Thursday, July 28, 2011

The Debt Ceiling is Unconstitutional Under Article I

Amid this debate over the debt ceiling, I realized something important: refusing to raise the debt ceiling to account for Congressionally-appropriated funds is nothing less than an unconstitutional abdication of Congress’s power to direct government spending.

Almost all of the talk around the debt ceiling ‘nuclear option’, declaring it unconstitutional, surrounds the Fourteenth Amendment to the U.S. Constitution which reads:

Section 4. 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.
Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.

There are mixed opinions on whether the President has the power to overturn the debt ceiling—the maximum amount of money that Congress decides that the government can borrow. Some say that the Amendment only applies to Congress, since they have the “power of the purse”—the power to decide what funds get spent for which purposes—defined by Article I, Section 9, Clause 7 of the Constitution:

No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

This would generally be right, and as Section 5 states, Congress has the power to enforce the Fourteenth Amendment, not the President, even though the debt ceiling itself creates a situation where the full faith and credit of the United States is called into question.

The original purpose of the debt ceiling, put into law in 1917, was to make issuing debt simpler. It used to be that debt was handled on an issue-by-issue basis by Congress. What this act did was say that it was okay for debt to be issued up to a certain amount in order to pay for government activities, and since 1979, the ceiling has usually automatically been raised when the budget was passed. The “Tea Party” Republicans elected in 2010 have sought to stop this practice in order to force spending cuts.

Here’s the problem with separating out the budget and the debt ceiling: Congress appropriates funds by passing a budget. That means we are then committed to those expenses for the year. So let’s say that Congress approved a $3.5 trillion budget, and we take in $2.5 trillion in revenue. That means we would have to borrow $1 trillion in order to fulfill the approved budget. As long as the debt ceiling has that much room left, there wouldn’t be a problem. However, in a year like this one, the debt ceiling maybe only allowed us to borrow $250 billion more, leaving $750 billion of the budget unable to be paid for.

So let’s review: Congress approves spending of $3.5 trillion, but then says we can only actually spend $2.75 trillion. Does that make any kind of sense?

Now what happens if the debt ceiling doesn’t get raised to accommodate this extra money? The President, through his Secretary of the Treasury, has to then decide who gets paid, and how much less they get paid.

What this amounts to is an abdication of the power of Congress to determine who gets what money to the President. Congress has this power for a reason: they are more directly accountable to the people they represent, and require relatively broad consensus to take action. Sure, the President could still only allocate up to the maximum for the line item. But this would allow is a situation where Congress could explicitly appropriate many funds for everyone’s favorite programs, but then only authorize the President to borrow enough to fund 50%, forcing the President to decide who gets which funds instead of Congress, and allowing Congress to blame the President for a group not getting enough money rather than themselves.

It is for this reason that a separate debt ceiling is unconstitutional. If Congress appropriates funds that they damn well know the government doesn’t have, they are implicitly, if not currently legal-wise, authorizing the Executive Branch to borrow that money. The law should reflect this simple fact.

My advice to President Obama

If the impasse continues and nothing happens, you should declare that the debt ceiling is unconstitutional on the grounds that it represents a Congressional abdication of its powers to the President, and that when Congress approves a budget for an amount they know the government cannot fully pay for, they are automatically authorizing that much additional debt. Therefore, you authorize the treasury to apportion funds exactly according to the Congressional appropriation for the year, and even though you agree that we do need some spending cuts, it is not within your power to change what Congress has appropriated.

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