federal government. In other cases (such as decisions about military action abroad), defenders of the executive branch use such textual ambiguity to argue that the executive branch can and should act when Congress cannot or will not deal with an emergency.
Admittedly, the argument is open to rebuttal. Spending and borrowing are powers of Congress, the counterargument continues, and for the executive branch to do so without approval from Capitol Hill would be crossing the line. Countering this is the argument that Congress has already authorized spending and if federal law mandates certain spending. while others forbid to pay for it at the same timeboth of them cannot be observed.
Some pretty big legal heavyweights—Jack Balkin of Yale, Michael Dorf of Cornell, and Neal Buchanan of George Washington University, to name just three—see it like I do; others, including Harvard’s redoubtable Lawrence clan, disagree.
It’s a hilarious constitutional conundrum that’s caused ecstatic slapstick parties in the halls of dozens of law schools. But constitutional analysis is one thing. The harsh reality is that the United States may soon find itself, like Wile E. Coyote, with only air under its feet. Then it is no longer the work of scientists. When there are two serious interpretations of the Constitution, and one has led to a national disaster and the other could have prevented it, which should a serious president accept?
A suspension may or may not be good policy; this should not be the deciding factor. Members of Congress may be about to violate their sworn obligations; that doesn’t absolve Biden of it, it’s about saving the country until he can’t anymore.
In another frightening moment on the eve of the Civil War, Abraham Lincoln ordered federal troops to refuse a writ of habeas corpus issued by the chief justice of the United States to help a pro-Southern politician. He then asked what Congress should do: “All laws? but oneto remain without execution and the government itself will be divided so that this is not violated?”
The next hurdle is the Supreme Court’s conservative supermajority, which will likely slavishly try to humiliate a Democratic president.
At this time, another unpleasant possibility arises. In 1933-34, newly inaugurated President Franklin D. Roosevelt took the United States off the so-called gold standard through executive actions and legislative change. According to Roosevelt, the link between the dollar and gold prevented the healthy inflation that could help pull the nation out of a deadly Depression. Citizens could no longer demand that the Treasury give them gold for dollar bills, and private lenders could not demand that creditors repay their loans at the value of gold.
Many observers predicted that the Supreme Court would invalidate these measures. Inside the White House, FDR and his aides quietly crafted a message to the public explaining why Roosevelt, as president, would not be bound by an adverse decision by the Court. “To remain silent and allow the Supreme Court’s decision to take its logical, inevitable conclusion would endanger the economic and political security of this nation to such an extent that government legislators and executive officers must look beyond the narrow letter.” Fulfillment of contractual obligations so that the parties can fulfill the essence of the originally given promise in accordance with the true intention of the parties,” the message said.
In a series of decisions called Golden Article Cases, the Supreme Court avoided this conflict 5-4. The Post-Donald Trump Court May Not Go Away. Then the matter would go to the country, as the British said. Whether he wins or loses there, Joe Biden would have done his job.