The Debt Limit and the Fourteenth Amendment

The idea has begun to be floated that the debt limit is unconstitutional.  The basic argument, according to this news account, is rooted in section 4 of the 14th Amendment, which requires that all outstanding public debt plus pension liabilities must be paid.  The provision reads: "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions ..., shall not be questioned."   Here is Garrett Epps' imagination of a speech by the President that presents Epps' idea of the meaning of this provision. 

First, some definitional clarity is in order.  The public debt authorized by law is the debt that has been issued and is outstanding and is within the statutory debt limit.  The "debts incurred for payment of pensions" is somewhat less clear.  It is reasonable to think that this phrase means the vested rights that have been acquired under current law for old-age pensions under Social Security, military pensions, and other federal pensions.  But it does not mean the liabilities that are to be expected if and when future possible beneficiaries of such pensions become vested.  Between the two categories -- public debt and pensions -- these are big numbers.  But a refusal to raise the debt limit might not make it impossible for the nation to continue to meet these obligations.  What it would mean is that all current revenue of the United States must first be devoted to paying the interest (and principal, when due) of the public debt and to continue to meet the vested rights of pensioners.  Money left over can be spent on everything else.  That would mean Draconian cuts -- in everything: Defense, EPA, Education Department, Labor Department, Justice Department, Medicare, Medicaid,  welfare assistance of every stripe and kind, and the boondoogles of the budget.  To the extent that current revenues are insufficient to meet the combined obligations of the public debt and vested pensions, perhaps the Epps argument is correct.  But the 14th Amendment's public debt clause is not a license to continue to borrow above the statutory debt limit in order to continue paying for things that are not within the categories of vested pensions and public debt. 

Of course, this situation creates another interesting conflict.  The Impoundment Control Act denies to the President the ability to refuse to spend appropriated funds.  But if the debt limit is not raised and current revenues are used to fulfill the obligations of the public debt clause, the President is forced to refuse to spend appropriated funds for other things because he has no statutory authority to borrow from the Chinese to get the money to spend these appropriated funds.  Or, the President might contend that he is obliged to honor the Impoundment Control Act and violate the debt ceiling.  One or the other of these statutes cannot be enforced under these hypothesized conditions. 

A refusal to raise the debt limit does have constitutional consequences, but the public debt clause is not a grant of unlimited power to the President to borrow.  A refusal to raise the debt limit, coupled with a refusal to cut current spending to levels that approximate current income, produces more political consequences than constitutional consequences.    

Comments

[Matthew Reid Krell]

Calvin, there's very little that I agree with you on; but I think you've hit the nail on the head with this one. Just wanted to drap an attaboy where it's due.

[Larry Rosenthal]

I quite agree with the post as well. Indeed, I have had a difficult time even grasping Professor Epps' argument. Article I vests in Congress, not the President, the power to borrow money on the credit of the United States. Congress has exercised that power by authorizing borrowing up to the ceiling. The debt ceiling itself does not question the validity of the national debt within the meaning of the Fourteenth Amendment, it just represents a directive to the executive to stop incurring debt once the ceiling is reached. Since the power to incur debt is vested in Congress, any debt that the President chooses to incur in excess of the ceiling is not a debt of the United States within the meaning of Article I -- indeed, it is likely ultra vires. And, if a debt is not "authorized by law," it is not protected by the Fourteenth Amendment. One minor addition to the post -- under the decision in Flemming v. Nestor, it seems to me quite unlikely that Social Security can be characterized as a vested pension right within the meaning of the Fourteenth Amendment.

All the talk about the likely nonjusticiability of this question in light of the limits on citizen and taxpayer standing may be beside the point as well. Doubts about the legality of this approach will surely be evident in the bond market. To the extent that lawyers for bond buyers advise their clients that there is serious doubt about its validity that they should not be Treasury bonds issued after the debt limit is reached, except with a substantial risk premium. After all, a future administration could refuse to honor the bonds, or a future Congress could choose to repudiate them.

Perhaps there is a good argument that some combination of the current Appropriations Act, in conjunction with the Impoundment Control Act, has worked an implied repeal of the current statutory debt limitation to the extent that additional debt must be incurred to honor current appropriations. If that is the case, then I would agree that debts incurred to pay appropriated funds, even in excess of the current statutory debt ceiling, are "authorized by law" and within the protection of the Fourteenth Amendment. I have not studied that issue, which likely turns on the precise wording of the various enactments, and must surmount the presumption against implied repeals. The constitutional argument without more, however, seems to me quite weak, unless I am missing something.

Larry Rosenthal
Chapman University School of Law

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Congress has exercised that power by authorizing borrowing up to the ceiling. The debt ceiling itself does not question the validity of the national debt within the meaning of the Fourteenth Amendment, it just represents a directive to the executive to stop incurring debt once the ceiling is reached. Since the power to incur debt is vested in Congress, any debt that the President chooses to incur in excess of the ceiling is not a debt of the United States within the meaning of Article I -- indeed, it is likely ultra vires. And, if a debt is not "authorized by law," it is not protected by the Fourteenth Amendment. One minor addition to the post -- under the decision in Flemming v. Nestor, it seems to me quite unlikely that Social Security can be characterized as a vested pension right within the meaning of the Fourteenth Amendment.

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[John N]

I think this post dismisses a compelling argument - That President Obama would risk impeachment by NOT acting under the 14th Amendment to prevent default.

Whether any of us like it or not it this debt ceiling debate is all about the “obligations” that Congress over time has signed into law, not the bonds.

The ceiling raise has nothing to do with future spending, only that which has already been committed to by this and prior sessions of Congress over out history.

We elected them, they act via their Constitutional responsibility passes laws/funding programs, we own it and has the “full faith and credit” of the US behind it. These are all laws that then need to be upheld, ie honored.

The Constitution is by definition the original document plus any and all Amendments to it so trying to separate the two is a specious argument as well.

In PERRY V. UNITED STATES, 294 U. S. 330 (1935)SCOTUS addreses the larger context of debt as “obligations” that further supports the notion that default would be unconstitutional and thus stopping it would be required of the President:

“…The government’s contention thus raises a question of far greater importance than the particular claim of the plaintiff. On that reasoning, if the terms of the government’s bond as to the standard of payment can be repudiated, it inevitably follows that the obligation as to the amount to be paid may also be repudiated. The contention necessarily imports that the Congress can disregard the obligations of the government at its discretion, and that, when the government borrows money, the credit of the United States is an illusory pledge.

We do not so read the Constitution….To say that the Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise; a pledge having no other sanction than the pleasure and convenience of the pledgor. This Court has given no sanction to such a conception of the obligations of our government.

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.”

The office of the President as “Chief Executive” is empowered by the Constitution that “he shall take Care that the Laws be faithfully executed”.

He is also Constitutionally bound by his oath of office:

“I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States.”

This creates a slippery slope for any President. In other words he has no choice in acting per the Constitution lest he violate his oath and for that could be subject to impeachment.

A secondary argument, slightly less compelling, is that in his job as Commander in Chief to protect the nation against any threats could be cited here. A default that plunges the nation into another recession and costs the taxpayers hundreds of billions in additional Federal interest payments and billions more in higher credit card, mortgage and consumer loans threatens the nation as much as any war or attack does. Not acting would weaken the nation considerably and his failure to protect the nation from this sort of “attack” would also be seen as a failure to fulfill his oath.

So the 14th/PERRY V. UNITED STATES makes it clear on the debt’s validity and the fact that it cannot be abrogated in anyway that diminishes the full faith and credit of the nation and its trust with any one owed money via a statute approved by Congress, be it your mom on SS, a cleaning contractor for a federal building or foreign nations holding bonds. All are equally valid and must be honored.

So no action by Congress is illegal and the Debt Ceiling law in any dispute is trumped by the Constitution. In “Perry” Chief Justice Hughes wrote the majority opinion: “We do not so read the Constitution…the Congress has not been vested with authority to alter or destroy those obligations.”

Altering those obligations means that the terms of meeting them cannot be changed in anyway so even a default of a few days or a program to pay bills in some order with revenues is not allowed. So inaction that allows any sort of modification is out of the question as well.

If Obama does not act to avert the crisis if negotiations fail that is a more compelling reason to Impeach than trying to claim that he exceeds his Constitutional power in resolving the crisis using the 14th.

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[Rocky]

Query - are tax expenditures "spending" subject to the Impoundment Control Act? In other words, can the president effectively raise taxes by impounding tax expenditures in order to spend appropriated funds as required by statute while avoiding default as required by the Constitution? http://sunsettheirs.org/theory-of-inverse-impoundment