no more wars
As the debt ceiling crisis continues, some politicians and scholars are encouraging President Obama to exercise his purported rights under the 14th Amendment to the Constitution to lift the debt ceiling if Congress continues to fail to get its own act together. President Clinton, Senator John Kerry and Senator Tom Harkin are among those encouraging President Obama do to so. President Clinton has publicly stated that he would invoke the 14th Amendment and raise the debt ceiling “without hesitation.”
So what are the legalities involved in President Obama invoking the 14th Amendment?
Section 4 of the 14th Amendment provides that “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.”
Section 8 of Article 1 of the Constitution provides that “The Congress shall have Power … To borrow money on the credit of the United States…”
Former Dean of the Chicago Law School Geoffrey R. Stone believes that the 14th Amendment gives President Obama the power to lift the debt ceiling without Congressional approval. He argues that the Constitution, via the 14th Amendment, says the public debt of the US previously approved by the Congress cannot be repudiated and not raising the debt arguably is a repudiation and unconstitutional.” Senator Harkin compares the idea to President Lincoln making the Emancipation Proclamation and President Franklin Roosevelt starting the Lend-Lease program, which enabled the US to support Allied nations before declaring war in 1941.
However, Erwin Chemerinsky, constitutional scholar and Dean of the UC Irvine Law School, and Lawrence Tribe, professor of Constitutional Law at Harvard Law School, disagree. They say that the 14th Amendment only means that debt already authorized by Congress cannot later be declared invalid by the US. Due to Article 1, Section 8 of the Constitution, only Congress can approve an increase in the debt ceiling. Dean Chermerinsky points out that any bonds issued after an unilateral increase in the debt ceiling could be challenged on grounds that this borrowing violated Article 1, Section 8, the buyers of the bonds would be buying a lawsuit and the bonds would likely be rated as lower grade bonds than bonds issued prior to a unilateral presidential increase in the debt ceiling. Professor Tribe asks whether, if the President can unilaterally increase the debt ceiling, where does his power stop? Could he also unilaterally impose taxes, coin money or sell federal property to pay US debts? For Dean Chermerinsky’s op-ed piece, click here ; for Professor Tribe’s op-ed piece, click here.
Another unknown is whether a unilateral presidential increase in the debt ceiling would prevent US bonds from being downgraded. There is the threat of lawsuits, although it is not clear who would have standing to bring the lawsuit. And there are threats of impeachment proceedings against President Obama if he took this action, most vocally by Tea Party Representatives Tim Scott and Michele Bachmann. The rating agencies might well conclude that the uncertainty surrounding the constitutionality of the issuance of bonds on President Obama’s act alone along with the obvious inability of Congress to get its act together requires that US bonds be downgraded anyway.
Efforts by Wall Street has reportedly stepped up in recent days to encourage Congress to resolve this issue. A letter dated July 28 from the Financial Services Forum and signed by the CEOs of the major banks is attached here. While Main Streeters generally decry the clout of Wall Street lobbyists, this may be one case where we hope it is a legendary as we typically fear it is.
