Saturday, July 16, 2011

Guest Post on the Debt Ceiling by Laurence Tribe

{Here's a different view of the President's constitutional options and duties with regard to spending, borrowing, and debt, courtesy of Harvard Law Professor Laurence H. Tribe:}

I.       The Constitutionality of the Debt Ceiling

Professor Buchanan argues in a recent post that the Constitution “[f]ortunately . . . does require that the debt-limit law be declared invalid,” writing: 
Everyone agrees that, without the debt-limit law, current law would allow the government to borrow the money necessary to cover its obligations. If that were not so, then we would not be in danger of exceeding the debt limit. That is, if the spending laws had not been written to include the authority to increase borrowing, then those laws would currently not be enforceable even in the absence of an overall debt limit. The very premise of the debt-limit standoff, therefore, is that the otherwise-valid spending laws would lead to an increase in debt above $14.3 trillion. The debt-limit statute purports to prevent the government from paying those other obligations, which violates Section 4. 
In an op-ed published in the New York Times, I argued that the debt limit law is perfectly constitutional. Professor Buchanan’s comment does not prompt me to change that conclusion but does encourage me to elaborate on it:

To begin, Professor Buchanan asserts that the “spending laws [were] written to include the authority to increase borrowing.” I am at a loss to see why Professor Buchanan assumes this to be so. Some spending laws might conceivably be written in a way that includes such authority – that is, written expressly or impliedly to authorize whatever borrowing might be needed to fund the obligations they create, notwithstanding any other limit set by law. But I haven’t personally seen any spending laws written in a way that includes such authority and certainly can’t accept the premise that each spending law necessarily contains its own built-in borrowing authorization. Spending laws empower the government to spend money. Other laws empower the government to raise the revenues to be spent. For example, one set of laws (31 U.S.C. §§ 3101–3113) authorizes the government to raise revenue by borrowing money. Another set of laws (the Internal Revenue Code) authorizes it to raise revenue by taxation. Still other laws authorize raising revenue by coining money, by selling federal property, and so on.

Professor Buchanan complains that the “debt limit statute purports to prevent the government from paying” for spending commitments it has already authorized. Not so. The debt limit statute merely limits one source of revenue that the government might use to pay its bills. Similarly, the tax code limits a different source of revenue—taxation—that the government might also use to cover its expenditures. The provisions setting tax rates or providing for tax deductions all limit the number of tax dollars that can flow into the Treasury, just as the debt ceiling limits the number of borrowing dollars that can flow into the Treasury. Professor Buchanan simply does not explain why the one is constitutional, and the other unconstitutional – or why one, but not the other, becomes unconstitutional under sufficiently dire fiscal circumstances.

II.    Prioritization and Section 4

All of this brings me to my second point: what is the government to do if, come August 3, it does not have enough money to make all of the expenditures that Congress has required by law? The answer, I think, is that it must prioritize expenditures: some payments simply have to be postponed until the Treasury has enough money to make them.

Professor Buchanan demurs. He says that this solution would itself violate Section 4 of the Fourteenth Amendment, because all spending commitments made by law are themselves in some broad sense a part of the “public debt” whose “validity” that provision says “shall not be questioned.” Although I have endorsed broad readings of the Constitution’s aspirational statements of principle, that approach is surely inappropriate with respect to the Constitution’s precise, hard-wired, rule-like provisions—including Section 4.

Professor Buchanan argues for his conclusion as follows: he contends that, in Perry v. United States, the Supreme Court used the words “obligation” and “debt” interchangeably.  “Obligations” encompass all “legally required payments,” the argument goes, so any legally required payment is a debt protected by the Public Debt Clause.

This reliance on a stray dictum in a plurality opinion from 1935 is unconvincing, for at least five reasons:

(1) Text: Section 4 itself distinguishes “obligations” from “debts.” On the one hand, it provides that the “validity of the public debt … shall not be questioned.” On the other hand, it declares “any debt or obligation incurred in aid of insurrection or rebellion against the United States … illegal and void.” If Professor Buchanan were right that “debt” and “obligation” mean the same thing, then the phrase “debt or obligation” would be redundant.

(2) Legislative history: As Michael Stern has pointed out, Congress rejected an earlier version of the clause that would have protected “debts or obligations.” “It seems that the framers of the Fourteenth Amendment deliberately decided to exclude ‘obligations’ from the Public Debt Clause.”

(3) Context: The word “debt” appears five times in the original Constitution. In each of those instances, it would be highly unnatural to read “debt” as synonymous with “all legally required payments.” The alternative—suggesting that the framers or ratifiers of the Fourteenth Amendment used a word already used in the Constitution, but imbued it with a different meaning—is equally implausible.

(4) Common sense: The Public Debt Clause prohibits Congress from repudiating any debt already incurred. If Professor Buchanan were right that “debt” includes all spending commitments, then the Public Debt Clause would prohibit Congress from ever repealing or revising a legally authorized appropriation. That conclusion is at war with history and with reason.

(5) Precedent: In Flemming v. Nestor, the Supreme Court held that Congress could revise or repeal Social Security Act benefits even though they had already been promised by prior legislation. This decision contradicts Professor Buchanan’s position that all legally required payments are part of the debt whose validity cannot “be questioned.”

Therefore, it cannot be said that Section 4 itself forbids the prioritization of appropriations.

III. Prioritization and the Principle Against Line-Item Vetoes

It would be remiss of me if I did not mention another, more powerful argument against prioritization (albeit one on which Professor Buchanan does not rely). In Clinton v. New York, the Supreme Court held that it is unconstitutional for the President (even with congressional authorization) to exercise a “line-item veto”:  the President may not cancel appropriations that Congress has authorized.

One might try to distinguish prioritizing appropriations temporarily (intending to honor them once the Treasury has enough revenue) from canceling appropriations outright. But this is splitting hairs. Let me assume at least for the sake of argument here that the anti-line item veto principle would apply to prioritization just as much as it would apply to cancelation.

Doesn’t this mean that prioritization would be unconstitutional after all? I don’t think so. To be sure, just as the Constitution authorizes Congress, not the President, “To lay and collect Taxes,” “To borrow money on the credit of the United States,” “To coin Money,” and “to dispose of … the Territory or other Property belonging to the United States,” as well as “to enforce, by appropriate legislation, the provisions” of the Fourteenth Amendment – including, of course, Section 4 – so too the Constitution authorizes Congress, not the President, to expend federal funds “to pay the Debts and provide for the common Defence and general Welfare of the United States.” That is, the Constitution allocates decisions about spending federal funds, just as it allocates decisions about raising such funds, to Congress rather than to the President.

In a situation where the legislatively authorized spending commitments outstrip legislatively authorized revenue, it is impossible to honor both of these allocational arrangements at once. One of them must give way.  But which one? The answer may not be derivable from any explicit textual command, but history at least points in a clear direction: the principle that must yield is the one barring executive control over spending, not the one barring executive control over revenue-raising.

The principle against executive raising of revenue dates to at least the thirteenth century. In Magna Carta, King John promised, “No scutage nor aid shall be imposed on our kingdom, unless by common counsel of our kingdom.” The English Bill of Rights of 1689 condemned King James II for an “endeavour to subvert and extirpate the … the laws and liberties of this kingdom [by] levying money for and to the use of the Crown by pretence of prerogative,” and declared that “levying money … without grant of Parliament … is illegal.” And the battle cry of the American Revolution was, of course, “No taxation without representation!”

In light of this unbroken history, it should come as no surprise that, as far as I am aware, no President of the United States has ever attempted to raise revenue without congressional authorization. By contrast, as Justice Scalia noted in his Clinton dissent, executive cancellation of congressional appropriations is far from unprecedented. For example, Ulysses Grant, Franklin D. Roosevelt, Harry Truman, and Richard Nixon all declined to spend money that Congress had appropriated.

Our legal system, moreover, has a long and deeply-rooted tradition of prioritizing personal liberty from government imposition over affirmative expectations of government payment, important though such expectations may often be and troublesome as that distinction may have become in an era of growing dependence upon governmental fiscal support. This tradition confirms what history suggests: the principle against legislatively unauthorized raising of revenue takes precedence over the principle against executive postponements or even outright cancellations of legislatively authorized expenditure.

I do not mean to suggest that, if it becomes necessary for the President to prioritize expenditures, the President is free to use whatever priorities he likes. First, the Constitution itself requires giving some expenditures (such as the payment of judicial salaries, Art. III, § 1, or payments on the public debt, Amdt. XIV, § 4) priority over others. Second, even if circumstances make it impossible for the President to obey the anti-line item veto rule announced in Clinton v. New York, he must do his best to honor the principles animating that rule: namely, using the line item veto to give the President unbounded power over spending would allow the Chief Executive to reward political allies and punish political adversaries. The President may not, for example, prioritize spending in blue states over spending in red states. Within those constitutional boundaries, however, it is up to the President to determine how spending must be prioritized when it becomes impossible to comply with all of the President’s legal obligations simultaneously.


I suppose it goes without saying that, even though unilateral executive prioritization comports with the President’s oath to “preserve, protect and defend the Constitution of the United States,” it is far from an ideal solution to the impending crisis. I accordingly continue to hope that the politicians in Washington will come to their senses before August 2, and that they will render this discussion academic. 


rapier said...

Let's grant that the general principal of a congressional mandated debt limit is constitutional. However in the current case congress approved appropriations that exceeded their own limit in April. This I think fundamentally alters the case. Which has primacy? The constitution's granting of appropriations power and the executives duty to spend them, or a simple statute.

It is exceedingly odd nobody ever asks the congress people about this. Why did they pass spending bills and now not allow the spending? Well we know the reason on political grounds but what are the constitutional grounds? There can be none, that are rational.

They actually pretended to do their constitutionally mandated job of appropriations? Or more likely they are pretending they will not allow the borrowing necessary to fulfill the disbursement of their appropriations? Neither case covers them in glory. Instead it blankets them with shame. If not a constitutional crisis it is a crisis of governance.

The debt limit has always been a double bind sort of exercise. If congress does not want the debt to increase then do not appropriate the spending. It would be one thing for fiscal year 12 for congress to say we won't fund X,Y and Z because we can't because of the limit. However to say the Treasury cannot borrow appropriated monies is schizophrenic.

Paul Scott said...

What limits do you see on prioritization, apart from the constitutional ones listed?

It seems the "spirit" of Clinton is quite broad.

Choosing not to pay out, for example, subsidies to farms and energy companies would almost certainly hurt more of Obama's political enemies than his allies.

Frankly, apart from some sort of "10% off of everything" plan, I don't see how you make a choice that is not more likely to effect Republican or Democratic interests.

I assume you do not suggest that Clinton goes that far, so I am curious what you believe is required of Obama when he makes these choices.

meads said...

Prof tribe needs to brush up on his math. Congress has the authority to spend, tax and borrow. In passing a budget it exercises it's authority to spend and tax. Inherent in that law is that it will borrow the difference to the extent spending exceeds tax revenues. Passing legislation that can not be paid for because of the debt ceiling would require the President to be unable to exercise his Article Two authority to execute the laws of the US. It is clear that this would violate the Constitutional principle of separation of powers. In such a case, the President must execute the spending provisions by instructing the Treasury Secretary to borrow the necessary money. Congress is then free to either pass new tax bills or a new budget cutting spending that has not yet occurred. The President does not have the authority to raise taxes.

With respect to section 4 of the the 14 th Amendment, it seems unlikely that the ratifiers of this Amendment thought that Southern and other minority legislators could refuse to pay for Federal Government debts or obligations once incurred. I find the analysis of the distinction between public debts and obligations to be unconvincing. The use of textualism and context seems very strained and strange coming for you. The idea that Congress would favor a payment of interest to a foreign government over a payment of social security to an American seems implausible.arguments 4&5 fail to address the distinction between current and future obligations.

With respect to prioritization, the principle behind Clinton v. New York was one of separation of powers not how the President would use that power. The principle is that a line item veto in effect creates a new law without it being passed b y Congress and as such is a violation of Article 1. If you accept that the President has the authority to prioritize , then the only constrain to that authority would be that it could not violate the Bill of Rights or any other specific constitutional limitation. Cutting spending to the states that voted against raising the debt ceiling is consistent with this principle.

Junaid said...

I assume you do not suggest that Clinton goes that far, so I am curious what you believe is required of Obama when he makes these choices.

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Junaid said...

However to say the Treasury cannot borrow appropriated monies is schizophrenic.

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