The argument that the 14th Amendment allows the Treasury Department to borrow as much money as it wants is hogwash

From the National Review Online:

July 4, 2011 4:00 A.M.
Obama’s Spendthrift Constitution
Congress, not the president, authorizes new borrowing.

All those pesky people attempting to tie raising the debt limit to reducing the debt through spending cuts must be unreconstructed southerners. How so? Well, they are clearly obstructing the president’s efforts to enforce the 14th amendment!

A constitutional claim newly minted by some administration asserts that the president can raise the debt ceiling if Congress doesn’t. This novel claim rests on Section 4 of the 14th Amendment, which says:


The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

The argument claims: (1) The federal government is constitutionally prohibited from defaulting on its debt; (2) therefore, Congress must raise the debt ceiling in order to avoid a default; and (3) if Congress refuses to do so, the 14th Amendment’s Section 4 impliedly allows the president to authorize the issuance of additional debt.

For many liberal constitutional-law professors — including former constitutional-law professor Barack Obama — the 14th Amendment is the only part of the Constitution that really matters. Still, even if the rest of the Constitution did not exist, Section 4’s language could not support this argument.

The argument blurs the meaning of “public debt.” It fails to distinguish deficit spending from issuing debt instruments to cover that deficit.

No one has questioned the federal government’s obligations to pay the debt instruments already issued — Treasury notes, bills, and bonds held by investors and foreign governments. Congress has authorized issuance of debt instruments of up to $14.29 trillion.

The controversy concerns whether Congress will authorize the Treasury to issue additional debt instruments. Section 4 specifies “public debt of the United States, authorized by law” (emphasis added). Only Congress — not the president — makes laws. Nothing in Section 4 requires Congress to “authorize[] by law” any additional debt.

Nevertheless, some who claim Section 4 supports implied presidential powers cite dicta in the Supreme Court’s plurality opinion in Perry v. U.S. (1935). This case involved a Treasury bond written as “payable in United States gold coin,” which the Treasury refused to pay in gold after Congress barred gold payments in 1933. In reality, the plurality opinion’s discussion of Section 4 cuts against arguments for expanded presidential power. It states:


We regard [Section 4] as confirmatory of a fundamental principle, which applies as well to the government bonds in question, and to others duly authorized by the Congress, as to those issued before the Amendment was adopted. Nor can we perceive any reason for not considering the expression “the validity of the public debt” as embracing whatever concerns the integrity of the public obligations. [Emphasis added.]

Perry confirms that Section 4 deals with debt “duly authorized by Congress.”

Even if Congress refused to pay debts already authorized — which no one is suggesting — the president could not provide a remedy. As the Perry plurality also stated, Congress has no duty to provide a remedy: “While the Congress is under no duty to provide remedies through the courts, the contractual obligation still exists and, despite infirmities of procedure, remains binding upon the conscience of the sovereign [emphasis added].”

Obligations “binding on the conscience” are also recognized by Article VI of the Constitution. It obligates the payment of “All Debts” incurred under the Confederation. Nevertheless, both that provision and Section 4 rely on Congress’s power “to borrow money on credit of the United States” (Article I, Section 8).

The struggle between House Republicans, who insist on spending cuts, and the president, who advocates higher taxes, simply exemplifies our separation-of-powers system in action. By design, the system usually forces resolutions of policy conflicts through some kind of compromise. And if the president and Congress fail to reach an agreement, the Constitution has not left the president powerless. As Senator Toomey insists, the Treasury can easily pay interest to bondholders first. The remaining funds would cover about two-thirds of the budget, and the president would simply be forced to make drastic cuts because he lacked money to pay all the bills.

Ultimately, public opinion will dictate whether a compromise occurs and whether spending cuts or tax increases prevail. That is as it should be in a self-governing republic.

On the debt ceiling, House Republicans have both the moral and the constitutional high ground. The 14th Amendment’s Section 4 and Article VI recognize the general obligation “binding upon the conscience of the sovereign” to pay lawful debts. Congress — not the president — decides the lawful debt level under its Article I power to borrow. Section 4 cannot imply novel presidential powers of enforcement because Section 5 provides: “The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.”

The Congress need not even pass legislation requiring that current debt holders be paid first. Nor should House Republicans be intimidated by the Section 4 argument. In fact, they should use it against the president. The argument recognizes the president’s obligation to pay existing debt instruments. He can do so regardless of whether Congress raises the debt limit.