Tuesday, June 28, 2011

14th Amendment: Democratic Senators See Debt Ceiling As Unconstitutional

WASHINGTON -- Growing increasingly pessimistic about the prospects for a deal that would raise the debt ceiling, Democratic senators are revisiting a solution to the crisis that rests on a simple proposition: The debt ceiling itself is unconstitutional.



"The validity of the public debt of the United States, authorized by law... shall not be questioned," reads the 14th Amendment.

"This is an issue that's been raised in some private debate between senators as to whether in fact wecan default, or whether that provision of the Constitution can be held up as preventing default," Sen. Chris Coons (D-Del.), an attorney, told The Huffington Post Tuesday. "I don't think, as of a couple weeks ago, when this was first raised, it was seen as a pressing option. But I'll tell you that it's going to get a pretty strong second look as a way of saying, 'Is there some way to save us from ourselves?'"

By declaring the debt ceiling unconstitutional, the White House could continue to meet its financial obligations, leaving Tea Party-backed Republicans in the difficult position of arguing against the plain wording of the Constitution. Bipartisan negotiators are debating the size of the cuts, now in the trillions, that will come along with raising the debt ceiling.

Sen. Patty Murray (D-Wash.), head of the Democratic Senatorial Campaign Committee, said that the constitutional solution puts the question in its proper context -- that the debate is over paying past debts, not over future spending.

"The way everybody talks about this is that we need to raise the debt ceiling. What we're really saying is, 'We have to pay our bills,'" Murray said. The 14th Amendment approach is "fascinating," she added.

The White House referred questions on the constitutionality of the debt ceiling to the Treasury Department. Treasury declined to comment.

Adam Winkler, a law professor at the University of California, Los Angeles, said that the 14th Amendment option has recently been much discussed in the field.

"Without any clear case law about the debt ceiling in particular, no one knows exactly how the courts would rule on that issue, about whether President Obama could ignore the debt ceiling," he said. "If he wanted to continue to service the public debt, he'd probably get away with it."

Which leads to a related question: Who's to stop him?

"To have standing to challenge a governmental action, you must show that you have suffered some injury from that action, and it's hard for someone to show such an injury," Winkler said. "If Congress acted as a unified body, and claims that the president has usurped their authority, then it may have some standing."

"But," he cautioned, "it would have to be a joint resolution. And this Senate would almost certainly block it."

The 14th Amendment became law in the wake of the Civil War, pushed by a Republican Congress eager to extend citizenship rights to freed slaves. But it also included a section dealing with federal debt: The government wanted to make clear to the market that even though loans to the Confederacy would not be paid back, any loans made to the U.S. government were still good.

In 1935, the Supreme Court held that despite the Civil War context, the amendment clearly referred to all federal debt.

"While [the 14th Amendment] was undoubtedly inspired by the desire to put beyond question the obligations of the government issued during the Civil War, its language indicates a broader connotation," the majority wrote in Perry v. U.S. "We regard it as confirmatory of a fundamental principle which applies as well to the government bonds in question, and to others duly authorized by the Congress as to those issued before the amendment was adopted. Nor can we perceive any reason for not considering the expression 'the validity of the public debt' as embracing whatever concerns the integrity of the public obligations."

The law at issue, which tried to override the validity of a bond offering, "went beyond the congressional power," the Court ruled, setting a precedent that has not been overturned.

Because the government borrows based on its full faith, Congress doesn't have the authority to undermine that confidence by reneging on its obligation to its lenders, the ruling declared.

"To say that the Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise; a pledge having no other sanction than the pleasure and convenience of the pledgor," reads the opinion, delivered by Chief Justice Charles Evans Hughes. "This Court has given no sanction to such a conception of the obligations of our government."

President Barack Obama, who was taught constitutional law, hasn't been afraid to assert executive authority. Most recently, he issued what amounted to a legal analysis defending the White House position that the military's operations in Libya were not in violation of the War Powers Act.

Ultimately, if Obama chose to ignore the debt ceiling, the debate would be more about power than an academic interpretation of the Constitution: Simply asserting that all debts and obligations will be paid may still spook the bond markets if a constitutional crisis is triggered.

Coons said that "from every professional -- either an economist or a currently practicing professional in the bond markets or financial services -- unanimously their input to me has been, 'You don't even want to have this debate, you don't want to terrify the markets by arguing over the interpretation of a previously irrelevant or not often applied provision of the Constitution. Don't spook the markets, don't scare the average American, just do your jobs.'"

But if that job can't get done, the government needs a fall back, Democrats say.

"Our challenge is that we have a partisan divide over how to craft a package that allows us to move forward -- that seems to me so deep that I am gravely worried we are rapidly running out of time," Coons said, noting that the Congressional Budget Office needs days or weeks to analyze whatever package of cuts is agreed to -- if one is agreed to.

Would the administration go down this road? It's impossible to say, but if the choice is between a financial crisis and a constitutional one, the option becomes awfully appealing.

"The consequences of [ignoring the debt ceiling] will produce a legislative response, and almost certainly a constitutional crisis -- a crisis of interpretation, if not fact," Coons said. "Unfortunately there's no way that that does anything except spook the markets."

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