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14-4: Any Questions?

posted by Stephen Lubben

Anna, Adam, and myself have a piece up on Alphaville about section four of the 14th Amendment, which is all the rage these days.


"The portion of the clause directed at the judiciary requires the courts to take debt validity as fact."

No, that's true only of debt "authorized by law." Debt issued in contravention of the debt ceiling would not be authorized by law--quite the opposite. The function of the public debt clause was to block arguments to the effect that a debt issuance was ultra vires on constitutional grounds (a type of argument that was live in the muni repudiations at the time and which one might have worried would have legs in some quarters w/r/t civil war debts: e.g., where does the constitution authorize bounties?). In other words, the clause ratified the constitutionality of congressionally authorized debt issuance.

For the 14A to protect the validity of debt issued in contravention of the statutory debt ceiling, you need some reason *outside the 14A itself* to think the debt ceiling is unconstitutional. If the ceiling were unconstitutional, then maybe debt issued in contravention of it would nevertheless be "authorized by law." I emphasize *maybe*. But what in the Constitution prevents Congress from declining to have treasury issue bonds?

The argument is indeed a structural one, outside 14-4 until the last step.

Vince is right to note that there's still the "authorized by law" phrase. That's something we didn't address in the FT piece (but don't worry, it's in the full article).

The quick response is this: the debt limit is unconstitutional because Congress cannot pass laws that curtail its own Article I powers.

Nothing in the Constitution expressly prohibits a debt limit, but the existing debt limit is unmoored to anything related to payment capacity or debt management. In the current circumstances, the effect of the debt limit is to undercut both Congress's Article I power to borrow money (an express power) and its power to enter into contracts (an implied power).

Failure to raise the debt limit cuts off the means by which the US government and everyone else expects the US government to pay for a set of commitments--not just borrowed money, which is presumed to be refinanced with new borrowing, but Social Security, pensions, etc., at a minimum. The lengthy record of raising debt limits to enable "regular and predictable" borrowing to pay for all sorts of things beyond refinancing the debt, gives rise to a reasonable expectation that a substantial portion of US government commitments would be paid from the proceeds of such regular and predictable borrowing.

Our support for this idea is a string of cases, including the Perry plurality, Winstar, Lynch, that for one or both of the following propositions: "Congress cannot just ignore contracts" and/or "Congress cannot use one of its powers to make another power a nothing." Applying this case law to the debt limit would suggest that Congress cannot arbitrarily legislate away the means to pay for the commitments it just legislated months ago. (Perhaps it could if it actually related to payment capacity, but that's not our situation).

We recognize that we're going to get some pushback on the idea of reading the borrowing authorization into appropriations, but an appropriation without a corresponding tax bill or some other basis for assuming increased revenue points to only one way of paying, namely borrowing, which is how things have been regularly done for over a century.

Now, there's no getting around the fact that in order to take advantage of "shall not be questioned," a court would first have to rule on the "authorized by law" issue, and that is what makes this a bit of a Cadmean, if not a Phyrric victory.

I think I understand. The idea is that 14-4 is relevant not to the validity of the debt ceiling but only to the validity of hypothetical new debt issued in contravention of the ceiling?

I'll confess that the structural argument strikes me as dubious. Among other things, the debt ceiling doesn't abrogate an Article I power, because (happily!) Congress is free to repeal the ceiling any time it wishes to borrow or contract on behalf of the US. But I'll leave it there, because my aim was mostly to understand how you're using 14-4.

i wasn't able to read the article because it is behind a pay wall, but that's never stopped me from commenting before

The facile analogy used by so called debt hawks is to compare the US government to a household. If the family can't afford to pay debt that it has already incurred, the debt ceiling is like a creditor who won't extend any more credit, and the family can't write a check that will bounce. So the alternative is what? I suppose that one alternative is to sell the silverware, the TV, furniture, etc.

Can the executive unilaterally decide to sell off the assets of the United States, without any authorization from Congress? I don't know. The flip side is, does the executive need prior approval from Congress to buy something - such as the Louisiana purchase, or Seward's folly? Maybe there's a clear answer sato both of the questions that I am not aware of because I wasn't paying attention in my high school American History class, and it wasn't taught in law school because it's not going to be on the bar exam and it's not an intellectually challenging question.

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