The Debt Ceiling and Presidential Power
The New York Times' Room for Debate asks Can Obama Ignore the Debt Ceiling?, with contributions from Eric Posner (Chicago), Elizabeth Price Foley (Florida International), Akhil Amar (Yale), Dorothy Brown (Emory), James Galbraith (Texas -- Economics), and Thomas Geoghegan. (Thanks to Micahel Perry for the pointer).
I think Professor Foley basically has it right:
Under Article I, Section 8 of the Constitution, Congress has the power to "borrow money on the credit of the United States." This power is exclusive; it cannot be exercised by the other branches of government.
If Congress refuses to raise the debt ceiling, the president has no authority to go around the legislature because he thinks raising the ceiling is desirable. Such an act would violate the Constitution's separation of powers. The president can no more authorize additional borrowing than he can impose new taxes, regulate commerce or exercise any other power granted only to Congress.
She suggests, though, that Section 4 of the Fourteenth Amendment ("The validity of the public debt of the United States, authorized by law ... shall not be questioned") imposes some limits:
The "debt" that "shall not be questioned" under Section 4 thus refers only to bonds and similar debt instruments. ... [Thus], there can be no reneging on U.S. "debt" because of Section 4. But there is little risk of such a debt default occurring, simply because the federal government has more than sufficient tax revenue — more than $200 billion per month — to service existing "debt" to creditors.
I would put the argument against the President a bit more strongly. First, because Professor Foley is absolutely right on her first point (that only Congress can incur debt), Section 4 of the Fourteenth Amendment, at least in this context, is only a direction to Congress. If Congress violates it by not incurring necessary debt, then Congress acts unconstitutionally. But that does not entitle the President also to act unconstitutionally, by exercising powers he does not have.
But second, I doubt that Section 4 even means what she, and Akhil Amar, say it means. Amar says in his contribution that "the 14th Amendment requires that these 'debts' for past loans must be paid in full, on time, as promised — no ifs, ands, or buts." It does not. It requires only that the validity of the debt not be questioned. To re-use an example from an earlier discussion, if I miss a mortgage payment, I do not question the mortgage's validity -- I only fail to pay a valid obligation due to personal circumstances, and humbly tell the bank I'll get it paid as soon as I can. If I instead contend that the mortgage is not a binding legal obligation, because for example the bank engaged in fraud in getting my signature on it, then I am questioning its validity (and I won't be paying next month either). Simple failure to pay "in full, on time," as Amar puts it, is not the same as saying a debt is void. In the current situation, Congress would obviously be doing the former rather than the latter. No one is suggesting that Congress declare the U.S. debt invalid, so Section 4 isn't involved at all.
Nonetheless, these are quibbles that shouldn't take away from Foley's elegantly simple central point: the President does not have constitutional power to incur debt on his own authority, and that should be the end of the matter regardless of what you think of the other arguments.
Eric Posner's essay sort-of invokes the founders (Hamilton and Jefferson, plus John Locke) to contend that, as Locke put it, the "executive in a liberal constitutional system must have a power — sometimes, called the 'prerogative' — to act unilaterally to address serious unanticipated threats to public well-being." (On the prerogative, see Mike Rappaport's ongoing discussion here and here). But Hamilton, the most pro-executive of the framers, did not say anything approaching this. The quote Posner offers from Hamilton's Federalist 34 comes from a discussion of Congress' power to tax and its potential to infringe state taxing powers. It has nothing to do with executive power. To infer from this that Hamilton thought the President should be able to exercise powers expressly granted to Congress is pure speculation; to say (as Posner does) that "the founders" as a whole would have agreed is just unfounded.
Eric Posner is a insightful and provocative theorist on many fronts, but this is just bad originalism: taking a quote regarding one subject, using it to speculate about the person's views on an unrelated subject, and then using that speculative conclusion to demonstrate what everyone at the time supposedly thought -- all in contradiction of what the text, the only thing they all formally agreed on, actually says. That's not surprising because Posner isn't an originalist and generally does not make originalist arguments (see in particular his book with Adrian Vermeule, The Executive Unbound: After the Madisonian Republic, which is a call to abandon constitutional limits on presidential power). It seems odd, though, for him to make originalist arguments here.
Thomas Geoghegan's essay contends:
Congress simply does not have the authority to default under the Constitution’s Article I, which enumerates its powers. Default deprives citizens of property, i.e., contractual rights to payment.
Neither point seems persuasive. As to the first, Congress has the power to borrow money, which surely includes the power to not borrow money, even if that results in default. (And failing to pay debts was a sovereign practice well known to the framers.) Geoghegan rightly notes later that the framers were concerned over the states' failure to pay their debts in the Confederation period. But they addressed that problem through the contracts clause of Article I, Section 10, which expressly does not apply to the federal government.
The second point implies that the key provision is not Article I, but the Fifth Amendment's rule against taking property without compensation. But the premise seems incorrect: a contract right is not a property right. The Constitution specifically contemplates the federal government adjusting private contract rights in the bankruptcy clause of Article I, Section 8, and no one thinks the Fifth Amendment limits that power.
Nonetheless, his bottom line seems correct: the remedy for bondholders (in theory at least) is to sue the federal government to enforce their contractual rights. They wouldn't have constitutional claims, but they would have contract claims -- in particular, because Congress would not be contesting the validity of the debt. (I think there might be some procedural obstacles, however).
RELATED: Jonathan Adler at Volokh Conspiracy has thoughts on the debt ceiling issue here, with links to earlier discussions opposing the President's power, including from Laurence Tribe and Michael McConnell, both of which basically seem right to me. Garrett Epps has a different view here.