Monday, January 07, 2013

All Debt Ceiling All the Time

By Mike Dorf

Despite being on air today for nearly an hour (audio available here), there were a number of points about which I'd like to say a few more words.  Hmm, if only I had a forum to do that.  Oh right!  I do.  Okay, here goes.

(1) Scope of Section 4 of the Fourteenth Amendment.  Professor McConnell took the position that Section 4 of the Fourteenth Amendment bars "repudiation" of federal debt but not mere non-payment.

(a) For over a year now, Professor Buchanan and I have been saying that our argument does not depend on the Fourteenth Amendment at all. Even if the debt ceiling law--in combination with spending and taxing laws that require the government to spend more than it can raise through taxes and borrowing--does not violate the Fourteenth Amendment, the combination makes anything the president might do unconstitutional under Article I, Section 8 (which assigns all of the relevant powers to Congress, not the President) and the Take Care Clause.  Thus, from our perspective, we can lose this particular point and still win the larger argument.

(b) But I don't think we lose this argument anyway. To see why, imagine that in 1872, Senators and Representatives of states of the former Confederacy enacted legislation forbidding the payment of principal or interest on bonds issued by the Union during the Civil War. Suppose further that this legislation included the following statement: "This law in no way repudiates or questions the validity of the public debt of the United States. It simply reflects the fact that the government cannot at this time afford to pay all of its bills." Is there any doubt that such a law would violate Section 4 of the Fourteenth Amendment, notwithstanding the fact that it doesn't denominate itself a repudiation? Surely the point of the constitutional provision is to protect holders of bonds against non-payment, regardless of how it is labeled. And just as the pro forma recitation of financial distress in 1872 should not save the hypothetical legislation, so here, the country's supposed "debt problem" or "spending problem" shouldn't save an otherwise invalid law under the Fourteenth Amendment.

(c) To be sure, there are other grounds on which it can be argued that Section 4 of the Fourteenth Amendment doesn't include all federal spending within "public debt."  Professor Buchanan and I consider them in our main article and we find some of them plausible but we conclude that the best reading of the constitutional provision is the most straightforward: The government must pay what it is legally bound to pay. In our analysis of some of these other, plausible, grounds for reading Section 4 narrowly, we treat the position that Professor McConnell seems to be espousing as a reductio. I continue to think that we were right to do so--even though, per (a), nothing really turns on it for us.

(2) Is There a Difference Between "Cutting" Spending and "Delaying" Spending?  Professor McConnell appeared to agree with me that a President cannot simply unilaterally cut spending, although he later appeared to take the point back.  (More about that in (3), below.)  But he also drew a distinction between a President "cutting" spending and a President "delaying" spending. Does that hold up?

(a) To the extent that any particular federal statute or contract gives the executive branch discretion regarding when to make legally required payments, I agree with Professor McConnell that there is nothing unconstitutional, indeed nothing illegal at all, about the President delaying spending.

(b) But there is not a lot of wiggle room under existing laws.  Therefore, pretty soon it will be true that for the President to "delay" spending money would be illegal.  Would it also be unconstitutional?  If the President could credibly promise that he was merely delaying spending, perhaps he could say--as Professor McConnell wants him to say--that he is simply prioritizing in a circumstance in which he cannot meet all of his obligations.  But that runs right back into our argument that when the President cannot meet all of his legal obligations, he should violate them in a way that involves the least policy discretion, and that means violating the debt ceiling, not rewriting Congress's priorities.

(c) As an aside, in investigating how government money gets spent, I took a look at a pie chart of federal spending.  The one to which I've just linked is from the Concord Coalition, a deficit hawk group.  Note that currently debt service accounts for just under 7% of federal spending, which is a little less than what it was in the last year of the Bush Administration. To me, that suggests that the notion that we have a real debt crisis--as opposed to a Tea-Party-manufactured political crisis--is baloney. Recent deficits have been high, as one expects in an economic downturn, but with very low interest rates, debt finance made and continues to make sense.  Indeed, I think a very good case can be made (and Professor Buchanan has made it in various fora) that now is exactly the time when the government should be borrowing a lot more, and doing so by locking in low long-term interest rates.  The factor that is most likely to add to borrowing costs in the short to medium run is the very political crisis that Tea Partiers have manufactured to make it hard for the government to pay its bills.  It's enough to want to make you tear your hair out.  But as I said, that's an aside.

(3) Is a Presidential Failure to Spend Constitutionally Equivalent to a President's Unilateral Spending? This is the point that Professor McConnell took back.  He said that a President's failure to spend is not unconstitutional, merely a violation of the Impoundment Control Act.

(a) Professor Buchanan and I anticipated this contention in our Columbia Law Review Sidebar paper. There, we offer an argument rooted in case law as well as first principles to show that a President's decision to make unilateral spending cuts really is objectionable on constitutional grounds.  The key Supreme Court case is the Line Item Veto Act decision, Clinton v. City of New York, which makes clear that the President has only a limited ability to cut spending even with Congressional authorization. He has no constitutional authority to cut spending without such authorization.

(b) Further, we argue in the Sidebar paper that it makes good sense to read the Constitution as limiting the President's ability to cut spending without congressional authorization.  Here is the money paragraph:
In giving the power of the purse to Congress, rather than the president, the Framers no doubt meant to guard against the sorts of abuses perpetrated by the Stuart kings, who repeatedly battled parliament over appropriations. But that is not the only sort of abuse against which the assignment of the purse power to Congress guards. Libertarians may worry only about presidents attempting to spend money that Congress has not authorized. But our Constitution assumes (quite correctly, in our view) that threats to the public welfare and safety may sometimes arise from a decision to spend too little on a pressing public need (by, for example, refusing to spend money to save life and limb during a natural disaster, or to invest adequately in
the education of the nation’s children). A president who impounds funds in the teeth of a congressional judgment that some government program must be funded thereby usurps legislative power.
(4) Do the President's Motives Matter? Finally, Professor McConnell suggested that there is a constitutionally significant difference between a President impounding funds because he disagrees with the underlying policy of the law Congress enacted (as Nixon did) and a President failing to spend money because the federal till is empty (as President Obama would be doing). Is that persuasive?

I don't think so.  After all, the till would not be literally empty.  Money would continue to come into the Treasury and President Obama would be deciding to spend that money on some legislated programs but not others, or on one partial basis but not another.  In doing so, he would necessarily be making numerous policy judgments that some legal obligations are more important to fund than others. Yet that is tantamount to just the sort of policy reweighing that the impoundment controversy shows to be constitutionally impermissible.  It's true that Obama would be impounding in some sense reluctantly whereas Nixon impounded willfully, but there is no reason to think that that difference matters.  The important point so far as the Constitution is concerned is that in each case the President would be exercising a quintessentially legislative judgment that separation of powers denies him.