In negotiations with Congress about how to avoid plunging over the fiscal cliff, President Obama has insisted that lawmakers agree to raise the debt ceiling, currently fixed at $16.4 trillion, when the U.S. government runs out of money. That could be as early as February 2013.
He recently informed a group of business leaders: “If Congress in any way suggests that they’re going to tie negotiations to debt-ceiling votes and take us to the brink of default once again as part of a budget negotiation, which, by the way, we have never done in our history until we did it last year, I will not play that game.”
The need for Congress to approve any increase in the debt ceiling is leverage that Republicans very much want to use again and retain, but some commentators have recently suggested that the president can raise the debt ceiling unilaterally. What allows him to accomplish this dazzling bit of budgetary legerdemain, they say, is Section 4 of the 14th Amendment — the Public Debt Clause. It stipulates that “the validity of the public debt of the United States, authorized by law . . . shall not be questioned.”
The president’s defenders argue that if Congress fails to raise the debt ceiling, the United States will immediately start defaulting on its debts, an outcome that the Public Debt Clause deems impermissible. To avoid default, they contend, President Obama could raise the debt ceiling without congressional approval.
But this argument is dead wrong.
When the 14th Amendment was passed, Senator Benjamin “Bluff” Wade of Ohio, a proponent, set forth the rationale: “I believe that to do this will give great confidence to capitalists and will be of incalculable pecuniary benefit to the United States, for I have no doubt that every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution.”
In 1935, in Perry v. United States, the Supreme Court observed that the Public Debt Clause confirmed the “fundamental principle” that Congress may not “alter or destroy” debts already incurred. However, even if Congress refuses to raise the debt ceiling and additional borrowing is curtailed, the federal government’s revenues are more than enough to satisfy current debt payments and enable it to avoid a default.
Meanwhile, the Constitution clearly provides that borrowing money requires congressional action. In Article I, Section 8, Congress is granted the power “to borrow money on the credit of the United States.” As Andrew Grossman of the Heritage Foundation has explained, the power of the purse — including the authority to tax, spend, and borrow — is clearly legislative, according to the Constitution. Nothing in the Public Debt Clause takes this power away from Congress and assigns it to the president.
President Obama has no more unilateral power to issue new debt on the credit of the United States than he has to unilaterally raise taxes, sell off government assets, or make expenditures that have not been enacted by Congress.
Moreover, the Public Debt Clause refers to public debt that has been “authorized by law.” The debt ceiling is established by statute (31 U.S.C. 3101 and 3101A). If President Obama were to issue an executive order purporting to enable the federal government to borrow more money, thereby incurring public debt in excess of the statutory debt limit, any debt so incurred would not be “authorized by law.” It would, in fact, be contrary to law.
Even President Obama has acknowledged the problems with this proposal. Last year, at a town-hall meeting in College Park, Md., he said:
Now, the gentleman asked about the 14th Amendment. There’s a provision in our Constitution that speaks to making sure that the United States meets its obligations. And there have been some suggestions that a president could use that language to basically ignore this debt-ceiling rule, which is a statutory rule. It’s not a constitutional rule. I have talked to my lawyers. They do not — they are not persuaded that that is a winning argument. So the challenge for me is to make sure that we do not default, but to do so in a way that is as balanced as possible and gets us at least a down payment on solving this problem.
But on other issues, Obama has indicated that he did not have the authority to take unilateral action to implement his policy preferences, but then he took such action anyway. For example, shortly before announcing his deferred-action program that approximated the DREAM Act, he told Univision that, much as he might like to grant “temporary protected status” to undocumented students, he could not “wave away the laws that Congress put in place.” He also observed that he didn’t “have the authority to simply ignore Congress and say, ‘We’re not going to enforce the laws you’ve passed.’” Then, of course, he proceeded to simply ignore Congress and take the action he wanted.
Let us hope that this time around the president will follow the law and not attempt to give Congress, and the Constitution, the back of his hand.
— John G. Malcolm is senior legal fellow in the Center for Legal and Judicial Studies at the Heritage Foundation.