What Obama could do if Congress fails to raise the debt ceiling (Part One)
Author's note: This is the first part of a three-part series. Part Two can be accessed here.
Once the debt ceiling is breached, as the Treasury Department claims, on Oct. 17, the nation is thrown in a constitutional twilight zone in which the President Barack Obama will have no clear guidance from the Constitution how to act.
The risk of the ensuing constitutional crisis is that any act by the president exposes him to charges of having violated the Constitution. This claim is made by law professors Neil Buchanan of George Washington University and Michael Dorf of Cornell University, in their article “How To Choose The Least Unconstitutional Option: Lessons For The President (And Others) From The Debt Ceiling Standoff,” (PDF) published in the October 2012 edition of Columbia Law Review. The dilemma of his position is that even doing nothing exposes him to being charged with an impeachable offense of failing to carry out his constitutional responsibilities as the president.
Buchanan and Dorf explained the complexity of the constitutional challenge the president faces once Treasury hits the debt ceiling. The dynamics involved include the conflict between appropriation laws that order him to spend, the tax laws that limit the power of government as a taxing authority, and the debt-ceiling statute which gives Congress the exclusive power to approve borrowing to service public debts.
The conflict between the three separate legislations, in the event that Congress fails to raise the debt ceiling, is that which Buchanann and Dorf described as a “constitutional trilema”: A constitutional Gordian Knot in which any decision the president takes with regard to spending and tax laws will result in a violation of his constitutional duty under Article 11, Section 3 which requires that he "take care that the laws" are "faithfully executed."
According to the Buchanan and Dorf (PDF): "Faced with that impossible choice, the president risks acting unconstitutionally no matter what he might do, because he will have failed to execute at least one duly enacted law of the United States. He thus faces a ‘trilemma:’ a choice between three bad options, all of which are unconstitutional.”
The scholars concluded that the challenge Obama faces is not whether to act but how to act in a manner that minimizes “the unconstitutional assumption of power." Having considered different proposals, Buchanan and Dorf concluded that the "least illegal" or least "constitutionally disruptive" of the options open to Obama would be to simply ignore the debt ceiling and continue borrowing and spending; an act effectively equivalent to the president raising the debt ceiling unilaterally.
The professors explained that although ignoring the debt ceiling would be illegal because by so doing the president has usurped the exclusive power of Congress to borrow money and raise the debt ceiling, in the circumstances, it would not only be the “least illegal” decision he could take but also the one that preserves, "to the extent possible, the ability of other actors to undo or remedy constitutional violations."
This, according to the scholars, is because it involves the least substitution of the decision-making powers of Congress with the president's.
The authors explained that the option of cutting expenses by prioritizing payments to bondholders and missing payments due to contractors, salaries of federal workers and retirees would require multiple and relatively complex choices that could impact on the economy more disruptively than if he simply ignores the debt ceiling.
The constitutional experts argued that besides the fact that prioritizing payments would be illegal because all parties to whom the payments are due are equally entitled under federal law, the potential consequences to the economy are greater than if he simply ignores the debt ceiling and continues issuing debt and spending.
According to Dorf, "In either case, we're talking about the president exercising power allocated to Congress. So how much power should he exercise? Any attempt to prioritize spending would involve thousands of legislative trade-offs. Whereas issuing as much debt as needed to cover spending involves just one decision."
The argument contradicts the opinion expressed by House Republicans that the only constitutionally valid option open to the president if the debt ceiling is breached is to prioritize payment.
Republicans had attempted to legislate in favor of their preferred decision for the president by pushing the Full Faith and Credit Act, which would require the administration to set priorities if Congress fails to raise the debt ceiling, with bondholders being paid first, then the military, Social Security, Medicare in the stated order.
But since the bill was never passed in Congress, the administration is not bound legally to follow the option.
Part Two can be accessed here.