03 June 2011

Is The Debt Ceiling Constitutional?

Congress enacts our tax laws.  Congress appropriates funds by law.  Congress passes a statute called the debt ceiling.  The U.S. Constitution gives Congress the enumerated power to tax, to spend, and to incur debt.  The U.S. Constitution also forbids Congress from passing laws that impair rights under government contracts.  The Constitution calls upon the President to faithfully execute the laws and constitution of the United States and the President has long been understood to have the authority to resolve based upon legal advice from the executive branch situations in which one law seems to be contradicted by another law or the United States Constitution.  The judicial branch is also understood to have that authority.

When the United States government bumps up against a debt ceiling passed by Congress, we are overconstrained and the way to faithfully executed the law and the United States Constitution becomes non-obvious.  No one suggests that the President or the Courts may increase revenues by imposing new taxes without Congressional approval.  But, faced with laws enacted by Congress appropriating discretionary funds, earlier passed legislation by Congress establishing a debt ceiling, legislation passed before the debt ceiling was enacted providing for non-discretionary spending, and the constitutional obligation of the United States government not to default on its contracts, either by failing to pay its national debt obligations or failing to honor contracts it has entered into with its employees and government contractors, what is a President who has a Congressional mandate to spend funds and a Congressional mandate not to borrow enough money to spend the funds appropriated to do?

According to current predictions from the United States Treasury Secretary, if legislative gridlock persists, we will have a constitutional crisis that will force the President to resolve this issue some time around August 2 of this year.

At least since President Nixon, there have been some who have argued that the mere fact that Congress has authorized the President to spend money in an appropriation doesn't mean that the President doesn't have to spend those funds, in a sort of back door line item veto that is not subject to legislative review (despite clear U.S. Supreme Court authority that Congress cannot create a line item veto by statute).  But, the President's freedom of action is less obvious once government contracts (particularly multi-year appropriations for navy purchases expressly authorized by the constitution) have been inked, in cases of non-discretionary spending, and in cases where the language of a specific appropriate classified as "discretionary spending" does not on its face have language that is susceptible to being read as giving the President the option not to spend it.

Looking at the issue politically, it also isn't obvious why the constitution, which is at its heart a political document, should be interpreted in a way that allows Congress to demand the impossible in an overconstrained budget by forcing the President to make politically painful choices on what to cut from Congressionally authorized appropriations by providing the President with neither the tax revenues nor the borrowing power to spend the funds appropriated.

In the absence of a debt ceiling statute, the President would almost surely have the inherent authority, implied from the appropriations and the lack of tax revenues sufficient to fund all of the appropriations made by Congress to borrow money on the full faith and credit of the United States in order to carry out the appropriations authorized by Congress.  So, one of the easier options for a court faced with resolving a situation in which the President is presented with a choice of evils that leaves it mathematically impossible for him to faithfully execute all of the laws that Congress has deemed fit to adopt would be to declare that the debt ceiling is unconstitutional, or at least, that the President may lawfully resolve the overconstrained situation by ignoring it until the nation's budget ceases to be overconstrained.  This has the virtue of keeping the courts out of the policy laden minefield of figuring out which spending programs should be cut and which should not be cut and how much each program should be cut.

The alternative would be for a court to determine that the President has the power to resolve the situation by not spending appropriated funds, or indeed, a court could even hold the that President is not allowed to spend even appropriated funds if tax revenues and the amount of spending available to the President as a result of the debt ceiling are insufficient to pay for the appropriated spending.

 But, here, the devils are in the details.  Since spending is authorized by myriad different pieces of legislation and government revenue is organized into many dedicated funds from which spending for particular programs flows, the analysis for each little bit of appropriated spending is not so simple.  In each case it is necessary to determine what legislation authorizes the spending, whether the spending comes from the general fund or from a trust fund that is still solvent, whether the spending is discretionary given the language of the appropriation, and how the general law of resolving conflicts between statutes such as interpretive provisions based upon specificity, connection to larger statutory schemes and the preference to be given to the later enacted statute (a rule that leaves unclear what weight to be given to the non-binding budget passed by Congress in advance of binding appropriation and tax bills should be given in terms of prioritizing statutes that conflict with each other) should be given.  The constitution is not a suicide pact, and the President cannot ignore in an overconstrained budget situation the fact that some appropriations are for essential government operations that have irrevocable life and death consequences if suspended even briefly while the President and Congress work out deals on spending cuts and the debt  ceiling.

Congressionally appropriated funds as he deems fit, and does not have any constitutional obligation to make the cuts from appropriations that are determined to yield in a conflict of statutes to the debt ceiling equally across the board or according to any other predetermined formula.

Similarly, even if it is determined that there are some appropriations that can be cut by the President that yield in a conflict of statutes to the debt ceiling, if all of these potential cuts in appropriations combined still make it necessary to exceed the debt ceiling in the budget year, it isn't legally obvious whether those cuts must all be made, extending the collision with the debt ceiling until the latest possible date before which Congress might act to increase the debt ceiling legislatively, or if the President may take note of the inevitable and abrogate the debt ceiling immediately upon determining factually that the debt ceiling can't be reconciled with the funding that has been appropriated by Congress and prevails in a conflicts of statutes with the debt ceiling.

But, if the President does not exercise his discretion to refrain from spending appropriated funds in an amount sufficient to avoid exceeding the debt ceiling, and if a court has the authority to look at spending statutes on a case by case basis to determine which may and which may not yield to a debt ceiling law when the aggregate amount of spending appropriated by Congress conflicts with the debt ceiling that it has enacted (something that is arguable a non-justiciable political question), these matters generally come to the courts when the clock is ticking and complying with all of the budget related laws enacted by Congress has already become impossible or will become impossible imminently. So, a court may lack the time to conduct the analysis necessary to come to a legally principled resolution of the question of when appropriated spending is not required by law before an immediate resolution of the conflict is required. Faces with a choice of evils, a determination that the debt ceiling is unconstitutional may be the only practicable resolution available to a court if it is called upon the resolve the crisis as a matter of law, because elected officials have failed to do so.

After all, a court determination that the United States government has a legal obligation to pay for appropriated spending, even if that means that the United States government has to incur a debt liability as a result, isn't really all that different from the routine practice of courts that under judgments against the United States government in a legal case that are by their very nature debts of the United States government that are not authorized by Congress in advance.

UPDATE:  Some have argued that the "no debt shall be questioned" language of the 14th Amendment makes the debt ceiling unconstitutional.  I'd argue the opposite.  The duty to pay the government's obligations comes from the contracts clause of the original constitution.  It applies to everything from contracts to build roads to Treasury bonds.  The 14th Amendment, by limiting its validation of the national debt (and with a current focus on the Civil War debt obligation of the Union which was validated in contrast to that of the Confederacy which was not) limits that validation to debts authorized by law.  But, the debt ceiling arguably makes the point that debts in excess of that amount are not authorized by law, buttressing the argument that Congress, in general, is the branch that authorizes debt to be incurred under Article II, Section 8.  Debts in excess of the ceiling, which are not authorized by law, are arguably subject to question under the 14th Amendment in a way that debts under the ceiling are not.

But, the 14th Amendment language still doesn't elucidate one way or the other the way we must proceed when we have multiple laws, one group authorizing spending, another authorizing the collection of federal reveneus from sources other than debt, and a third limiting the amount of the debt that may be incurred.  When they can't be reconciled, something has to give.  If it is not an imposition of executive order imposed taxes, it must be legislatively authorized spending or the legislatively imposed debt ceiling.

In practice, so much of the spending, like Social Security, Medicare, unemployment benefits, etc. is non-discretionary, and tax revenues are so low, that once the debt-ceiling is reached, truly draconian cuts on that portion of discretionary spending that the government is not already obligated to pay as a result of government contracts with private parties may be impossible, at least as a practical matter.  For example, we can't simply put the entire U.S. military on furlough, and the Department of Defense is the singled largest discretionary spending line item.

So, faced with a choice of evils, it may simply be impossible to do anything but to ignore the debt ceiling, which in one piece of legislation, in favor of the appropriations legislation for the nation's spending, which is another piece of legislation.

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