Tuesday, August 02, 2011

Debt Limits, Unconstitutional Choices, and Limited Presidential Power

-- Posted by Neil H. Buchanan

I certainly chose a bad two weeks to go on vacation! With the biggest political/economic/constitutional mash-up in history bearing down on the country, I found myself traveling in Canada (on a trip that had been planned months in advance, and that could not be rescheduled), wondering what kind of country I would find upon my return. Perhaps the most bewildering moment was when an elderly Chinese-Canadian woman at the next table in a restaurant in Quebec City explained repeatedly and emphatically to her companion that "America has no money, but Canada has money." As wrong as that analysis was, it was no worse than 90% of what one hears from American politicians and pundits.

Immediately upon my return (and speaking of bad punditry?), I was a panelist (via telephone) on yesterday's edition of "To the Point," an NPR radio show produced at KCRW-FM in LA, hosted by Warren Olney. I agreed to appear on the show because it is not one of those "shout and interrupt" shows so beloved of cable TV, and I was delighted to find that it is still possible to discuss issues intelligently, led by an able host. As we went to air, neither house of Congress had yet voted on the deal to end the crisis, so there was still reason to discuss the possible consequences of the deal falling apart. (As I write this post, the House has passed the relevant bill, and the Senate is expected to pass it today.) Much of the discussion on the show (which ran for 40 minutes) concerned the politics of the crisis, but in the last 15 minutes or so, they brought me on to discuss the legal/constitutional aspects (and a little bit of economics).

Not surprisingly, the host posed the issue to me as "the 14th Amendment option," i.e., whether the President could use the now-much-discussed Section 4 of that amendment to justify raising the debt ceiling without prior Congressional authorization. I adopted the analytical framework that I have developed recently -- especially during my recent exchange with Professor Tribe (see, e.g., this post) -- arguing that, while the 14th Amendment is perhaps helpful to the argument, the fundamental problem is that the President could not (absent a deal to change the law before the deadline) simultaneously execute his constitutional duties to spend, tax, and borrow in the ways currently required by law.

The 14th Amendment, at most, gives the President reason not to exercise discretion in cutting spending (the so-called prioritization option), which means that the interesting question is the one that Professor Dorf has also pursued in his most recent DoL post and Verdict column: How does one choose among a set of choices that are all, in one way or another, a violation of one's oath of office? I pointed out that it is therefore a mistake to describe the ignore-the-ceiling strategy as "a legal end run" (as Paul Krugman did in his most recent op-ed). It is genuinely bizarre that defaulting is considered the natural, constitutionally-required course, when doing so would clearly violate the law.

In any event, I decided for the purposes of the show to explain the President's potential choice as a matter of choosing the least scary, least "obnoxious" option. If the President were someone whom you distrust, I asked, which of the three choices -- cutting spending at his/her limited discretion, raising taxes at his/her limited discretion, or borrowing enough money to cover the difference between currently-authorized spending and taxing -- would you want the President to be forced to use?

As I see it, the idea of setting a precedent in which the President can re-calibrate the spending or taxing choices made by Congress is truly scary, because it gives the President power to upset political trade-offs in a way that the power to borrow as much as the spending/taxing laws would require does not. (Moreover, setting aside the fiction that Congress is a continuing entity, separate from its members at any given time, it is the current Congress that voted for the taxing and spending laws that would cause borrowing to exceed the ceiling that a previous Congress enacted.) If Congress does not like the level of federal debt that results, it can fix that in the next budget cycle.

The conservative panelist on the show was from one of the legion of right-wing think-tanks in DC, all of which have similar names. (This was one of the business-oriented ones, not one built on culture war issues.) He was very Tea Party-friendly, if not an actual Tea Partier himself. When the host asked him about my argument, he immediately asserted that increasing borrowing would be "most obnoxious," but he could not explain why. He pointed out that Professor Tribe was against the 14th Amendment option, which merely meant that the guy was not prepared for my non-14th Amendment argument and was hoping to invoke Tribe's name in an "even liberals admit" moment. He then repeated an argument about the limit on borrowing being a result of an effort to limit the power of English kings, which was interesting but also non-responsive.

The only point that this panelist seemed to want to make was that conservatives like the barrel over which they have put Obama, and they will reject any analysis that might change the terms of the debate. Bizarrely, however, he also argued that exceeding the debt ceiling would be no big deal, as a way to defend the Republicans from the claim that they have taken the economy hostage. One of the other panelists pointed out his logical inconsistency, along the lines that I described in a DoL post in May. (In tomorrow's post, I will discuss the political opportunism -- and sheer happenstance -- involved in the positions that the two parties have taken during this debate.)

No matter how one assesses the discussion on yesterday's radio program, I am left with the bigger question of how anyone who believes in limited government could want to have a debt limit statute at all. If one believes that government should be small in some sense, then spending should be cut. If one believes that government has a tendency to grow, then one can adopt a "starve the beast" strategy, limiting government's size by opposing taxes. A debt ceiling, then, is a fail-safe in case one has lost too many elections and is faced with a Congress that might make government bigger than one likes. The debt ceiling is thus, obviously, an extra weapon in the arsenal of the anti-government camp.

Unless the government is already so small that changing its relative spending levels is inconsequential, however, giving the President the power to change spending decisions can substantially alter the overall policies that are built into a government's budget. This, in fact, is why the ultimate deal to which Obama and Congress agreed had to include specific limits on what could be cut, setting out types of spending that could not be cut (some lower-income support programs, for example) and setting defense spending apart from other discretionary spending. Giving Obama the power (even within equal-protection and due-process limits) to cut spending to avoid exceeding the debt limit was unacceptable to Republicans.

And I can honestly understand why. Anyone who is committed to any meaningful concept of limited government should be scared to death of an understanding of the Constitution in which the President has the power -- especially power derived from a law that has never been taken seriously -- to undo some of Congress's most fundamental choices.


Bob Hurt said...

I find most of this screed confusing and irrational. WTF are you talking about? Debt limit arguments imply having lost the argument for no debt at all, a mandatory, rational imperative for all government. Of course, an idiot can argue for no debt limit AND no taxes because unlimited spending (government debt) obsoletes all taxation by putting the tax on savings and earnings through loss to inflation. Like I said: an idiot argument, it amounts to nothing more than a charade. Keep your pecker in your pants and you won't knock her up. Spend less than you make and you'll never have to borrow. Simple. If you want more money, EARN (don't borrow) it.

The 14th Amendment prohibits questioning of the national debt, but I for one have HUGE questions about it because I seriously doubt its validity. A nation's people have ultimate responsibility for the crimes of its government, Iraqis for example must bear (and have borne) the brunt of sins of Saddam. So must the English bear the brunt of the sins of their royalty. Likewise, its bankers must bear whatever brunt its enemies or creditors wish to impose. Don't tell me the Rothschild empire owes no debt to every American for bailing out England and Europe from WWI and WWII. For some ultra-idiotic probably political-correctness reason, people want to insulate banks from the sins of their related governments, and our 14th Amendment seems to echo that sentiment. SEEMs to. We don't need to question the debt. Because of manipulation and lobbying by bankers, I consider ALL US bank debt crooked, and believe the Congress should, rather than questioning it, simply repudiate it. Tough titty if the bankers don't like it - consider it the price of doing business and enjoying government protection and bailouts.

Bob Hurt said...

Speaking of bailouts, the recent GAO first-ever audit of the Federal Reserve revealed that it GAVE $16 trillion to banks, ostensibly to bail them out.

The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows:

Citigroup: $2.5 trillion($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion* ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)

Which might make you wonder why Congress bothered arguing over a paltry $3.5 Trillion.

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