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His Majesty Obama and the Debt Ceiling

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President Obama may be poised to claim an unprecedented executive power. Or not. It depends on whether you credit official denials from White House Press Secretary Jay Carney or public statements from high-ranking Democrats. The monarchical power in question is the ability to raise the debt ceiling at will. It involves bypassing the House of Representatives, which currently has the constitutional authority to initiate all revenue bills.

In what could be a trial balloon, top Democrats from Senate leader Harry Reid to House Speaker Nancy Pelosi and former president Bill Clinton are urging Obama to sidestep the debt-ceiling battle with Congress by invoking a controversial constitutional clause, section 4 of the Fourteenth Amendment. They want Obama to claim authority under that clause to unilaterally raise the debt ceiling, perhaps through an executive order. Executive orders have the force of law without requiring the president to go through a legislative process. So far, purely practical reasons have led Obama to decline.

But the upcoming debt-ceiling crisis will be ugly, and what is politically practical can change quickly. On December 31, the federal government bumped its head against a ceiling of $16.394 trillion. This means it is unable to issue new debt to make payments on existing debt; instead, Treasury Secretary Tim Geithner is resorting to what he calls “extraordinary measures” such as shuffling about federal-employee pension funds in order to buy time. By about mid-February, time will be up; the federal government will face massive payment delays and possible defaults. And yet, Republicans in the House will not raise the ceiling unless Obama commits to deep spending cuts. He refuses to do so.

Many fiscal conservatives and libertarians are undisturbed by this impasse, even though the immediate fallout would be regrettably painful. Gridlock sounds good when the alternative is the runaway train of entitlement spending that is bankrupting America. But the gridlock could be short-lived. The longer a standoff drags on, the more loudly Democrats will raise the Fourteenth Amendment — and the more tempted Obama may be to substitute a constitutional crisis for a financial one, especially if he has a better chance of winning the former.

Seizing the power to raise the debt ceiling would be a disastrous expansion of presidential authority. Two basic restraints on executive power are established by the Constitution’s tripartite balance of power: the competing authorities of Congress and of the United States Supreme Court. A unilateral move by Obama could weaken both.

Generally speaking, a reduction in any government power is cause for celebration. But in this case, the power would not be reduced. It would be transferred wholesale into executive hands, which could then work without constraint. It would increase the prospect of a dictatorial America.

Executive authority and a competing Congress

Article 1, section 7 of the Constitution states, “All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.” (Emphasis added.)

The House’s monopoly on raising revenue was intended to be a powerful brake upon the executive. The president can sign executive orders and create executive agencies (like the Department of Education) with administrative policies that regulate the minutiae of society. Without funding, however, the measures and agencies falter. Thus, congressional control of revenue bills is one of the few remaining solid obstacles to the presidency becoming monarchical.

Unfortunately, there is some legal grounding on which Obama could challenge the absolute authority of Congress over revenue bills. Section 4 of the Fourteenth Amendment (1868) reads,

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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

This is a Reconstruction amendment; that is, it has a specific historical context. It was adopted in the wake of the Civil War (1861–1865) in order to facilitate the reformation of the American South.  Section 4 aimed at guaranteeing Union loans while repudiating Confederate debt. Nevertheless, the United States Supreme Court later ruled that the section’s language had broader application. In Perry v. U.S. (1935), the majority opinion stated, “While [the Fourteenth Amendment] 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.” The court found it to be  “confirmatory of a fundamental principle which applies as well to the government bonds in question [in that 1935 case].”

Constitutional attorneys could, however, argue cogently against the presidential use of Section 4. For example, they could point out that the section refers to honoring current debt, not to creating new debt. But during a national emergency, when the president assumes extraordinary powers, Obama’s chances of success will be enhanced.

His chances are also enhanced by the current strategy being pursued by top Democrats. In stirring up public debate, the Democrats are engaging in what is called “popular constitutionalism” or “democratic constitutionalism.” Although that term is imprecisely defined, an essay entitled “Popular Constitutionalism and Relaxing the Dead Hand: Can the People Be Trusted?” by law professor Todd E. Pettys offers a general sense:

A growing number of constitutional scholars are urging the nation to rethink its commitment to judicial supremacy. Popular constitutionalists argue that the American people, not the courts, hold the ultimate authority to interpret the Constitution’s many open-ended provisions whose meanings are reasonably contestable.

To some degree, popular constitutionalism uses democracy to replace the traditional role of the Supreme Court in interpreting the Constitution. The Democrats are attempting to sell a specific interpretation of section 4 to the public. The more accepted their interpretation becomes, the more pressure is exerted on the Supreme Court to agree. Popular opinion thus begins to trump the judicial restraint on executive power.

Moreover, Obama could always follow ex-president Clinton’s advice. During the 2011 debt-ceiling crisis, the New York Times (July 25, 2011) reported that Clinton had “identified a constitutional escape hatch” for Obama: the Fourteenth Amendment. If he were still president, Clinton claimed he would invoke the amendment “without hesitation” and “force the courts to stop me.” An executive order can go into force almost immediately; courts are slow. Even if the Supreme Court ruled against an executive order, political realities would favor Obama.

Conclusion

In 2011, the president rejected the constitutional option because he had doubts about it being “a winning argument.” Many top Democrats expressed deep disappointment. Obama did not expand on the explanation, but his administration has a history of eschewing conflict in the Supreme Court. Moreover, Obama must be aware of how badly creditors might react to the prospect of loaning more money to the U.S. government without having the usual congressional guarantee of repayment. Thus, an executive order might precipitate precisely what it was meant to prevent: the inability to pay federal debt.

The debt-ceiling crisis of 2012–2013 differs from that of 2011, however. In 2011, a compromise deal was eventually reached. A similar compromise seems less likely today.

Obama has previously sought the power to unilaterally raise the debt ceiling. He slipped it into the very first round of the current negotiations with Congress. The Washington Post (Nov. 29) reported,

GOP aides said Obama is seeking to permanently enact procedures that were temporarily adopted in the summer of 2011 that allow the White House to unilaterally increase the debt ceiling unless two-thirds of lawmakers disapprove.

That process, initially proposed by McConnell, was not intended to become permanent. By trying to make it so, Obama is seeking to avoid another damaging battle over the debt ceiling that would again risk a national default. However, this change would also deprive Congress of its historic authority over federal borrowing.

Predictably, Obama’s demand was rejected outright by House Speaker John Boehner. A Republican House will never give up the best leverage it has on the executive. If no compromise is reached on the debt-ceiling crisis, then Obama’s invocation of the Fourteenth Amendment will become more likely. It will be a giant step toward making Obama “His Majesty, the President.”

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    Wendy McElroy is an author for The Future of Freedom Foundation, a fellow of the Independent Institute, and the author of The Reasonable Woman: A Guide to Intellectual Survival (Prometheus Books, 1998).