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He should make this clear even if he signs a temporary increase. I disagree with the administration’s position that the President can not just ignore the debt ceiling if Congress refuses to raise it. Despite what some lawyers are arguing, current federal appropriations law makes it clear that a Presidential decision to exceed the debt ceiling follows well established law and will NOT raise a significant constitutional issue. The real constitutional crisis will occur if he leads the government into default. Since it is clear that the Tea Party members of Congress will try to impeach President Obama,  (see Jed Lewison here) no matter what actions he takes, he should take the action that produces the greater good and ignore the ceiling if it is not increased. Otherwise, he jeopardizes our fragile recovery and the 2014 elections for Democrats.

For more background on the issue, the Abbreviated Pundit Roundup for last Friday included another excellent article by Paul Krugman on the consequences of a debt ceiling impasse. In it, he references a WaPo article summarizing a law journal article which concludes that although it would raise serious constitutional issues, the President should ignore the debt ceiling if the ceiling is exceeded. The WaPo article can be found here. The law journal article itself can be found here.  

While I agree the President can ignore the debt ceiling if Congress refuses to raise it, my concern is the way in which the legal and constitutional analysis of Presidential authority has been framed. In my experience, there is a simpler way to frame the issues that is more consistent with US law.  The debt ceiling may very well raise legitimate 14th Amendment issues but I have yet to see any convincing analysis of them.  For example, what is the status of a law that is currently constitutionally valid, but by its own terms, will violate the 14th Amendment if Congress does not act?  Had the Administration done a better job of analyzing the legal and constitutional issues involved, they might have decided to fight the inclusion of the sequester in the 2011 debt ceiling increase and the economy would be in much better shape.  We might also have a Democratic Congress, notwithstanding the gerrymandering.  

If time permits me to write as many diaries as I would like, you will find this a recurring theme, the deterioration in the quality of legal reasoning by both the right and the left.  That is the true constitutional crisis, the failure of the courts and the members of the bar to adequately serve their critical role in assuring the success of our Constitution. This failure parallels the problems caused by the so called "serious people" that can be found inside Washington.

The short term increase currently being considered presents the ideal opportunity to make this change to the administration’s position, which will increase the President’s leverage in future budget negotiations.  My argument is below the orange scroll.

The WaPo article states:

If Congress failed to lift the debt ceiling by mid-October, President Obama would be caught in a serious constitutional dilemma.  
Wikipedia states something similar in its article on the debt ceiling.

I strongly disagree, although on balance, that position is more persuasivel than the administration position.  However, both reduce the political options that the President has in trying to avoid the crisis and causes him to spend unnecessary political capital to deal with the matter (such as meeting yesterday with Congressional leaders despite saying he would not negotiate over the debt limit).  More importantly, because of the ongoing media hyperbole and the failure of the Administration to address this, if he is forced to take action to avoid default, the financial markets will be impacted more than they would be had the administration taken steps to address market concerns about the potential for default if Congress did not act.  Undoubtedly, this is what some on Wall Street are hoping for in order to profit from the resulting turmoil, such as another rapid increase in mortgage interest rates like the one earlier this year.  

As I stated above, my main objection to the law journal article is not the authors’ conclusion but their failure to look at less politically sensitive arguments that lead to the same conclusion.  While I agree that there are some constitutional issues involved, the primary issue is one of statutory interpretation, not constitutional law or usurpation of powers by the President.  Laws get ignored every day, not because of some diabolical plot, but because someone legitimately determines that some other law has precedence.

Given the complexity of Federal statutes, there are always conflicts between various statutory provisions, sometimes within the same statute. When I served as an attorney in the US government, I frequently was called upon to prepare opinions to address conflicts in statutory provisions governing the agency’s functions.  Various Supreme Court decisions have developed well established rules for how to interpret the laws and to resolve these conflicts. No one viewed these opinions as anything other than a routine legal matter, despite the fact that these opinions often led the agency to violate one Congressional mandate in order to comply with another one.

The debt ceiling conflicts with myriad other constitutional provisions, statutory provisions and court decisions governing the appropriations process. While the stakes may be much higher, I see the same rules of statutory interpretation applying to the breach of the debt ceiling.  There is no need to treat this as having the significance of the legal issues that President Lincoln faced or other constitutional issues involving the growth of Presidential authority.  

The basic conflict in question is that unless the debt ceiling is raised, its limit will soon conflict with requirements under various other appropriations laws mandating that the President spend money appropriated by Congress.  Three key principles of statutory interpretation apply here. First, if at all possible, interpret each statutory provision in a way that reconciles the conflicts and gives meaning to both. Second, assume (perhaps unrealistically) that Congress was fully cognizant of all other existing law in enacting the later provisions. Finally, if the provisions cannot be reconciled, determine their precedence based on which of the provisions was enacted last and which is the more “specific.” Generally, but not always, the rules of statutory interpretation hold that if the competing provisions can not be reconciled, the last takes precedence over the first and the more specific language takes precedence over the more general language. As discussed below, the appropriations statutes clearly take precedence over the debt ceiling law and the President would be acting in accordance with well established principles of law by ignoring the debt ceiling.

Looking at the first principle of statutory interpretation, clearly if the debt ceiling is exceeded, the various appropriations statutes are in conflict with the debt ceiling without any rational way to reconcile them. It is therefore necessary to determine which takes precedent. Without going into too much detail, the stronger argument is that the appropriations statutes are both later in time and the more specific. Therefore, they take precedence over the debt ceiling and must be complied with, even if it means that the debt ceiling is breached. The key points here are the Nixon administration impoundments, the Impoundment Control Act and the 1995 SCOTUS ruling on the line item veto. The Act and the SCOTUS decision make the expenditure of duly appropriated funds by the President mandatory. The debt ceiling law was first enacted in 1917.  The legal mandates on the President to spend all duly appropriated funds occurred after that and therefore take precedence over the debt ceiling. By the same token, the appropriations laws are the more detailed laws and so here again take precedence.  

The President had a duty to notify Congress of the potential conflict and did so. It was then up to Congress to rectify the potential conflict.  Once it became clear that Congress was considering allowing the conflict to occur by not raising the debt ceiling, the President should have informed Congress that should a conflict arise because of the failure of Congress to act, then he would have no choice under the Supreme Court ruling but continue to expend duly authorized appropriations.

There are two other provisions of law which I believe to be relevant. The first is what appropriations law says about the President’s authority to spend money in the absence of an appropriation and the second is the 14th Amendment provision discussed in the law journal article.    

It is well established and accepted law that the President can employ personal services in the absence of an appropriation to avoid the suspension of government functions that would “imminently threaten the safety of human life or the protection of property.”  A relevant Justice Department opinion on this authority can be found here.  

While arguably not directly on point, this is an important factor worth considering. I would argue that Congress, in granting the President this extraordinary emergency authority, indicated its intent that any Presidential actions to respond these emergency circumstances takes priority over even its authority to control the budget. This includes the debt ceiling. Note that this authority grants the power to expend funds to protect not only human life but property of the United States. One could make all kinds of arguments about what is property, but as a practical matter, there is no more valuable US government asset than its ability to borrow money and issue debt instruments. In fact, in terms of its importance to the world economy, there is probably no other single asset in the world that comes close to its value. Failure to protect this asset will cost the US taxpayer trillions in the long run. This would be a violation of the intent of the Anti-Deficiency Act which was enacted to prevent the President to taking actions that would have the effect of coercing Congress to pass additional appropriations.

The final issue is the 14th Amendment which provides in pertinent part:

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.

The law journal article discusses the one SCOTUS decision that addressed the meaning of this provision in a 1935 case concerning changes to the terms of Federal debt (that was decided on other grounds). The court said that:
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.
Thus we have a SCOTUS decision directly on point that says the President cannot refuse to spend duly authorized appropriations and a SCOTUS decision that went out of its way to make clear that the 14th amendment prohibits anything that threatens the integrity of the public debt. It seems to me to be very clear that the debt ceiling has pretty much been rendered moot by these two decisions and must be ignored if Congress does not raise the ceiling.

The President should have obtained an opinion from the Department of Justice supporitng his authority to ignore the debt ceiling in order to spend duly appropriated funds and issued an Executive Order to the Secretary of the Treasury that, should the debt ceiling in 31 USC 3101 be exceeded, the Secretary is authorized and directed to continue to issue such debt instruments as necessary to meet all existing debt obligations, duly authorized appropriation expenditures and any measures necessary to reverse any previous extraordinary measures taken to avoid a breach.  

If you hung in there this long, thanks for reading. Unfortunately, it takes me a lot longer to write a short article than a long one.

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Comment Preferences

  •  Tip Jar (12+ / 0-)

    Dedicated to recapturing the American Dream by changing the framework of the debate to focus on: Growth, Efficiency, Community, Sustainability and Economic Fairness. Improve constantly and drive out fear - Dr. W. Edwards Deming

    by Paradigm Change on Tue Oct 15, 2013 at 01:30:43 PM PDT

  •  As soon as he does this... (14+ / 0-)

    The GOP is left off the hook as they let him do this, just so they can impeach him later. So no, he should not say that he can use the 14th amendment until absolutely necessary, and it's not even clear that he'll be able to invoke it if we go over the cliff.

    And even if he does when push comes to shove, we're still screwed... markets will be massively disrupted and new treasury bonds will have to be heavily discounted. Our credit rating will suffer even if he says he's ignoring the debt ceiling, because there will be uncertainty in the market.

  •  What it really (5+ / 0-)
    Recommended by:
    ZedMont, WisVoter, salmo, Mr Robert, viral

    comes down to is this: all this stuff only works because we agree to it. If President Obama declared that he was going to pay the bills regardless of the debt ceiling, and open the government regardless of what the House says, for the good of America, I doubt the Supreme Court would try and stop him. And even if it did, he could ignore them, after all, that's what separate but equal means. I believe he is going to have to make a choice, and soon, whether or not he is going to allow the economy to go down the toilet because of the recalcitrance of the teabaggers. The House is not going to do anything in the next week or two, they really do want to see what will happen if they don't raise the debt limit. President Obama, what will you do?

  •  I agree. Here. (4+ / 0-)
    Recommended by:
    WisVoter, unruli, Mr Robert, buffie

    The thing that would guarantee a Democratic (1+ / 0-)
    House in 2014:

    President Obama issues an executive order directing the Treasury to pay all debts of the United States in accordance with section 4 of the 14th amendment.

    He will be impeached, and hopefully the trial goes to the election.  Can you imagine that?  The president saves the country from a band of pirates, and the pirates have to stand up in the Congress every day and advocate for the idea that he should have just let the country go to hell.  That will ensure that the disrepute in which they find themselves presently mired goes on for the duration.

    Of course the president will never be convicted and the nation will be grateful.  It will go down as one of the most courageous and selfless actions of any president in history.

    Once they have impeached him, the Republicans will file suit in the U.S. Supreme Court.  Neither John Roberts nor Anthony Kennedy will vote to uphold a "law" that violates the Constitution and destroys the country.

    It's not in his nature to do things this way, but that's what will happen if he does.

    Blue, blue, my world is blue... http://www.youtube.com/...

    by ZedMont on Tue Oct 15, 2013 at 01:00:41 PM PDT

    [ Reply to This ]

    Blue, blue, my world is blue... http://www.youtube.com/watch?v=h6cPXvTqasg

    by ZedMont on Tue Oct 15, 2013 at 01:44:32 PM PDT

    •  Well, I agreed with you before I finished reading. (2+ / 0-)
      Recommended by:
      WisVoter, buffie

      I agree with your basic premise, but I also agree with comments below that he can't show his hand, he has to do it as a last resort AND after the debt limit law has actually violated the 14th amendment.

      Blue, blue, my world is blue... http://www.youtube.com/watch?v=h6cPXvTqasg

      by ZedMont on Tue Oct 15, 2013 at 01:54:54 PM PDT

      [ Parent ]

    •  Hendrik Hertzberg makes this point in The NYer (5+ / 0-)
      Recommended by:
      hester, WisVoter, salmo, unruli, buffie

      In a piece entitled "Impeach Obama":
      http://www.newyorker.com/...

      Hertzberg was a Presidential speechwriter in the Carter administration.  

      His piece concludes
      'It is widely said that the Obama Administration has “ruled out” recourse to the fourth section of the Fourteenth Amendment. Not so. In 2011, when the Republicans test-drove their debt-ceiling gambit, Timothy Geithner, then the Secretary of the Treasury, read the section to a breakfast gathering of reporters. A squall ensued; the President calmed it, saying that “lawyers” had advised him that the Fourteenth was not a “winning argument.” Similarly cagey equivocations have been forthcoming this time around. Obama has been careful to keep the option on life support. At his news conference last Tuesday, he noted that there had been some discussion about his powers, under the amendment, to “go ahead and ignore the debt-ceiling law.”

      'He continued: "Setting aside the legal analysis, what matters is that if you start having a situation in which there’s legal controversy about the U.S. Treasury’s authority to issue debt, the damage will have been done even if that were constitutional, because people wouldn’t be sure. . . . What matters is: what do the people who are buying Treasury bills think?

      'What also matters, of course, is: compared with what? In the end, Obama could have no honorable choice but to invoke the Fourteenth. There is little doubt that he would prevail. The Supreme Court would be unlikely even to consider the matter, since no one would have standing to bring a successful suit: when the government pays its bills, who is damaged? The House Republicans might draw up articles of impeachment, adopt them, and send them to the Senate, where the probability of a conviction would be zero. This would not be a replay of Bill Clinton and the intern. President Clinton was not remotely guilty of high crimes and misdemeanors, but he was guilty of something, and that something was sordid. Yet impeachment was what put Clinton on a glide path to his present pinnacle as a wildly popular statesman. President Obama would be guilty only of saving the nation’s economy, and the world’s.'

      There's no such thing as a free market!

      by Albanius on Tue Oct 15, 2013 at 01:57:10 PM PDT

      [ Parent ]

      •  Nice fantasy (0+ / 0-)

        but if you think Obama would willingly subject this country and himself to impeachment to save John Boehner's drunken ass, you're not thinking too clearly.

        Still enjoying my stimulus package.

        by Kevvboy on Tue Oct 15, 2013 at 03:13:19 PM PDT

        [ Parent ]

        •  Impeachment... (1+ / 0-)
          Recommended by:
          Albanius

          for the high crime of saving the US and World economy would hasten the implosion of the Republican Party. PBO would never be convicted and I think he would wear the whole process as a badge of honor.

          "Well Clarice, have the lambs stopped screaming?"

          by buffie on Tue Oct 15, 2013 at 05:27:56 PM PDT

          [ Parent ]

      •  I am not certain that I agree that the 14th is . . (0+ / 0-)

        a losing argument but that's the point of this diary, do not to lead with it, there is a better legal theory.  Strategically it is a high risk approach because of the lack of precedence on point.  I can cite numerous precedents in support of my legal theory.  Politically, the press conference you cite certainly shows it is a losing argument.  But if I was writing the government's brief, I would certainly throw it in.  

        Dedicated to recapturing the American Dream by changing the framework of the debate to focus on: Growth, Efficiency, Community, Sustainability and Economic Fairness. Improve constantly and drive out fear - Dr. W. Edwards Deming

        by Paradigm Change on Tue Oct 15, 2013 at 05:48:15 PM PDT

        [ Parent ]

  •  One more point (3+ / 0-)
    Recommended by:
    ZedMont, salmo, buffie

    The 14th amendment is transparent, and unambiguous. It gives the President the right to spend money to pay bills, no matter what the House says.

  •  If SCOTUS takes this up... (6+ / 0-)
    Recommended by:
    Samer, ZedMont, WisVoter, salmo, Mr Robert, buffie

    ... and they can do so rapidly (see Bush v. Gore) look for Roberts to come down on the side of the president.   1) He says he cares about how his court is perceived. 2) He tends to side with business interests over partisan interests (see ACA decision).  The most stable result is permanently ending the ability to take the economy hostage with the debt ceiling.  Roberts will do his best to make the world safe for the plutocracy.

  •  PBO's press conference last week (9+ / 0-)

    It certainly seemed that the administration has a contingency plan.  He never said he had no options all he said are no options are good.  

    I think he doesn't want to show his hand for a few reasons:

    1.  It could initiate a legal challenge which could thwart the rescue.
    2.  It could trigger another debt downgrade (actually surprised this hasn't happened already)
    3.  It could send the message to the bond market that there is no chance for congressional action (one could argue this has already occurred)

  •  Obama should make clear that... (7+ / 0-)

    there's more than enough room in the FEMA camps for every GOP member of Congress.

  •  It seems that forcing Obama into a Constitutional (1+ / 0-)
    Recommended by:
    WisVoter

    ...crisis - whether he submits to a Congressionally caused default by following debt limit restrictions or ignores the debt limit law - either way, a manufactured "crisis" requiring a SCOTUS decision, even if lost, is the goal, the prize, the New Confederacy Republicans are after.

  •  While I mostly Agree with the OP. (1+ / 0-)
    Recommended by:
    WisVoter

    You missed an option that would have to be exhausted first.
    Congress directs the President to spend an amount of money over the course of a year, not each day or each month.
    If the debt ceiling is reached, the President can, without violating any law, reschedule payments to later in the year.
    I think an action that does not violate a law would be the first recourse, and deciding which law to follow would come later, correct?
    But then you see a wonderful thing, the President, not the Congress, is the Executive Branch, and so decides which payments to prioritize.
    Imagine Obama saying "Because of the Debt Ceiling, I have to prioritize payments.  First we will pay interest on the debt, of course.  Then Social Security, Medicare, food for children, and other services that the American people rely on for survival.  Then payments to federal employees and the military for doing their job.  Payments to corporations, such as payments for military appropriations, or farm subsidies, will of course be paid last, if money is available."
    Betcha the R's would pass a clean CR before the speech was over.

    The President has the power to delay funding of (for instance) military contracts until after the debt ceiling is lifted

    by computant on Tue Oct 15, 2013 at 02:03:00 PM PDT

  •  As I understand the President's position (5+ / 0-)

    it's not that he definitively does not have the authority to do this, but that there would be uncertainty and disruption due to the ensuing (doubtless extended) litigation of the issue, impeachment hearings, etc., which would also lead to the government having to pay a stiff premium to lenders - all of which could be as bad as defaulting would be.

    "That capability at any time could be turned around on the American people and no American would have any privacy left, such is the capability to monitor everything ... There would be no place to hide." - Senator Frank Church

    by jrooth on Tue Oct 15, 2013 at 02:07:55 PM PDT

    •  This is it exactly (1+ / 0-)
      Recommended by:
      WisVoter

      He is worried that markets will teeter totter just as bad as a default, because nobody will know if the bonds they're buying are any good.

      The trillion dollar coin and premium bonds are real options, however. I don't know why he is not considering them.

      Rick Perry - the greatest scientist since Galileo!

      by Bobs Telecaster on Tue Oct 15, 2013 at 02:22:45 PM PDT

      [ Parent ]

    •  No, not exactly (2+ / 0-)
      Recommended by:
      misslegalbeagle, erush1345

      There is no legal authority for the President to ignore the debt ceiling and for the Treasury to continue to issue securities. The power to borrow on the credit of the U.S. is clearly given to Congress in Article 1 of the Constitution. They have delegated that authority via the debt ceiling statute to the Treasury, but only up to the specified dollar amounts. Past those amounts, there is no delegated authority to issue securities.

      If Treasury continues to issue securities past the authorized amount, those securities would not be legally valid obligations to pay. Who would buy them?

      It's harder for laypeople to understand the legal argument, but much easier to understand the practical argument that no one would want to invest in a security that might not be good.

      •  The legal authority is exactly what's being argued (0+ / 0-)

        by others, the diarist included.  I'm not at all sure it's so clear that your analysis is right (and at least on its face it looks to me like the coin seigniorage idea actually is statutorily permitted).  I'm also not sure you're wrong.  I've seen people with a lot of experience and knowledge of the law argue both sides.

        What I think I have heard the President say is that we don't even need to resolve those legal debates -  the mere fact that any debt issued in those circumstances would be legally questionable for some considerable period of time is enough on its own to make these bad ideas.

        I think that's a pretty persuasive argument.

        "That capability at any time could be turned around on the American people and no American would have any privacy left, such is the capability to monitor everything ... There would be no place to hide." - Senator Frank Church

        by jrooth on Wed Oct 16, 2013 at 05:41:31 AM PDT

        [ Parent ]

  •  The 14th amendment enjoins congress (3+ / 0-)
    Recommended by:
    johnny wurster, elmo, erush1345

    it does not empower the President (though in this case, I'm sure we all wish it did.)

    Rick Perry - the greatest scientist since Galileo!

    by Bobs Telecaster on Tue Oct 15, 2013 at 02:10:35 PM PDT

  •  He should just do it if need be (1+ / 0-)
    Recommended by:
    WisVoter

    Premium bonds or temporary asset transfers to the fed are the ways he can go.

    "When dealing with terrorism, civil and human rights are not applicable." Egyptian military spokesman.

    by Paleo on Tue Oct 15, 2013 at 02:25:08 PM PDT

  •  Nope. (0+ / 0-)

    Ain't gonna happen and shouldn't happen.

    This would be 1/ an abrogation of Congress' duty to pay for the national debt they ran up, and 2/ an open door to impeachment of Obama, which is the end game for many of these right wing hard core folk.

    Still enjoying my stimulus package.

    by Kevvboy on Tue Oct 15, 2013 at 03:10:30 PM PDT

  •  He does that and (0+ / 0-)

    they will scream with glee as they introduce articles of impeachment.
    That train is never late

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