Tuesday, October 15, 2013

A Break -- and a Brief Comment on the Shutdown/Debt Ceiling Deal

By Mike Dorf

For personal reasons, I need to take a break from blogging for at least a week or two.  Professors Buchanan and Colb will continue to post on their appointed schedule, so there will be new content here on DoL, just not from me.

Before signing off, however, I wanted to make a brief comment on the procedure leading to, and likely to follow, the shutdown/debt ceiling deal that appears to be emerging from the Senate.

Supposing that the deal as it emerges from the Senate passes the House (a big "supposing") and is signed by President Obama, it will take some time to determine whether his strategy of not negotiating with a metaphorical gun to his head succeeded.  As a definitional matter, I think it's debatable whether his signing the legislation--which includes some concessions to the Republicans--counts as negotiation.  If I were a White House spokesperson, I would say it doesn't because the President didn't negotiate the deal; he merely agreed to sign legislation that had bipartisan support in Congress.

But I am not a White House spokesperson, and so I'm inclined to say that this is a technicality.  The point of not negotiating with hostage takers is to avoid creating incentives for future hostage taking.  If Republicans perceive the deal as meeting even some of their demands, then they may attempt the maneuver again . . . and again . . . and again.  The fact that they will have to negotiate with Harry Reid rather than directly with the President is inconsequential.  Hostage taking will have been rewarded in any event.

Is there nonetheless reason to hope that the hostage takers have learned their lesson--and will thus not attempt to use the debt ceiling and the threat of government shutdowns in future negotiations?  The answer to that question is more complicated.  The fact that the day of reckoning is only put off by a few months strongly suggests that Republicans do plan to use those threats as leverage in further budget negotiations.  A terrorist with a bomb is still a terrorist with a bomb, even if the bomb has a relatively long fuse.

Meanwhile, there is very little chance that Tea Party Republicans will be chastened by the public reaction to their tactics.  They will more likely be emboldened by their partial success or, for those who think this deal is a sellout because it doesn't repeal the Affordable Care Act and ensure the resignation of President Obama, emboldened with righteous anger.

The hope, such as it is, must therefore be that the experience of the last several weeks leads Speaker Boehner and other old Republican hands to completely abandon the Hastert Rule--and thus the Tea Party wing of the House--going forward. Will they do it?  I suspect not, but I hope to be proven wrong.

11 comments:

The Dismal Political Economist said...

All of us who follow this Forum wish Mr. Dorf well in resolving whatever issues are taking him away from DOL. This Forum is one of the few on the Web that combines interesting posts with intellectual integrity. And when we disagree with the Posts it is never because the arguments made lack a solid analytical basis.

David Hoffer said...

Dear Professors Buchanan and Dorf,

I have been following Dorf on Law since 2011 when Professors Buchanan and Tribe had that online media/Internet debate. Over these last two years watching many brilliant people arguing the pros and cons of the Fourteenth Amendment rendering the debt ceiling statute (“DCS”) unconstitutional let me to the conclusion that the amendment was a “Red Herring”.

What if the DCS was unconstitutional from the day FDR signed it into law. This would mean that the DCS is not unconstitutional because it increases the possibility of a default; it is unconstitutional because it created the statutory mechanism for a default.

All pre-1917 borrowing under the Borrowing Clause was from European nations. With the Liberty Bonds and Baby Bonds we borrowed from the American people. With the Series E Bonds we began borrowing from the public. All this necessitated Congress to increasingly delegate to the Treasury its own rights and responsibilities under the Borrowing Clause. This was undoubtedly a proper delegation.

The authority to borrow money was inextricably linked to the authority to spend money under the Borrowing Clause, the Liberty Bonds and the Baby Bonds. With the DCS, virtually all of our debt was placed under a ceiling. The link between the authority to borrow money to the authority to spend money was broken.

Can’t really explain in economic terms why having a limit connected to a specific debt is different than having a ceiling on all debt, but nearly 3/4 of a century under the DCS is historical proof that it didn’t work. It worked great with the massive spending ramping up into World War II, but not so much during peacetime. But placing all of our debt under a single ceiling is definitely within Congress’ authority and is constitutional.

Using one of your equations in a recent post, (a) Spend $X; (b) Collect $Y in taxes; and (c) Borrow $Z, then Z = X - Y. When ΔZ is calculated by the fiscal decisions of Congress, DCS runs smoothly. When ΔZ is calculated by the political whim of Congress, DCS is used for fiscal policy hostage taking.

Congress delegated to the Treasury the authorization to borrow the difference between congressionally approved spending and congressionally approved revenue. The 1939 legislative act that created the DCS was a valid delegation of legislative power. The portion of the DCS that is the ceiling which purports to prevent the President’s constitutional obligation to continue to borrow violates the Constitution’s separation of powers.

I am forwarding this to you because of the shortness of time. If you agree with this analysis, which I hope you do, please make sure the administration finds out about this before something stupid happens Thursday.

The full post, “The Second Vote”, of this argument can be found on my Blog at renasnc.com

Neil H. Buchanan said...

Thanks to TDPE for his comments and good wishes for Professor Dorf.

I plan to respond to David Hoffer's very interesting comment soon.

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