The Grand Old Party is engaging in a high stakes game of “chicken” with President Obama, the Democrats in Congress and the American economy. In less than a month, unless they relent in their [misguided? intentionally destructive?] effort to destroy the American (and the world) economy to curry favor with their Tea Party wing, the Republicans in Congress will cause the American government to default on its debt, on August 2, 2011 or thereabouts. Unless…
- They abandon their stated position of taking all tax increases and the closing of tax loopholes for the wealthy “off the table”. This will only happen if their Wall Street protectors and ardent supporters tell them to ‘cut the foolishness” and get on with the business of government, and agree to raise the debt ceiling. The problem is that some of their most conservative Tea Party members in Congress don’t give a damn, and actually want the government’s credit to fall into default, so President Obama can be blamed for destroying the economy they actually destroyed, thus denying him reelection. Or,
- The Democrats in the House manage to pick off enough less than arch-conservative Republican members of the House (the handful that remain) to ram through the debt ceiling increase, and the Senate Democrats hold their caucus together to pass it.
In the past, the law increasing the debt ceiling has been routinely passed by votes in Congress, and signed into law by the President. During George Bush’s presidency, he increased the national debt by over $4 trillion, and Congress raised the debt ceiling seven times, with little debate. But now, following President Obama’s caving last December and continuing the Bush tax cuts for two more years, the Republicans see some vulnerability, on which they hope to capitalize by forcing him again to cave on increasing taxes and closing tax loopholes in order to reduce the national debt, and by further eroding the safety nets and entitlements for the poor.
But here are a number of ways for President Obama to escape this looming catastrophe, short of giving in to the Republicans:
- He could consult with Treasury Secretary Tim Geithner and determine that August 2 is not the drop dead date for default, and kick the can a little ways down the road. Unlikely to happen, and only defers the day of reckoning.
- He could follow former President Bill Clinton’s suggestion and work out a deal for additional taxes and closing of tax loopholes, but effective in, say, a year and a half, after the next presidential election. Possible, but a cop out.
- He could ignore the debt ceiling, declaring the law creating it to be unconstitutional, and just order his government to continue paying all indebtedness as it becomes due.
The 14th Amendment to the Constitution was passed in 1868, after the Civil War, and it includes the requirements of citizenship, ensuring that slaves and former slaves, among others, are citizens, and it included the “privileges or immunities” clause, the “due process” clause, and the “equal protection” clause. It also apportioned Representatives of the House among the states, and disqualified from public office any U.S. elected or appointed officials who supported the Confederacy.
The 14th Amendment also contained this curious clause:
“The validity of the public debt of the United States, authorized by law, …shall not be questioned.”
All of the public debt currently contained in the national debt was presumably “authorized by law”, and it could be argued by a constitutional law professor at the University of Chicago Law School who happened to become President of the United States that the law imposing the debt ceiling is unconstitutional because it calls into question the validity of the U.S. public debt.
There is Supreme Court authority for this position. In Perry v United States, 294 U.S. 330 (1935), the majority of the Supreme Court, in an opinion by Chief Justice Charles Evans Hughes, ruled that :
“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 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.” (294 U.S. at p. 354)
This case concerned a $10,000 World War I bond that stated: “The principal and interest hereof are payable in United States gold coin of the present standard of value”. The plaintiff wanted payment in gold with a value as of the date the bond was issued, while the U.S., based on an act of Congress, would redeem the bond only by payment in 1934 of $10,000 in legal tender currency. The Supreme Court held that the plaintiff was not entitled to receive an amount in legal tender currency more than the face amount of the bond.
On page 351 of its opinion, the Court stated that: “In authorizing the Congress to borrow money, the Constitution empowers the Congress to fix the amount to be borrowed and the terms of payment. By virtue of the power to borrow money ‘on the credit of the United States,’ the Congress is authorized to pledge that credit as an assurance of payment as stipulated, as the highest assurance the government can give, its plighted faith. 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.”
It can be argued that passage of the debt ceiling resolution, to the extent that it would prevent the United States government from honoring its past validly incurred debts, is unconstitutional.
President Obama need only issue a Presidential Finding to this effect, and state that he orders the U.S. government to pay all legal obligations of the United States as they become due.
What can Congress do? They could bring suit against the President requiring him to reverse his finding and stop paying the debts of the U.S. Government (presumably not the salaries of Members of Congress and their staffs first), which will take many months if not years to reach the Supreme Court. But the Supreme Court has shied away from injecting itself into “political questions” involving disputes between the two other branches of government. However, there WAS Bush v Gore in 2000… And who has standing to say that they have been harmed by the continued payment by the United States of its debts and obligations?
Or Congress could seek to impeach President Obama for disobeying an Act of Congress. It takes a majority of the members of the House to impeach, as was done with President Clinton, but two-thirds of the Senate to convict, which will never happen with a Democratic majority (as the Republicans also found with President Clinton).
And what position would the Republicans in Congress be taking? They would assert that the President should be removed from office for protecting the full faith and credit of the United States and preventing a worldwide economic collapse. They would look ridiculous.
Ted Vaill is in his second term as an elected delegate to the State Democratic Party, and he has practiced law in California, and before the U.S. Supreme Court, for over 40 years.