Saturday, July 9, 2011

Constitutional Nonsense on Debt

What the 14th Amendment really says about the debt ceiling and debt default

Lo and behold! As we celebrated this Fourth of July amid the debt-ceiling fight, the netroots and progressive pundits suddenly discovered the Constitution’s relevance in fiscal matters. It doesn’t seem like that long ago — because it wasn’t that long ago — that they ridiculed the very idea of constitutional limits on Congress in economic policymaking, and even mocked the GOP’s public reading of the Constitution at the beginning of the current session.

Of the new House rule requiring a statement of the constitutional authority for bills, Ian Millhiser wrote at ThinkProgress that “the constitutional lunatics are now in charge of the GOP’s asylum.” It was completely unnecessary for Congress to cite constitutional justification for its actions, Millhiser proclaimed, because “Article I of the Constitution gives Congress broad authority” and “leaves budgeting decisions almost entirely to the judgment of Congress.”

But now that the GOP Congress is exercising this “broad authority” — or rather, what has always been its basic authority — over the nation’s purse strings to press for spending cuts as a condition of hiking the $14 trillion debt ceiling by another trillion or so, Millhiser, the Huffington Post, and The New Republic have suddenly discovered that in at least this one instance, the Constitution supposedly limits Congress’s economic powers. Section 4 of the 14th Amendment, which states that “the validity of the public debt of the United States, authorized by law . . . shall not be questioned,” makes the debt ceiling itself unconstitutional, their argument goes. Folks who were railing against the “unitary executive” a few years ago now argue that if Congress doesn’t give Obama what he wants, this section gives him the constitutional authority to issue new debt by himself; otherwise, there would not be enough money to pay the existing debt, and the 14th Amendment does not allow that.

Just a few months after arguing majestically about how the Constitution puts virtually no limits on the “judgment of Congress,” Millhiser now hopes the White House begins “seriously exploring whether the Constitution will save America’s economy from the GOP’s extortionary tactics.” And David Dayen of FireDogLake, who thought it was “silliness” for members of Congress to read the Constitution in its entirety at the start of the session, now thinks it’s okay to read this one little section. He urges Democrats to stop tussling with Republicans over spending and taxes and just go with “a strategy that works: reading the Constitution.”

But this tortured interpretation of the 14th Amendment actually shows why members of Congress — as well as the pundit class — should have participated in the public reading of the entire Constitution earlier this year. If they had done that, they might not have skipped over an essential passage regarding the power to borrow. Article I, Section 8 — the same part of the Constitution that gives Congress the power to tax, appropriate, and “regulate commerce . . . among the states” (long the Left’s justification for any regulation of activity, or in the case of Obamacare, the inactivity of not buying health insurance) — also explicitly states: “The Congress shall have power to . . . borrow money on the credit of the United States.”

The 14th Amendment doesn’t affect this power one bit. It applies only to debt “authorized by law,” and as Catholic University Law School distinguished scholar John S. Baker wrote recently in NRO, “Only Congress — not the president — makes law.”

What it perhaps does do — based on one Supreme Court case — is require the Treasury Department to prioritize payment of existing debt to bondholders over other spending in the event the debt ceiling isn’t raised. So if the government finds itself short on cash, it has to keep paying the bondholders and find the necessary savings in some other part of the budget. This is exactly what conservatives like Sen. Pat Toomey (R., Pa.) have been trying to codify through legislation. As Michael McConnell, the distinguished director of the Stanford Constitutional Law Center, has put it, “the real effect of Section Four of the Fourteenth Amendment is almost the opposite of what hopeful voices in Washington are saying.

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