Saturday, January 12, 2013

That’s a Negative, Nancy: Ignoring the Debt Ceiling is Unconstitutional and Unwise


Modern democrats complain that the national debt is a “manufactured crisis” which will simply go away so long as it’s ignored. So it should come as no surprise that Nancy Pelosi, a prominent cheerleader from this crowd, recently asked President Obama do just that: ignore it. The Minority Leader wants the president to overrule congressional borrowing limits and continue spending away on the grounds that the debt ceiling is unconstitutional. As this article explains, she claims that due to the 14th amendment, which says the debt of the US “shall not be questioned,” the expenses Congress has incurred by the laws it passes must be paid. Prominent Keynesian Bruce Bartlett, former Treasury Secretary Timothy Geithner and many other talking heads agree with Pelosi that any debt ceiling legislation is unconstitutional due to this amendment. Frequent readers of this blog might snicker at the progressives newfound concern for constitutionality, but do they have a case?

Consistent with my originalist interpretation of the constitution, the meaning of the 14th amendment depends on its author’s intent. Determining that intent requires knowledge of the context and circumstances in which it was passed. The 14th amendment was passed in the wake of the civil war, just after the Confederate States of America had printed their own unique currency, sold their own bonds, and issued their own debts. For example, several large banks in Britain and France had lent money to the Confederacy in support of their efforts to secede (although both nations had banned slavery, they benefited from the cheap textiles the discounted cotton slavery provided, and thus had an incentive for American slavery to remain). The primary intent of the amendment was to clarify which wartime debts were valid and would be paid back (those held by the Union), and which were not (those created by the illegitimate Confederate government). In the process, the amendment reassured the many who had lent to the government during the war that they would be repaid.

So Pelosi is correct that due to the 14th amendment, the validity of the existing debt of the US cannot be questioned. But that is very different from saying that the amount of debt the US is allowed to accrue cannot be limited. Debt is created when money is borrowed, not when it is agreed that money shall be spent in the future. A congressional apportionment saying that X amount of money shall be spent on certain programs is not the same as actually borrowing the money necessary to make those expenditures. The actual borrowing happens gradually over the course of the year as the money is needed. The 14th amendment does not say that projected increases to the debt cannot be preemptively limited; it refers only to the existing debt.

Democrats seem to be confusing two different types of legal obligations here. If Congress passes a law that says “We will employ 10,000 postal service workers this year,” then what Pelosi is arguing is that Congress has incurred a “debt” due to its legal obligation to pay those people. Since this “debt” cannot be questioned, she claims that any law which calls into question the government’s ability to pay those recipients (such as a debt ceiling) is unconstitutional. But those pending outlays are not the kind of “debt” the 14th amendment refers to. The 14th amendment refers to the debt the government incurs when individual lenders actually give their money to the government (often through federal bonds), with the understanding that this money will one day be repaid. To put it another way, they’re confusing the people we’ve promised to pay with the people we’ve promised to pay back. As the historical context of the 14th amendment reminds us, the debt which cannot be questioned refers to money we have to pay back.

Since the debt ceiling does not violate the 14th amendment, it is a constitutional law of congress pertaining to the explicitly enumerated power of the purse. The president must enforce and abide by those laws. Ordering the treasury to borrow money which Congress has prohibited him from borrowing would therefore by unconstitutional. That the Congress has apportioned more money to be spent than they’ve granted the president the power to borrow is irrelevant. Apportioning funds without specifying where those funds are to come from does not grant implicit permission to get them by whatever means necessary, and it does not give permission to break other laws. Just because there is a contradiction in the laws which Congress has passed does not mean the President gets to decide which one trumps the other, thus assuming the Congressional power of the purse for himself.

I’ve heard it said that in the presence of apparently contradictory laws, the most recent law should trump. As it relates to the debt ceiling, this is incorrect for two reasons. The first is that it is perfectly okay for Congress to make a law that restricts its future lawmaking flexibility – that happens all the time. If they change their mind and later want that flexibility back, they’re free to repeal the original law. But until they expressly do that, the old laws have equal weight as the new. Federal budgets clearly do not repeal the debt ceiling, so they must be enforced within the scope of debt ceiling legislation. But secondly, even if the most recent laws did trump, the debt ceiling was raised (and thus reestablished as an intended legislative priority) more recently than Congress has actually bothered to pass a budget! Unlike debt ceiling legislation, Congress is legally required to pass a budget for every fiscal year, but that responsibility has been simply ignored for the past three and a half years due to the inability to reach a consensus. It’s particularly dubious to say that the Omnibus Spending Bill passed two-congresses ago in April of 2009 should trump the debt ceiling established in 2011.

The debt ceiling has existed for a century, and nobody has questioned its constitutionality until now. Nancy Pelosi and crew had no problem with the debt ceiling until it became a political inconvenience, which explains why their argument is so hastily constructed, shoddy and unfounded. Thankfully, the Obama administration is being reasonable on this proposal. White House Spokesperson Jay Carney announced a few weeks ago that the administration does not think an executive order voiding the debt ceiling would be constitutional. That’s not a common admission from the White House these days, but I still have to give him credit when credit is due. Obama deserves props for resisting the pressure from his party in the name of constitutionality.

Progressive Representative Keith Ellison recently blamed Republicans for using the debt ceiling to “hold Democrats hostage” in negotiations. Only in Washington is it considered hostage taking to make the other party obey the law. 

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