{"id":164,"date":"2013-01-12T18:32:06","date_gmt":"2013-01-12T23:32:06","guid":{"rendered":"http:\/\/www.dougsbriefcase.com\/blog\/?p=164"},"modified":"2013-02-21T11:52:34","modified_gmt":"2013-02-21T16:52:34","slug":"debt-ceiling-without-legislation","status":"publish","type":"post","link":"https:\/\/www.dougsbriefcase.com\/blog\/debt-ceiling-without-legislation\/","title":{"rendered":"Debt Ceiling without Legislation"},"content":{"rendered":"

Sen\u00adate Demo\u00adc\u00adra\u00adt\u00adic lead\u00aders yes\u00adter\u00adday called on the Pres\u00adi\u00addent to \u201ctake any law\u00adful steps\u201d to increase the government\u2019s bor\u00adrow\u00ading author\u00adi\u00adty \u201cwith\u00adout Con\u00adgres\u00adsion\u00adal approval, if nec\u00ades\u00adsary.\u201d The let\u00adter<\/a>,<\/span> signed by Sen\u00ada\u00adtors Reid, Durbin, Schumer and Mur\u00adray, does not spell out what those \u201claw\u00adful steps\u201d might be, but instead sim\u00adply asserts that the Pres\u00adi\u00addent needn\u2019t obtain Con\u00adgres\u00adsion\u00adal autho\u00adriza\u00adtion to incur unlim\u00adit\u00aded debt. He can act unilaterally.<\/p>\n

That is, so far as I know, a nov\u00adel asser\u00adtion and one that is poten\u00adtial\u00adly quite dan\u00adger\u00adous. It also has scant con\u00adsti\u00adtu\u00adtion\u00adal backing.<\/p>\n

Arti\u00adcle I, Sec\u00adtion 8<\/a> explic\u00adit\u00adly grants Con\u00adgress, not the President,<\/p>\n

\u201c<\/span>\u2026pow\u00ader To lay and col\u00adlect Tax\u00ades, Duties, Imposts and Excis\u00ades, to pay the Debts and pro\u00advide for the com\u00admon Defence and gen\u00ader\u00adal Wel\u00adfare of the Unit\u00aded States.\u201d<\/p>\n

 <\/p><\/blockquote>\n

The con\u00adclu\u00adsion of this sec\u00adtion under\u00adscores this author\u00adi\u00adty, grant\u00adi\u00adng Con\u00adgress power<\/p>\n

\u201c<\/span>to make all Laws which shall be nec\u00ades\u00adsary and prop\u00ader for car\u00adry\u00ading into Exe\u00adcu\u00adtion the fore\u00adgo\u00ading Powers.\u201d<\/p><\/blockquote>\n

Thus, author\u00adi\u00adty with respect to debt is a Con\u00adgres\u00adsion\u00adal, not a Pres\u00adi\u00adden\u00adtial, prerogative.<\/p>\n

Some have recent\u00adly sug\u00adgest\u00aded that the Four\u00adteenth Amend\u00adment, rat\u00adi\u00adfied short\u00adly after the Civ\u00adil War, con\u00adferred this pow\u00ader to pay debts on the Pres\u00adi\u00addent, act\u00ading inde\u00adpen\u00addent\u00adly of Con\u00adgress. Sec\u00adtion 4<\/a> of that amend\u00adment states that<\/p>\n

\u201c<\/span>the valid\u00adi\u00adty of the pub\u00adlic debt of the Unit\u00aded States, autho\u00adrized by law, includ\u00ading debts incurred for pay\u00adment of pen\u00adsions and boun\u00adties for ser\u00advices in sup\u00adpress\u00ading insur\u00adrec\u00adtion or rebel\u00adlion, shall not be questioned.\u201d<\/p><\/blockquote>\n

In an age where the fed\u00ader\u00adal gov\u00adern\u00adment is con\u00adstrained con\u00adstant\u00adly to take on addi\u00adtion\u00adal debt to pay inter\u00adest on debt already incurred, a lim\u00adit on bor\u00adrow\u00ading rais\u00ades the pos\u00adsi\u00adbil\u00adi\u00adty of default. Hence, the argu\u00adment goes, the Pres\u00adi\u00addent can incur new debt in order to pre\u00advent the \u201cvalid\u00adi\u00adty\u201d of exist\u00ading debt from being \u201cques\u00adtioned.\u201d<\/p>\n

The most obvi\u00adous flaw in this argu\u00adment is that the Four\u00adteenth Amend\u00adment says that debt \u201cautho\u00adrized by law \u2026 shall not be ques\u00adtioned.\u201d In 2011, Con\u00adgress enact\u00aded and the Pres\u00adi\u00addent signed into law the Bud\u00adget Con\u00adtrol Act<\/a> . Sec\u00adtion 301 of that Act autho\u00adrized the fed\u00ader\u00adal gov\u00adern\u00adment to bor\u00adrow an addi\u00adtion\u00adal $2.1 tril\u00adlion. That is the extent of fed\u00ader\u00adal debt that has been \u201cautho\u00adrized by law.\u201d The Pres\u00adi\u00addent lacks legal author\u00adi\u00adty to bor\u00adrow more.<\/p>\n

The US<\/span> Gov\u00adern\u00adment, accord\u00ading to out\u00adgo\u00ading Trea\u00adsury Sec\u00adre\u00adtary Tim\u00ado\u00adthy Gei\u00adth\u00adn\u00ader, reached that ceil\u00ading on Decem\u00adber 31. He is jug\u00adgling the books now to keep the debt with\u00adin that lim\u00adit. By his esti\u00admates, that jug\u00adgling can suc\u00adceed only for anoth\u00ader six weeks or so, at which point Trea\u00adsury will have either to bor\u00adrow addi\u00adtion\u00adal sums or default on its debt.<\/p>\n

The Sen\u00ada\u00adtors\u2019 let\u00adter argues that the Pres\u00adi\u00addent can bor\u00adrow more, with\u00adout wait\u00ading for Con\u00adgress to pass anoth\u00ader law. That would be unprece\u00addent\u00aded, poten\u00adtial\u00adly coun\u00adter\u00adpro\u00adduc\u00adtive and, in my view, con\u00adsti\u00adtu\u00adtion\u00adal\u00adly dubious.<\/p>\n

My view is, of course, irrel\u00ade\u00advant. Were the Pres\u00adi\u00addent to heed the advice of Sen\u00adate lead\u00aders, the valid\u00adi\u00adty of that new debt would be sub\u00adject to judi\u00adcial chal\u00adlenge. How the courts would rule is anyone\u2019s guess. But how might investors view U.S. debt as the legal chal\u00adlenges wend\u00aded their way through the courts? Were five Supreme Court jus\u00adtices to agree that the Pres\u00adi\u00addent had over\u00adstepped the Constitution\u2019s bounds, the U.S. gov\u00adern\u00adment would imme\u00addi\u00adate\u00adly default and the Trea\u00adsury bonds investors had pur\u00adchased would become worth\u00adless. Aware of that pos\u00adsi\u00adbil\u00adi\u00adty, wouldn\u2019t investors avoid Trea\u00adsury debt or insist on high\u00ader rates of inter\u00adest? How would that affect the Fed\u00ader\u00adal Reserve\u2019s bal\u00adance sheet and pen\u00adsion funds that rely on Trea\u00adsury bonds to remain sol\u00advent? How would rat\u00adings agen\u00adcies grade con\u00adsti\u00adtu\u00adtion\u00adal\u00adly sus\u00adpect debt?<\/p>\n

Uni\u00adlat\u00ader\u00adal action by the Pres\u00adi\u00addent, far from eas\u00ading fears of default, could actu\u00adal\u00adly fuel them, pro\u00advok\u00ading the very \u201ceco\u00adnom\u00adic cat\u00ada\u00adstro\u00adphe\u201d that the Sen\u00ada\u00adtors hope to avoid.<\/p>\n

Con\u00adcen\u00adtrat\u00ading fed\u00ader\u00adal bor\u00adrow\u00ading author\u00adi\u00adty in a sin\u00adgle indi\u00advid\u00adual would cre\u00adate oth\u00ader prob\u00adlems. What if a Pres\u00adi\u00addent decid\u00aded that it would be in his or her inter\u00adest not to increase the debt ceil\u00ading? That may seem unlike\u00adly now but until recent\u00adly it seemed unlike\u00adly that a Pres\u00adi\u00addent would claim author\u00adi\u00adty to raise the debt ceil\u00ading with\u00adout leg\u00adis\u00adla\u00adtion. That has now become the offi\u00adcial posi\u00adtion of the Con\u00adgres\u00adsion\u00adal wing of the President\u2019s party.<\/p>\n

It is also worth not\u00ading that Pres\u00adi\u00addent Oba\u00adma him\u00adself only recent\u00adly came to believe that autho\u00adriz\u00ading more bor\u00adrow\u00ading was a good a nec\u00ades\u00adsary thing. As a Sen\u00ada\u00adtor, he not only vot\u00aded against rais\u00ading the debt ceil\u00ading, he took the floor to argue against it. He has late\u00adly changed his mind. He could sure\u00adly change it again, par\u00adtic\u00adu\u00adlar\u00adly if threat\u00aden\u00ading default would pro\u00advide him a new tool to bend Con\u00adgress to his will.<\/p>\n

The Pres\u00adi\u00addent and Con\u00adgress only days ago reached agree\u00adment that avert\u00aded a fis\u00adcal cri\u00adsis. That agree\u00adment was far from per\u00adfect. Tens of mil\u00adlions of work\u00ading Amer\u00adi\u00adcans are find\u00ading that their own tax\u00ades have increased, even though they make far less than $400,000. But at least it was an agree\u00adment that, in addi\u00adtion to pleas\u00ading the Pres\u00adi\u00addent and anger\u00ading Repub\u00adli\u00adcans, raised no larg\u00ader con\u00adsti\u00adtu\u00adtion\u00adal con\u00adcerns. Wash\u00ading\u00adton faces three more fis\u00adcal crises in the com\u00ading weeks \u2013 the imple\u00admen\u00adta\u00adtion of auto\u00admat\u00adic spend\u00ading cuts on March 1, the expi\u00adra\u00adtion of gov\u00adern\u00adment fund\u00ading on March 27, and the loom\u00ading prospect of default. Con\u00adgress and the Pres\u00adi\u00addent should agree on a way to resolve these fis\u00adcal crises, not esca\u00adlate them into con\u00adsti\u00adtu\u00adtion\u00adal ones.<\/p>\n","protected":false},"excerpt":{"rendered":"

Sen\u00adate Demo\u00adc\u00adra\u00adt\u00adic lead\u00aders yes\u00adter\u00adday called on the Pres\u00adi\u00addent to \u201ctake any law\u00adful steps\u201d to increase the government\u2019s bor\u00adrow\u00ading author\u00adi\u00adty \u201cwith\u00adout Con\u00adgres\u00adsion\u00adal approval, if nec\u00ades\u00adsary.\u201d The let\u00adter, signed by Sen\u00ada\u00adtors Reid, Durbin, Schumer and Mur\u00adray, does not spell out what those \u2026 Con\u00adtin\u00adue read\u00ading \u2192<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":184,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","wp_typography_post_enhancements_disabled":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"nfd_image_url":"","nfd_onboarding_generated":"","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[12],"tags":[],"class_list":["post-164","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-debt-ceiling"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t