Sen­ate Demo­c­ra­t­ic lead­ers yes­ter­day called on the Pres­i­dent to “take any law­ful steps” to increase the government’s bor­row­ing author­i­ty “with­out Con­gres­sion­al approval, if nec­es­sary.” The let­ter, signed by Sen­a­tors Reid, Durbin, Schumer and Mur­ray, does not spell out what those “law­ful steps” might be, but instead sim­ply asserts that the Pres­i­dent needn’t obtain Con­gres­sion­al autho­riza­tion to incur unlim­it­ed debt. He can act unilaterally.

That is, so far as I know, a nov­el asser­tion and one that is poten­tial­ly quite dan­ger­ous. It also has scant con­sti­tu­tion­al backing.

Arti­cle I, Sec­tion 8 explic­it­ly grants Con­gress, not the President,

“…pow­er To lay and col­lect Tax­es, Duties, Imposts and Excis­es, to pay the Debts and pro­vide for the com­mon Defence and gen­er­al Wel­fare of the Unit­ed States.”

 

The con­clu­sion of this sec­tion under­scores this author­i­ty, grant­i­ng Con­gress power

“to make all Laws which shall be nec­es­sary and prop­er for car­ry­ing into Exe­cu­tion the fore­go­ing Powers.”

Thus, author­i­ty with respect to debt is a Con­gres­sion­al, not a Pres­i­den­tial, prerogative.

Some have recent­ly sug­gest­ed that the Four­teenth Amend­ment, rat­i­fied short­ly after the Civ­il War, con­ferred this pow­er to pay debts on the Pres­i­dent, act­ing inde­pen­dent­ly of Con­gress. Sec­tion 4 of that amend­ment states that

“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.”

In an age where the fed­er­al gov­ern­ment is con­strained con­stant­ly to take on addi­tion­al debt to pay inter­est on debt already incurred, a lim­it on bor­row­ing rais­es the pos­si­bil­i­ty of default. Hence, the argu­ment goes, the Pres­i­dent can incur new debt in order to pre­vent the “valid­i­ty” of exist­ing debt from being “ques­tioned.”

The most obvi­ous flaw in this argu­ment is that the Four­teenth Amend­ment says that debt “autho­rized by law … shall not be ques­tioned.” In 2011, Con­gress enact­ed and the Pres­i­dent signed into law the Bud­get Con­trol Act . Sec­tion 301 of that Act autho­rized the fed­er­al gov­ern­ment to bor­row an addi­tion­al $2.1 tril­lion. That is the extent of fed­er­al debt that has been “autho­rized by law.” The Pres­i­dent lacks legal author­i­ty to bor­row more.

The US Gov­ern­ment, accord­ing to out­go­ing Trea­sury Sec­re­tary Tim­o­thy Gei­th­n­er, reached that ceil­ing on Decem­ber 31. He is jug­gling the books now to keep the debt with­in that lim­it. By his esti­mates, that jug­gling can suc­ceed only for anoth­er six weeks or so, at which point Trea­sury will have either to bor­row addi­tion­al sums or default on its debt.

The Sen­a­tors’ let­ter argues that the Pres­i­dent can bor­row more, with­out wait­ing for Con­gress to pass anoth­er law. That would be unprece­dent­ed, poten­tial­ly coun­ter­pro­duc­tive and, in my view, con­sti­tu­tion­al­ly dubious.

My view is, of course, irrel­e­vant. Were the Pres­i­dent to heed the advice of Sen­ate lead­ers, the valid­i­ty of that new debt would be sub­ject to judi­cial chal­lenge. How the courts would rule is anyone’s guess. But how might investors view U.S. debt as the legal chal­lenges wend­ed their way through the courts? Were five Supreme Court jus­tices to agree that the Pres­i­dent had over­stepped the Constitution’s bounds, the U.S. gov­ern­ment would imme­di­ate­ly default and the Trea­sury bonds investors had pur­chased would become worth­less. Aware of that pos­si­bil­i­ty, wouldn’t investors avoid Trea­sury debt or insist on high­er rates of inter­est? How would that affect the Fed­er­al Reserve’s bal­ance sheet and pen­sion funds that rely on Trea­sury bonds to remain sol­vent? How would rat­ings agen­cies grade con­sti­tu­tion­al­ly sus­pect debt?

Uni­lat­er­al action by the Pres­i­dent, far from eas­ing fears of default, could actu­al­ly fuel them, pro­vok­ing the very “eco­nom­ic cat­a­stro­phe” that the Sen­a­tors hope to avoid.

Con­cen­trat­ing fed­er­al bor­row­ing author­i­ty in a sin­gle indi­vid­ual would cre­ate oth­er prob­lems. What if a Pres­i­dent decid­ed that it would be in his or her inter­est not to increase the debt ceil­ing? That may seem unlike­ly now but until recent­ly it seemed unlike­ly that a Pres­i­dent would claim author­i­ty to raise the debt ceil­ing with­out leg­is­la­tion. That has now become the offi­cial posi­tion of the Con­gres­sion­al wing of the President’s party.

It is also worth not­ing that Pres­i­dent Oba­ma him­self only recent­ly came to believe that autho­riz­ing more bor­row­ing was a good a nec­es­sary thing. As a Sen­a­tor, he not only vot­ed against rais­ing the debt ceil­ing, he took the floor to argue against it. He has late­ly changed his mind. He could sure­ly change it again, par­tic­u­lar­ly if threat­en­ing default would pro­vide him a new tool to bend Con­gress to his will.

The Pres­i­dent and Con­gress only days ago reached agree­ment that avert­ed a fis­cal cri­sis. That agree­ment was far from per­fect. Tens of mil­lions of work­ing Amer­i­cans are find­ing that their own tax­es have increased, even though they make far less than $400,000. But at least it was an agree­ment that, in addi­tion to pleas­ing the Pres­i­dent and anger­ing Repub­li­cans, raised no larg­er con­sti­tu­tion­al con­cerns. Wash­ing­ton faces three more fis­cal crises in the com­ing weeks – the imple­men­ta­tion of auto­mat­ic spend­ing cuts on March 1, the expi­ra­tion of gov­ern­ment fund­ing on March 27, and the loom­ing prospect of default. Con­gress and the Pres­i­dent should agree on a way to resolve these fis­cal crises, not esca­late them into con­sti­tu­tion­al ones.