The Debt Limit Is Unconstitutional

The fight over the debt limit has been painful. I’m tempted to say this is the lowest political moment of my life, but I’m reminded of the fight over Barack Obama’s birth certificate. Part of me says, “Of course Congress will strike a deal in the next seven days. The nation’s unemployment will reach Great Depression levels otherwise.” I struggle to hear that voice as I watch the debating.

So is this the end? Are we doomed? Perhaps not.

I’ve always wondered what it was like when constitutional scholars discovered the commerce clause as a means to fight racial discrimination (and pretty much everything else). (See Heart of Atlanta Motel v. United States 379 U.S. 241). We haven’t had a truly novel constitutional development for some time. This, however, might be our time.

There has been recent talk regarding an obscure provision of the constitution. Section 4 of the 14th Amendment states as follows:

The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion shall not be questioned.

Granted, Section 4 was not written with debt limits in mind; it was written to guarantee that Union soldiers would receive their due compensations. But, grammatically, this sentence is much broader than war pensions. This section fundamentally says that when the United States government owes money, it better pay it.

Before I go any further, let’s be clear about the operation of the debt limit. Most people understand it to work like saying: “I have a debt limit of 1,000 dollars. Therefore, if I’ve borrowed 900 dollars, I can’t buy on credit anything valued about 100 dollars.” Unfortunately, national finances don’t work like personal finances. It’s not as if the legislature has passed 900 dollars worth of legislation and now they are just waiting to pass 100 more. Most government spending is on autopilot. The government becomes indebted based on predetermined conditions and is spread out over years, even decades. You can’t just identify that last item in the budget and say, “Okay, we’ve reached the debt limit, now we stop purchasing things.” By law, the government continues to owe money and will continue to do so.

By implication then, enforcing a debt limit by necessity requires the government to dishonor its debts.

Eric Posner and Bill Clinton suggested that Section 4 allows the president to unilaterally raise the debt limit. I think this is wrong. Section 4 requires the president to do so and to continue to do so every time the debt limit will be surpassed. In other words, a functioning debt limit is unconstitutional.

There are a few counterarguments that I anticipate. First, the language could be seen as forbidding an outright repudiation rather than a mere default. However, as Garrett Epps points out, the language of Section 4 is “extraordinary.”

[I]t does not simply say that the national debt must be paid; it says that its “validity … shall not be questioned.” Only one other section of the Constitution–the Thirteenth Amendment’s proclamation that “[n]either slavery nor involuntary servitude … shall exist within the United States, or any place subject to their jurisdiction”–is as unqualified and sweeping.

. . .

Suppose you lend $10,000 to your cousin. When the debt comes due, he says, “Listen, I’m good for the money, but I’m a little short right now. Trust me, I will get it to you sooner or later.” That’s not repudiation. But on the other hand, you might think the validity was now at least being “questioned.”

Second, some might say that Section 5 provides the only enforcement mechanism. Section 5 reads: “The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.” In other words, the president does not have the power to enforce the payment of debts, only Congress does. Notice, however, that Section 5 does not say, “Congress shall have the power to enforce . . . “; it says “Congress shall have power.” Thus, without Section 5, Congress would have no power to enforce Section 4. Additionally, Section 1, also and indisputably within Section 5’s reach, has been enforced by lawsuit, executive order, and legislation.

Politically, Obama is making a mistake by refusing to pursue this course. By merely threatening to do so, he would gain bargaining leverage in the negotiations. Congressional opposition would have to know that if Obama were to take the plunge and ignore the debt limit, the move would be extremely popular nationally. If I were Obama, I would make the political declaration immediately and deal with the legal battle when it comes.


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