In a continuing series of posts, Lyle Denniston provides responses based on the Constitution and its history to public statements about the meaning of the Constitution and what duties it imposes or rights its protects. Today’s topic: the ceiling on the federal government’s debt.
The constitutional claim
“The president would be justified in taking extreme actions to protect against a debt default. In the event that congressional irresponsibility makes default impossible to avoid, he should order the secretary of the Treasury to simply disregard the debt limit and sell whatever securities are necessary to raise cash to pay the nation’s debts…It’s worth remembering that the debt limit is statutory law, which is trumped by the Constitution…”
— Bruce Bartlett, Fiscal Times website, April 29
The constitutional response
No President has ever tried to borrow beyond the debt limit in the 94 years that a debt ceiling has been imposed by federal law (ever since the Second Liberty Bond Act of 1917). That does not make it unconstitutional, but it does raise constitutional doubts.
Some have argued that, if default on the debt were to come, it might be the financial equivalent of an immediate military threat to the nation’s safety. If lenders at home and around the world stopped making loans to the U.S., out of fear it was no longer credit-worthy, that would no doubt be a calamity. That perhaps explains why extreme measures are being talked about now.
But is the idea of simply ignoring the debt limit merely a product of the fanciful musings of online commentators? Apparently it is not. Treasury Secretary Timothy Geithner, in a conversation with news reporters in May, pulled out a copy of the Constitution, with a paper clip holding the page he wanted, and read from the Fourteenth Amendment’s Section 4. He, in effect, was daring Congress to push the President to the point of doing something to head off default if there is no agreement to raise the ceiling. (More on Section 4, shortly.)
The constitutional issue also came up at President Obama’s press conference last week, but he carefully avoided a response. Geithner’s gesture in May, though, does suggest strongly that government lawyers have been pondering the idea. So, too, apparently, have some Democrats in Congress. They reportedly asked a Washington law professor for some guidance on the very point.
At the time the Constitution was originally written, in 1787, the government did have a debt, left over from fighting the Revolution, but it did not have a debt ceiling. The original document’s Article VI promised that the government would pay the debts it had taken on before the Constitution was adopted.
Secretary Geithner, however, did not rely upon that provision. Instead, he turned to one of the post-Civil War amendments, the Fourteenth, ratified in 1868. His focus was the opening sentence of that amendment’s Section 4, which 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.” In reciting it, the Secretary paused at the last four words, “shall not be questioned” – and called them “the important thing.”
Section 4 was put into the amendment, according to Yale law professor Jack Balkin (on his website, Balkinization), “to prevent political disruption and party wrangling over the public debt following the Civil War.” However, Balkin added, “the language of the Amendment went beyond this particular historical concern. It was stated in broad terms…”
Indeed, when the Supreme Court in 1935, in a trio of decisions, struck down President Franklin D. Roosevelt’s repudiation of clauses in government bond contracts requiring that they be paid off in gold (while upholding that move for private debt contracts), the justices gave Section 4 an expansive reading.
The Court majority, in the case of Perry v. U.S., said of the first sentence of Section 4: “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” (emphasis in original).
Presumably, today’s government policymakers and lawyers looking into their options if there is no agreement on raising the debt ceiling have examined that precedent to see if it would support the truly bold move of borrowing beyond the present limit, to preserve “the integrity of the public obligations.”
Should President Obama take such an unprecedented step, could he be sued for that? The answer probably is no. The Supreme Court and lower courts have for years taken a dim view of allowing members of Congress to sue when they have lost a legislative battle. And no private individual or bank would seem to have a legal grievance, if what the President had done was to assure that the government’s debts to its creditors got paid.
Of course, the Constitution does not deal with the kind of political backlash that might befall a President who ignored the debt limit. But one might recall the scorching reaction of Supreme Court Justice James McReynolds in 1935 to the part of President Roosevelt’s gold policy that scuttled gold clauses in private debt contracts. Reciting his dissenting opinion from the bench that day, McReynolds added to what he had written: “This is Nero at his worst. As for the Constitution, it does not seem too much to say that it is gone.”
Strong language, to be sure, but the political discourse of today might well match it.
(For another take on this issue, see Garrett Epps’s text of an imaginary speech President Obama might give on the Constitution and the debt ceiling on the Atlantic magazine’s website.)
Lyle Denniston is the National Constitution Center’s Adviser on Constitutional Literacy. He has reported on the Supreme Court for 53 years, currently covering it for SCOTUSblog, an online clearing house of information about the Supreme Court’s work.