Bargaining in the Shadow of the Debt Ceiling (aka Buchanan/Dorf Part 3)

By Mike Dorf

With the sequester due to go into effect very soon and the need for a continuing resolution to keep funding the government due up just after that, readers of this blog may be wondering: "How does the prospect of hitting the debt ceiling again in May affect the bargaining position of the parties?"  Good question.  In our brand new debt ceiling paper, Professor Buchanan and I take a crack at that question and a few others.  It's short (by law review standards--33 pages) so you should read the paper for the full argument (because you have nothing better to do) but here I'll summarize very briefly.

After recapping the last year and a half of craziness as well as our prior writing on the subject, we roll out two main parts of our argument.  First, we respond to those objections to our "trilemma" analysis to which we haven't previously responded or haven't responded systematically.  We make a number of new moves but the one that's perhaps the most provocative is this: We argue that Congress cannot enact complex taxing and spending laws and then delegate to the President the power to cut whatever spending he chooses to cut to get under the debt ceiling, using whatever prioritization scheme he thinks makes sense.  We invoke the "nondelegation doctrine," which requires that Congress supply an intelligible principle when it delegates power to the President to fill gaps in legislation.  Although we acknowledge that the modern nondelegation doctrine is very permissive, we deny that it is utterly toothless.

The nondelegation argument is one of three we offer in response to a claim we have seen in a number of places: The contention that language in many appropriations measures authorizing payment from "money in the Treasury" excuses the federal executive from spending thus-appropriated funds when the federal credit card is maxed out (i.e., when there's no room left for further borrowing under the debt ceiling).  It's not necessary to buy our nondelegation argument in order to reject this reading of the statutory language, as we offer two other, independent grounds for rejecting it.  But we suspect that readers who are interested in constitutional law generally and not quite so obsessed as we are with the debt ceiling may find the nondelegation argument to be the most interesting.

After responding to objections to our prior work, we turn to the question at hand.  We begin by noting that our past work had assumed that the President would more or less stumble into a trilemma: He would have signed legislation calling for more spending than permitted in light of the tax laws and the debt ceiling, but he would have done so in the expectation that Congress would raise the debt ceiling before the day of reckoning. That expectation is no longer a sure thing.  Now, if Congress enacts spending laws that will bump up against the debt ceiling, a President who signs them cannot be confident that Congress will later raise the ceiling.  Thus we come to the question: Did our prior conclusion that borrowing in excess of the debt ceiling would be the least unconstitutional option depend on the assumption that a debt ceiling crisis was not anticipated when the relevant spending measures were enacted?  Or to put it differently: In this new period of craziness, should the adoption of appropriations measures that call for spending beyond the government's borrowing capacity be taken as less a reflection of the real congressional will, so that in the event that Congress later fails to raise the debt ceiling, now cutting spending is the least unconstitutional option?

Our answer is no.  Borrowing in excess of the debt ceiling remains the least unconstitutional option for two chief reasons.  First, the two separation-of-powers factors we identified in a "normal" crisis--minimizing the usurpation of legislative authority and maximize reversibility--remain the same even in the "new normal" of expected debt ceiling standoffs.  And second, any other conclusion would give the parties (including both Congress and, under certain circumstances, the President) perverse bargaining incentives to create a crisis.

Well, that's the gist of it.  There's a good deal more in the paper itself, but fans of platinum coins may be disappointed to learn that we relegate them to a footnote, chiefly because they appear unlikely to be "in play" in the next round of madness.