Friday, July 01, 2011

Can The President Ignore The Debt Limit If He Thinks It is Unconstitutional

The real question in the debate on the Constitutionality of the debt limit is not whether it is Constitutional but whether the President can ignore the law based on his unilateral determination regarding its Constitutionality. If he took such an action it would be a truly profound assertion of Presidential power. As much as this could be viewed as a righteous assertion of Presidential authority in the face of an irresponsible Republican cabal in Congress, once asserted, this power will continue to be available. It will be used again.

Before getting to that issue, here's a brief discussion of the debate regarding the debt limit.

There is a law that limits the amount of money the United States can borrow, the total amount it can owe at any one time. It reads

31 USC 3101(b) The face amount of obligations issued under this chapter and the face amount of obligations whose principal and interest are guaranteed by the United States Government (except guaranteed obligations held by the Secretary of the Treasury) may not be more than $14,294,000,000,000, outstanding at one time, . . . .

The Treasury reached that $14B limit in May. Here is a comprehensive Congressional Research Service Report report explaining the history and operations of the debt limit. Since May, Treasury has used some "extraordinary" powers, such as canceling Civil Service Retirement Fund obligations, to keep paying the bills.

But on August 2, 2011, Treasury will reach the limits of its authority. Beginning then and each month thereafter we will have two dollars of income for every three dollars of bills that must be paid. Choices will then be made between honoring obligations to bondholders, honoring contracts to vendors and suppliers, honoring statutory obligations to social security recipients, soldiers and other Federal employees, complying with statutory Medicare obligations to doctors and hospitals, and other obligations to states and municipalities, just to name a few.

Since the Republicans are quickly converting the possibility of defaulting on these financial, contractual and statutory obligations from an academic question into a real potential nightmare people have wondered whether that debt limit law is even Constitutional. After all,

Section four of the 14th Amendment 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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

The debate on the 14th Amendment is examined in an article by Jack Balkin in which he concludes,

What do we learn from this history? If Wade's speech offers the central rationale for Section Four, the goal was to remove threats of default on federal debts from partisan struggle. Reconstruction Republicans feared that Democrats, once admitted to Congress would use their majorities to default on obligations they did disliked politically. More generally, as Wade explained, "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."

It is not he purpose of this article to debate whether the debt limit violates the 14th Amendment. It is sufficient to say that reasonable legal arguments can be made to support that position. The language is broad, covering not just debt instrument but other obligations , including statutory obligations to pensioners. The language goes to all debts, not just civil war debts. And the purpose was to keep subsequent Congresses from reneging on the obligations incurred by prior Congresses. The broad reach of the language is discussed in the Supreme Court decision, Perry v United States. In any event, there is a sound basis for the President to assert that the debt limit is Unconstitutional.

In fact some in Congress have suggested he may do just that. Today Senator Schumer suggested that the President could ignore the debt limit law, but cautioned that it was premature to take such action and that it was not without risks.

Risks? You bet. And any such action would be a truly profound assertion of Presidential power. Let's be clear. We are talking about the President having the power to unilaterally decide whether he will comply with laws that are duly enacted by Congress and signed by the President.

This is not the same as the President's decision to not defend the Constitutionality of DOMA, the Defense of Marriage Act. In the case of DOMA, the Constitutionality of the law had been challenged in court. The President decided that the law was no longer Constitutionally defensible and argued that position in court. However, he also announced that he would continue to enforce DOMA until the courts struck it down.

This is not like the President's decision regarding Libya and the War Powers Act. While all Presidents have questioned the Constitutionality of the War Powers Act, all have generally complied with it. In the case of Libya, the President is arguing that he has consulted with Congress and in any event the Act doesn't apply because we aren't involved in hostilities. Whether one agrees or disagrees with the President's position he is clearly not taking the position that he even though the Act applies he is violating it based on his determination of its Constitutionality.

In the case of the debt limit the President would be ignoring and violating a law that clearly applied to his actions. He would be doing so even though the law has not been challenged let alone held to be Unconstitutional by a court.

Most legal scholars believe that the President has a duty to enforce the law regardless of what he thinks about it. This obligation arises from the Article II obligation of the president to faithfully execute the laws. The obligation to faithfully execute those laws is also in the Presidential oath,

I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States.

By that oath he President swore to faithfully execute the Office of President. Foremost among the duties of the office are to "take care that the laws be faithfully executed." The debt limit law, 31 UC 3101 is one of those laws.

All laws that are duly enacted a presumptively Constitutional. This is a basic tenet of our legal system that was recently referred to in the 6th Circuit Decision upholding the Affordable Care Act

The minimum coverage provision, like all congressional enactments, is entitled to a “presumption of constitutionality,” and will be invalidated only upon a “plain showing that Congress has exceeded its constitutional bounds.” . . . The presumption that the minimum coverage provision is valid is “not a mere polite gesture. It is a deference due to deliberate judgment by constitutional majorities of the two Houses of Congress that an Act is within their delegated power . . .(citations omitted).

No Court has held that the President has the power to issue a binding ruling that any law, such as the debt limit, is Unconstitutional. Rather the courts have held that such power resides in the Supreme Court. Since the 1803 case of Marbury v Madison it has been accepted that only the Court can declare a law Unconstitutional. Unless that happens or until it is repealed, the debt limit is the law of the land. If a President is presented with a law that he thinks is Unconstitutional he should not sign it. The same applies to every Member of Congress who votes on a law. But once passed and signed, it is the law.

There are some legal scholars who disagree, arguing that the President has no more obligation to enforce laws he thinks are Unconstitutional than to enforce the laws of another country. The scholars who hold that view embrace the concept of an imperial Presidency. Thankfully, that is a minority view.

The issue is simple and straightforward: "who decides if a law is Constitutional." If the President does, then there are only two branches of government and the Presidency can override the legislature at its will. If both the Court and the President decide, you have uncertainty and chaos because there is no ability to reconcile conflicting positions. It the decision rests with the Court, you have certainty, order, and a true separation of powers. Thankfully, most Presidents have respected this third view and the circumstances where laws have been ignored are rare. And I think President Obama will also respect this position. He takes the long view and opening this pandora's box would be fraught with risk for our country. He won't go there.

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