Is The Debt Ceiling Unconstitutional?

Does a little known provision in the 14th Amendment make the entire debt ceiling debate irrelevant?

Doug Mataconis · · 34 comments

There’s a new idea floating out there that the entire debate about raising the debt ceiling is irrelevant, because the very idea of a debt ceiling is unconstitutional:

Growing increasingly pessimistic about the prospects for a deal that would raise the debt ceiling, Democratic senators are revisiting a solution to the crisis that rests on a simple proposition: The debt ceiling itself is unconstitutional. “The validity of the public debt of the United States, authorized by law… shall not be questioned,” reads the 14th Amendment. “This is an issue that’s been raised in some private debate between senators as to whether in fact we can default, or whether that provision of the Constitution can be held up as preventing default,” Sen. Chris Coons (D-Del.), an attorney, told The Huffington Post Tuesday. “I don’t think, as of a couple weeks ago, when this was first raised, it was seen as a pressing option. But I’ll tell you that it’s going to get a pretty strong second look as a way of saying, ‘Is there some way to save us from ourselves?'” By declaring the debt ceiling unconstitutional, the White House could continue to meet its financial obligations, leaving Tea Party-backed Republicans in the difficult position of arguing against the plain wording of the Constitution. Bipartisan negotiators are debating the size of the cuts, now in the trillions, that will come along with raising the debt ceiling.

Back in April, Bruce Bartlett made pretty much the same argument:

The president would be justified in taking extreme actions to protect against a debt default. In the event that congressional irresponsibility makes default impossible to avoid, he should order the secretary of the Treasury to simply disregard the debt limit and sell whatever securities are necessary to raise cash to pay the nation’s debts. They are protected by the full faith and credit of the United States and preventing default is no less justified than using American military power to protect against an armed invasion without a congressional declaration of war. Furthermore, it’s worth remembering that the debt limit is statutory law, which is trumped by the Constitution which has a little known provision that relates to this issue. Section 4 of the 14th Amendment says, “The validity of the public debt of the United States…shall not be questioned.” This could easily justify the sort of extraordinary presidential action to avoid default that I am suggesting.

Garrett Epps, a law professor and former reporter, seems to be the first one to write about this idea earlier this year:

Section Four of the Fourteenth Amendment states, at its outset, that “[t]he 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.” This section was inserted into the Amendment because of a very real concern that Southern political leaders, and their Northern allies, would gain the upper hand in Congress in the 1866 or 1868 elections and vote to repudiate the national debt. The Lincoln administration had borrowed freely to finance the war machine. As Reconstruction dawned, white Southerners complained bitterly that they would now be taxed to repay the funds that had been borrowed to defeat their cause. “What, ruin us, and then make us help pay the cost of our own whipping?” one asked a Northern journalist in 1865. “I reckon not.” Southerners were used to having their way in Congress–they had dominated the institution from 1787 until secession in 1861–and many believed that when their representatives arrived in House and Senate, they would be able to tear up the nation’s IOUs. Section Four was the response; its language is extraordinary. First, it does not simply say that the national debt must be paid; it says that its “validity … shall not be questioned.” Only one other section of the Constitution–the Thirteenth Amendment‘s proclamation that “[n]either slavery nor involuntary servitude … shall exist within the United States, or any place subject to their jurisdiction”–is as unqualified and sweeping. Second, it suggests a broad definition of the national debt: “…including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion.” From this language, it’s not hard to argue that the Constitution places both payments on the debt and payments owed to groups like Social Security recipients–pensioners, that is–above the vagaries of Congressional politics. These debts have to be paid, the argument would be, in full, on time, without question. If Congress won’t pay them, then the executive must.

Previously, Epps had outlined what he believed Section Four authorized the Executive to do in the form of an imaginary speech by President Obama to a Joint Session of Congress:

It says it “shall not be questioned.” The national debt must be paid in full, on time, regardless of any political division within our Congress. That is what the Framers intended: to set the debt obligations of our country beyond the reach of Congressional meddling. Those obligations will not be questioned as long as I am president of the United States.This action requires me to authorize borrowing that is not in conformity with the debt-limit statute. But no congressional statute can command or permit our government to violate the Constitution. I find the debt limit, to the extent that it could be construed to require national default on any obligation of our nation, to be in the words of the great chief justice John Marshall, repugnant to the Constitution and thus void.

In other words, Epps argues, despite the clear language of the debt ceiling statute that the Federal Government cannot borrow above the statutory limit without Congressional authority, that the President has the authority to order the Treasury Department to issue new debt in order to ensure that the national debt is not repudiated, i.e., that we continue making interest payments on existing bond obligations.

The Supreme Court seems to have ruled on Section Four of the 14th Amendment only once since ratification, in the case Perry v. United States 294 U.S. 330 (1935). In that case, the Court was dealing with a lawsuit filed by the holder of a government bond that, when issued, had provided that principal and interest would be paid “in United States gold coin of the present standard of value.” In 1933, only a month after entering office FDR issued Executive Order 6102, which forbid the “Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States.” The Executive Order also forbid Americans from owning monetary gold, and required the surrender of the same to the U.S. Treasury in exchange for U.S. currency at the exchange rate of $ 20.67 per ounce. Soon after, several lawsuits were filed, including the Perry case.

While the Court ultimately rule in favor of the government, finding Congressional power over money to be plenary, it said the following about Congressional action that impaired U.S. debt obligations:

The Fourteenth Amendment, in its fourth section, explicitly declares: “The validity of the public debt of the United States, authorized by law, . . . shall not be questioned.” While this provision was undoubtedly inspired by the desire to put beyond question the obligations of the government issued during the Civil War, its language indicates a broader connotation. We regard it as confirmatory of a fundamental principle which applies as well to the government bonds in question, and to others duly authorized by the Congress, as to those issued before the Amendment was adopted. 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.

It’s not much of a statement, admittedly, but it does seem to support Epps’s interpretation of Section Four. The question is, what does it really mean practically?

At the most, I would argue that it means that the United States cannot, constitutionally, default on its debt and that the President would be authorized to take action to prevent that. That doesn’t mean, however, that the President would be authorized to issue new debt without Congressional authorization, because there are other means by which interest on the debt could be paid. For example, the President could tell the Treasury that payment of interest takes priority over all other government obligations and that incoming revenue must be used for that purpose first. If there’s nothing left over for other government expenses, then they won’t be paid. Theoretically, it might authorize incurring new debt, but that authorization would seem to extend only incurring enough debt to pay the interest, and nothing more.

Even if this might be Constitutional, though, I’m not at all sure that it’s financially or politically wise. The financial markets are already getting nervous about the debt ceiling debate, turning it into a Constitutional crisis and potential legal showdown between the Executive and Legislative Branches would only serve to spook them more. Politically, it is such an extraordinary step, and such a unique Constitutional argument, that it would only serve to reinforce the Republican meme that the President has taken it upon himself to ignore Congress when it doesn’t sue him (i.e., Libya). Moreover, the American people are already overwhelmingly opposed to a debt ceiling increase, an action like this would probably not go over well unless the Obama Administration explained it well. That is something that, from the stimulus to health care reform to the action in Libya, they have been exceedingly bad at doing. Therefore, the public is likely to react very negatively to what will seem to many to be an unprecedented Executive Branch power grab.

Hopefully, we won’t need to have this debate beyond the blogosphere. Hopefully, the President and Congress will come to an agreement, probably at the last minute and probably in a form that nobody is going to like. Of course, given how things have gone there’s really no reason to be optimistic is there?