Tuesday, September 30, 2014

Writing About the Debt Ceiling is Apparently Not Easy

-- Posted by Neil H. Buchanan

A colleague recently forwarded to me a link to a law student note, Unconstitutional Debt Ceilings, 103 Georgetown L. J. Online 29 (2013), in which a 2013 Michigan Law graduate provided a short argument to the effect that the federal debt ceiling is unconstitutional.  Because Dorf on Law brings in new readers all the time, I cannot presume that everyone reading this post is aware that Professor Dorf and I have written a series of academic articles, Verdict columns, and blog posts regarding the debt ceiling, in which we emphatically reach the same result.  (I also published a book on the subject last year: The Debt Ceiling Disasters.)  I thus read the student's note with interest.  [Note: I initially misread the star-footnote, thinking that the author of the note had been a Georgetown Law student.  Although I went to Michigan, my mostly positive assessment below was formed when I thought that the author attended GW's cross-town rival.  So there was clearly no "homerism" involved.]

The note does not cite any of the Buchanan-Dorf scholarship.  I say that not to be grumpy, but because it means that the note provides an opportunity to watch someone reinvent the wheel, and then to compare his wheel with ours.  (The oversight is surprising, however, because the one thing that I thought I knew about law review editors is that they are obsessive about preemption checks.)  It was interesting to read the note and to watch how the author struggled with the various issues, beginning with the 14th Amendment argument and then working his way toward an argument that looks very much like a preliminary version of our "trilemma" argument.  (Readers who are unfamiliar with that argument can find a brief version of it in this Verdict column from early 2013.)

Working without reference to any existing legal literature is not easy, and the author of the note inevitably makes a few errors.  He frequently makes gratuitous, and inaccurate, statements about how terrible government debt is.  That, however, is more a matter of a law student making unschooled statements about economic issues.  A much more important error, however, is this argument (on p. 35): "When debt increases faster than GDP, the country becomes more highly leveraged, endangering the government's ability to repay its debt" (emphasis in original, footnote omitted).  This is simply not correct, because U.S. federal debt is denominated in dollars, which the U.S. government can create.  No amount of debt endangers the government's ability to repay the debt.  Excessive debt creation can have other effects, such as causing inflation to increase (as the note points out), but that is a very different issue.

Still, the author of the note is merely replicating an error that Professor Tribe committed in his original 2011 NYT op-ed regarding the debt ceiling, and which Tribe subsequently repeated in his mini-debate with me here on this blog.  So, if a law student is going to make a fundamental analytical error, he could do worse than repeating an error that was committed by one of the top legal scholars in the country!  A similar excuse is available for the author's acceptance (in the same paragraph) of the idea that the Standard & Poor's downgrade of U.S. debt in 2011 was caused by "excessive debt," an argument that the author simply repeats from a Bloomberg magazine article.  True, S&P talked a lot about high debt levels, but the downgrade was caused by the debt ceiling-related political circus, not by any change in the government's debt forecast (since the debt forecast had actually just been revised downward).

Still, the note is quite valuable, especially because the author did some very good research and found wonderfully on-point quotations from two Supreme Court cases, supporting the idea that the debt ceiling cannot be used to change the spending decisions made by Congress.  As Professor Dorf and I have argued, one of the fundamental reasons that the debt ceiling must give way to the spending laws (and the tax code) is that the political balancing act that creates spending legislation is the essence of representative government.

The note quotes Justice Kennedy, from Office of Personnel Management v. Richmond, 496 U. S. 414 (1990), arguing that the Appropriations Clause's "fundamental and comprehensive purpose ... is to assure that public funds will be spent according to the letter of the difficult judgments reached by Congress as to the common good and not according to the individual favor of Government agents or the individual pleas of litigants."  Similarly, the note explains that Clinton v. City of New York, 524 U.S. 417, 439 (1990), prohibits "unilateral Presidential action that either repeals or amends parts of duly enacted statutes."

Thus, as we have argued, the claim that the President can merely "prioritize" spending, if the debt ceiling becomes binding, is wrong.  (As a matter of politics, it is amusing to note that the House Republicans' lawsuit against President Obama claims that he wrongly chooses to execute only parts of laws, not the laws in their entirety.  I will surely write about that issue again in the near future.)

Therefore, although the note is too short to cover the issues in depth, and the author makes a few errors along the way, it is a valuable addition to the small canon of work on the debt ceiling that has emerged in the last few years.  Indeed, Professor Dorf and I have frequently noted the lack of substantive engagement with our arguments, and we thus welcome such work, even if the engagement is only indirect.

Unfortunately, another recent article to have come across my desk is far less laudable.  In 31 Yale J. on Reg. 269 (2014), a business law professor is aware of our first article (or at least its title), but things quickly go awry: "Two legal scholars have argued that [issuing debt in excess of the debt ceiling] is one of the 'least unconstitutional' options.  The problem, however, is that this option may not be constitutional at all, and even if it is, the resulting uncertainty will be costly.  The Fourteenth Amendment does not explicitly authorize the executive branch to borrow to avoid default. Nor does it appear to provide any implicit authorization: its provision prohibiting the government from questioning the 'validity' of its public debt was historically included solely to prevent a southern Democratic majority from repudiating Civil War debts."

Where to begin?  (1) We did not argue that exceeding the debt ceiling is "one of" the least unconstitutional options.  We called it the least unconstitutional option, and we explained why that was so.  (2) Everyone knows that "uncertainty will be costly," but the question is whether it will be more costly than the alternative -- the first-ever default by the federal government.  Calling it "costly" says nothing.  (3) No one would ever say (and we certainly have not) that the Fourteenth Amendment authorizes borrowing -- much less explicitly.  (4) The Civil War debt history does not prevent a constitutional provision from being applied to other circumstances.  And in our most recent article, we show that even the narrowest version of the "repudiation" argument ends up supporting the idea that the debt ceiling cannot be used to justify defaulting on scheduled payments.

The bottom line, unfortunately, is that there is nothing new to report about debt ceiling scholarship.  One mostly good and one not-so-good addition to the very thin pile of articles have not changed the bottom line: Both Obama and the Republicans are wrong, with the Republicans being more wrong for having started this craziness.

5 comments:

ghkozen said...

As a former editor on the Georgetown Law Journal, I have one quibble. Unless there has been a change in how the Journal writes bylines since I left, the article indicates that the author is a 2013 graduate of the University of Michigan Law School, not a Georgetown graduate.

Neil H. Buchanan said...

My thanks to ghkozen for catching my error. I have now edited the first paragraph of the piece to correct my mistake.

Camilla Richards said...

The debt of the US is growing so fast so nobody can say when it’s gonna stop. To get out debt it’s necessary to cut expenses and try to live within your means but we see how consumers and government proceed borrowing. And borrowing becomes a lifestyle and a part of national culture. We want more than we can afford but we can’t wait and that’s why we borrow and apply to cash advance loan lenders. So many people today are in debt, just take a look how many lending services are available! There are so many opportunities to live better than we actually can afford and we use these opportunities and get into endless debt circle.

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