(from The Wall Street Journal, May 12, 2011)

Now’s the time for Congress to reclaim its responsibility for issuing new U.S. debt.

By DAVID B. RIVKIN JR. AND LEE CASEY

Congressional Republicans debating how to use the government’s debt ceiling to control runaway federal spending should examine one of the Constitution’s relatively obscure clauses: Section Four of the 14th Amendment. This provision, which forbids any default on outstanding federal debt, appears to limit the leverage Congress can exercise in this increasingly frequent showdown with the president. In fact, Section Four can become a powerful hammer for the budget hawks if Congress simply reclaims its constitutional pre-eminence in the borrowing process.

The Constitution’s 14th Amendment was adopted shortly after the Civil War. In part, its purpose was to ensure that the statutory citizenship and legal rights granted to the newly freed slaves were not denied by the states, or repealed by a later Congress once the Southern states were fully represented again.

But that wasn’t the only concern. Vast federal debts had been incurred to fight that war, and Congress also acted to ensure that these obligations could not be disavowed in the future. Thus, in addition to guaranteeing rights to citizenship, due process of law, and equal protection, the 14th Amendment forbids dishonoring “[t]he validity of the public debt of the United States, authorized by law.”

As a result, unlike most other sovereign states, the U.S. constitutionally cannot default on its financial obligations. In particular, it must continue to make payments, interest and principal, on its bonds, effectively requiring Congress to provide sufficient authority for that purpose. This fact, which should be highlighted at every opportunity, makes the U.S. a better credit risk than it may otherwise seem—especially since U.S. Treasury obligations, if it came to it, could be enforced in the courts by their owners.

Consistent with its obligations under Section Four, Congress should promptly increase the debt ceiling, but with one key caveat: The increase can be used only for borrowing to service existing obligations. By anchoring this action in a specific constitutional obligation, Congress would make it difficult, if not impossible, for the Obama administration to oppose this resolution of the debt-ceiling battle. At the same time, Congress should reclaim immediate control of the issuance of all other new debt obligations.

The Constitution gives Congress power over the national purse, permitting it to tax, to spend and “to borrow money on the credit of the United States.” From the time of the founding until the passage of the First Liberty Bond Act in 1917, Congress itself voted on each and every new government bond issue, specifying the amount to be borrowed and the terms involved. Today, exercise of this power has been delegated to the Treasury Department, which generally can borrow up to the debt limit. Yet this practice can easily be changed. It wouldn’t even be necessary to repeal the existing “debt ceiling” statutory framework, an action that President Obama might well veto. Congress can simply refuse to use it. In other words, Congress cannot renege on debt already incurred, but it can condition, decrease and even stop issuance of new U.S. debt.

This strategy would put Congress’s fiscal conservatives very much back in the driver’s seat. The need for new government borrowing is constant; currently nearly 40 cents of every dollar the government spends is borrowed. Anytime Congress and the president cannot agree on how new borrowing should be accomplished (and for what purposes), and what additional spending cuts should be implemented to avoid increasing the nation’s overall debt burden, spending will simply be cut across the board by 40%. That is one very big incentive for agreement.

Of course, were Congress to reclaim this authority and separately approve each new U.S. debt issue, it would once again be directly responsible for government borrowing in a way that it has avoided for nearly 100 years. With political power comes political accountability. And that, more than anything else, is what the voters who brought a Republican majority back to the House of Representatives wanted.

This true type of fiscal responsibility would also be far more consistent with the vision of our Founders. They believed that public borrowing was an important governmental tool, but one that should be used sparingly on discreet occasions. As Thomas Jefferson once wrote, “no generation can contract debts greater than may be paid in the course of its own existence.” This was the practice for much of the nation’s history. Today, we are spending with abandon and burdening generations to come. It is up to Congress to end this perfidious practice.

Messrs. Rivkin and Casey, Washington D.C.-based attorneys, served in the Department of Justice during the Ronald Reagan and George H.W. Bush administrations.

Source: http://online.wsj.com/article/SB10001424052748703730804576315253099387050.html