Tuesday, November 18, 2014

Blame, an Emboldened Obama, and the Debt Ceiling

-- Posted by Neil H. Buchanan

In my Dorf on Law post this past Thursday, I noted that the post-midterms political conversation was initially dominated by promises from the Republicans that they would prove that they can "govern responsibly."  This essentially meant that they were promising not to shut down the government again.  Although few people specifically discussed the debt ceiling separately, the clear implication was also that their hostage-taking strategy of 2011-14 would not be used in 2015.

My favorite line describing the new political reality came from unnamed aides to rising Senator Majority Leader Mitch McConnell, who described Senator Ted Cruz as an "army of one."  Cruz was the architect of the 2013 shutdown, and he is not only completely unrepentant, but he apparently has convinced many of his followers that they "won" the shutdown.  With Cruz being attacked so bluntly, the clear implication is that the Establishment-connected extreme conservatives have wrested control from the Tea Party-connected extreme conservatives, and that this means that stupid stunts will no longer be tolerated.

Maybe.  Clearly, the Establishment types are right that their party does itself no favors with these hyper-confrontational strategies.  The problem is that there are always reasons at least to try to have a stare-down with the President, on the theory that one can steer out of any skids in time to prevent a crash.  (Sorry for the mixed metaphor.)  An unexpected crash, however, is exactly what happened in the Fall of 2013, when (as even a cursory review of the political commentary in August and September of that year would show) every pundit and every Republican insider was certain that there would be no shutdown and no debt default standoff.  Then path dependence set in, and people were afraid to back off, for fear of looking weak.  Supposed "centrists" (who are, again, actually extreme conservatives) like John McCain started making speeches about how Obama was being obstinate and arrogant for refusing to negotiate.  We all know what happened next.

As I have said for months, the timing of the next debt ceiling deadline contributes to an absolutely perfect recipe for disaster.  The debt ceiling will be un-suspended on March 15, at which point the only way to prevent default will be for Treasury to employ the "extraordinary measures" that we have come to know and love.  The best guess for a real drop-dead date is mid- to late April.  The chances are reasonably good that the government will be operating under a continuing budget resolution at that time, which will present the President with a "trilemma" -- the necessity to default on spending obligations, to increase taxes, or to exceed the debt ceiling.  Note, however, that we learned last year that even the expiration of a continuing resolution (that is, a shutdown) does not prevent the onset of a trilemma, because there is enough ongoing mandatory spending that debt continues to rise even during a shutdown.  (To be clear, there is absolutely nothing wrong with that.  Debt should rise in a growing economy.)

So, the only way that there will be no debt ceiling-caused default is if the debt ceiling is increased by late April 2015.  That is more than 18 months before the election, and it will be oh-so-tempting for Republican extremists to think that they can have their fun with Obama and still have enough time to recover from the fallout before the 2016 elections.  After all, the 2014 midterms were only a year after the last shutdown, and look how well things turned out!  (Not that I buy the excessive hype about the "drubbing" that the Democrats supposedly took in the midterms, but what matters is what the crazies think.)

Now, an additional wild card has been added into the deck.  The post-midterm talk about governing responsibly has quickly been replaced by Republican outrage over President Obama's discovery of his spine.  While I was channel surfing recently, I even saw my GW Law colleague Jonathan Turley (who is a mainstay on MSNBC) being fawned over on Fox News, because he was arguing that the President's plan to take executive action on immigration would be a gross violation of the separation of powers.  Even so, the host did not challenge Jon when he warned that impeachment would be a bad idea, and that shutdowns (including mini-shutdowns) should also be off the table.  Apparently, Republicans are returning in desperation to their much-mocked idea to sue the President, which they tried this past summer.

If Obama has really decided that he is finally free, and that he is going to take bold and risky actions, then that could completely change the dynamics of the debt ceiling.  If he becomes convinced that the Republicans will never impeach him, or that he is willing to fight the PR war of an impeachment, he might finally come around to embracing the Buchanan-Dorf line, which says that the President could accurately describe a decision to exceed the debt ceiling as the most modest move available, and that he is required to do so by core constitutional principles.

I am not predicting that Obama will do that, but for the first time, it seems possible that Buchanan-Dorf cannot be dismissed as being "correct, but obviously a politically irrelevant non-starter."  Even short of invoking our argument, the President could adopt a strategy that I suggested long ago, in which he would seize the narrative by saying something like this: "Republicans claim that they will not give me what I supposedly want, a debt ceiling increase, unless I give them what they want.  Well, I don't want a debt ceiling increase any more than they should want it.  So, if they want me to sign a debt ceiling increase, here are my demands: (1) a national $15 minimum wage, indexed to inflation, (2) an increase in the estate tax, to return it to 2001 levels, (3) the repeal of all abortion restrictions nationwide, (4) updates to the National Labor Relations Act that will effectively increase union membership, (5) my immediate confirmation as Chief Justice of the United States Supreme Court , (6) ..."  You get the idea.

Would the President be blamed for the ensuing deadlock over the debt ceiling, if no agreement were to be reached?  Maybe, if he is viewed as being unreasonable.  But he could certainly calibrate his demands to be no more outrageous than those on the Republican side.  If Republicans say, "We won't pass a debt ceiling increase unless you do X," Obama can say, "No, I won't sign a debt ceiling increase unless you do Y."  An emboldened Obama might be just the guy to kill the strange idea that debt ceilings are politically useful vehicles to extract concessions from the President.

All of which raises an interesting question that a frequent commenter to Dorf on Law, who has adopted the online nom de plume David Ricardo, posed in response to my post last Thursday: "[I]f the President is presented with a conditional debt ceiling increase bill and his choices are to (1) sign the bill, (2) veto the bill and allow default or (3) veto the bill and ignore the debt ceiling and to continue to pay the debts as they come do, spend what Congress has authorized and appropriated and to issue new debt as needed then why isn't he required to sign the bill as the least un-constitutional action?  Doesn't the President in this situation create the trilemma by his veto, as the trilemma would not exist if he signed the bill?"

What is interesting here is that Ricardo's comment is the honest version of the argument that the Republicans have tried to make all along: A President can avoid the bad consequences of a debt default by agreeing to his opponents' demands.  A hostage crisis can be ended, after all, if the hostage takers' demands are all met.  There are reasonable versions of many Republican arguments, for example, actual scientists' statements regarding the remaining gaps in the theories of evolution, climate change, and so on.  The problem is that those arguments are then exaggerated and misused.  But the honest questions themselves deserve consideration.

As an initial matter, I can simply adopt as my own a reply comment from Paul Scott: "Separation of powers runs in both directions. That failure to sign a bill would result in a 'trilemma' cannot itself be used to force the avoidance of that trilemma. To do so would allow Congress to make laws without the involvement of the executive (or without a super-majority of both houses).  Relating back to the comments of doing the least harm to the constitutional structure, we cannot conclude that putting the executive in a trilemma is an acceptable means for Congress to circumvent the constitutional requirement that the President sign a bill into law (or that a super-majority of Congress do so over the President's objections)."  Quite so.

No matter the reason for a trilemma, the President is facing a properly-enacted set of laws regarding spending, taxing, and borrowing.  If the debt ceiling crisis were deemed to be "Congress's fault," then that is still no reason for the President to press his advantage and worsen the constitutional damage by adopting what amounts to a line-item veto, changing Congress's spending priorities under the guise of being "forced" to do so by Congress's bad-faith refusal to increase the debt ceiling.

And if the President must not seize this power when he is not at fault, then certainly he must not do so when he is to blame.  Professor Dorf and I have both discussed in passing the possibility of strategic presidential actions that would force a debt ceiling crisis.  (My list of demands above is simply an extreme version of this.)  If the President simply refuses to sign a debt ceiling increase, no matter whether he is being reasonable or unreasonable, he certainly cannot then be allowed to say, "And now I am tearing up the appropriations laws that are on the books, so that I can decide who gets paid and who has to wait."

The broader point is that the President does not "get to do" something wonderful (from his perspective) when he follows the Buchanan-Dorf argument.  A President does not "win" when he exceeds the debt ceiling under a trilemma.  He simply has to decide which law to disobey, by applying core constitutional principles.  Once he has made the correct choice to issue additional debt, he then does exactly what he would have been required to do, had there been no debt ceiling crisis: Pay the bills to which Congress has previously committed the nation, on time and in full.  It's a boring job, but a President's gotta do it.


David Ricardo said...

Interesting, informative and thought provoking as all of the Dorf Buchanan posts on this topic have been. A couple of points

1. The issue of whether or not the Establishment-connected extreme conservatives have wrested control from the Tea Party-connected extreme conservatives is undetermined at this point in time. The makeup of the new Congress within the Republicans is vastly different and no one should take Sen. McConnell at his word on a government shutdown. The inmates have captured the insane asylum, we just don’t know yet what they will do with it.

2. With respect to whether or not the President has decided to take bold action and to hold his ground on issues like the debt ceiling, this is also undetermined. Little in this President’s past gives a large amount of encouragement. Notice how the President deferred action on immigration until after the election to help embattled Democrats (and how did that work out?)

3. In order for the President to adopt the Dorf Buchanan approach he would have to engage in a massive educational offensive to the nation, who will be bombarded by claims of the Republicans that the President is violating the Constitution by not abiding by the debt ceiling law. This President shows no sign of doing this or that he is capable of doing this or that he even wants to do this.

The most that can be said at this time is that a clean debt ceiling bill will not pass Congress and that the two outcomes are either no debt ceiling bill because Democrats block it in the Senate and/or Republicans cannot agree on the conditions in the House, or a debt ceiling bill with conditions passes and is presented to the President. If a debt ceiling bill does not pass________________ (fill in the blank). If a conditional debt ceiling bill passes and if the President signs such a bill he has forever given Congress a way to impose its will on the Executive Branch without having to override a veto. And if he vetoes such a bill, __________________(fill in the blank)

To paraphrase Wood Allen, on the debt ceiling we face two paths. One path leads to chaos and massive economic destruction. The other path leads to disruption and near total financial annihilation. Let us hope we have the wisdom to choose the correct path.

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