14th Ammendment Invalidates Debt Ceiling?

[TampaYankee]

14th Amendment: Democratic Senators See Debt Ceiling As Unconstitutional

Samuel Haass samuel.haass@huffingtonpost.com

WASHINGTON -- Growing increasingly pessimistic about the prospects for a deal that would raise the debt ceiling, Democratic senators are revisiting a solution to the crisis that rests on a simple proposition: The debt ceiling itself is unconstitutional.

"The validity of the public debt of the United States, authorized by law... shall not be questioned," reads the 14th Amendment.

"This is an issue that's been raised in some private debate between senators as to whether in fact we can default, or whether that provision of the Constitution can be held up as preventing default," Sen. Chris Coons (D-Del.), an attorney, told The Huffington Post Tuesday. "I don't think, as of a couple weeks ago, when this was first raised, it was seen as a pressing option. But I'll tell you that it's going to get a pretty strong second look as a way of saying, 'Is there some way to save us from ourselves?'"

By declaring the debt ceiling unconstitutional, the White House could continue to meet its financial obligations, leaving Tea Party-backed Republicans in the difficult position of arguing against the plain wording of the Constitution. Bipartisan negotiators are debating the size of the cuts, now in the trillions, that will come along with raising the debt ceiling.

Sen. Patty Murray (D-Wash.), head of the Democratic Senatorial Campaign Committee, said that the constitutional solution puts the question in its proper context -- that the debate is over paying past debts, not over future spending.

"The way everybody talks about this is that we need to raise the debt ceiling. What we're really saying is, 'We have to pay our bills,'" Murray said. The 14th Amendment approach is "fascinating," she added.

The White House referred questions on the constitutionality of the debt ceiling to the Treasury Department. Treasury declined to comment.

Adam Winkler, a law professor at the University of California, Los Angeles, said that the 14th Amendment option has recently been much discussed in the field.

"Without any clear case law about the debt ceiling in particular, no one knows exactly how the courts would rule on that issue, about whether President Obama could ignore the debt ceiling," he said. "If he wanted to continue to service the public debt, he'd probably get away with it."

Which leads to a related question: Who's to stop him?

"To have standing to challenge a governmental action, you must show that you have suffered some injury from that action, and it's hard for someone to show such an injury," Winkler said. "If Congress acted as a unified body, and claims that the president has usurped their authority, then it may have some standing."

"But," he cautioned, "it would have to be a joint resolution. And this Senate would almost certainly block it."

The 14th Amendment became law in the wake of the Civil War, pushed by a Republican Congress eager to extend citizenship rights to freed slaves. But it also included a section dealing with federal debt: The government wanted to make clear to the market that even though loans to the Confederacy would not be paid back, any loans made to the U.S. government were still good.

In 1935, the Supreme Court held that despite the Civil War context, the amendment clearly referred to all federal debt.

"While [the 14th Amendment] 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," the majority wrote in Perry v. U.S. "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."

The law at issue, which tried to override the validity of a bond offering, "went beyond the congressional power," the Court ruled, setting a precedent that has not been overturned.

Because the government borrows based on its full faith, Congress doesn't have the authority to undermine that confidence by reneging on its obligation to its lenders, the ruling declared.

"To say that the Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise; a pledge having no other sanction than the pleasure and convenience of the pledgor," reads the opinion, delivered by Chief Justice Charles Evans Hughes. "This Court has given no sanction to such a conception of the obligations of our government."

President Barack Obama, who taught constitutional law, hasn't been afraid to assert executive authority. Most recently, he issued what amounted to a legal analysis defending the White House position that the military's operations in Libya were not in violation of the War Powers Act.

Ultimately, if Obama chose to ignore the debt ceiling, the debate would be more about power than an academic interpretation of the Constitution: Simply asserting that all debts and obligations will be paid may still spook the bond markets if a constitutional crisis is triggered.

Coons said that "from every professional -- either an economist or a currently practicing professional in the bond markets or financial services -- unanimously their input to me has been, 'You don't even want to have this debate, you don't want to terrify the markets by arguing over the interpretation of a previously irrelevant or not often applied provision of the Constitution. Don't spook the markets, don't scare the average American, just do your jobs.'"

But if that job can't get done, the government needs a fall back, Democrats say.

"Our challenge is that we have a partisan divide over how to craft a package that allows us to move forward -- that seems to me so deep that I am gravely worried we are rapidly running out of time," Coons said, noting that the Congressional Budget Office needs days or weeks to analyze whatever package of cuts is agreed to -- if one is agreed to.

Would the administration go down this road? It's impossible to say, but if the choice is between a financial crisis and a constitutional one, the option becomes awfully appealing.

"The consequences of [ignoring the debt ceiling] will produce a legislative response, and almost certainly a constitutional crisis -- a crisis of interpretation, if not fact," Coons said. "Unfortunately there's no way that that does anything except spook the markets."

See original article at:

http://www.huffingtonpost.com/2011/06/28/14th-amendment-debt-ceiling-unconstitutional-democrats_n_886442.html

[TampaYankee]

I've got to admit that if I ever knew this was in the 14th Ammendment I had long forgotten it.

It sure adds a new wrinkle to the issue. Rather than seeing this as a lever to get the GOP to compromise I see it as giving them license to walk away and let the Dems have full credit for the 'Debt Crisis'.

This puts the Dems between a rock and a hard place IMO. I can't think of anything that would rally the conservative and conservative leaning moderates more in the next election than for Obama and the Dems to declare the Debt Ceiling unconstitutional and issue new debt without Congressional approval. This would be the equivalent for the GOP that the Medicare dismantling is to the Dems.

On the other hand, to let happen the economic armageddon that almost all economists predict if the GOP doesn't compromise in good faith would be malfeasant as the stewards of government.

I guess Obama may have to draw a line in the sand that without a compromise solution by a date certain he would be left with no other choice than to invoke the 14th Ammendment as a resolution to the crisis. That would put the onus on the GOP to decide if they want the short term political gain in the next election versus losing the authority to ever again exercise any authority over the national debt beyond limiting spending on a routine year-year to year basis by the party in control of Congress. Interesting dilemma.

[RA1]

I think I understand the bits about the facts and constitionality of using the 14th amendment but regardless would not this still allow the House to not fund various or all bills unless and until the debt ceiling issue is "decided"? What am I missing or not considering? Interesting, indeed.

Best regards,

RA1

[MsGuy]

You're entirely correct, RA1, but for procedural reasons it's convenient for the party that controls only one house to hold "must do" legislation hostage to gain leverage on the rest of the players. We saw this same type of kerfuffle last December on the tax bill, last Spring on the budget resolution, and we'll see it again next Fall on next fiscal year's budget.

It's kinda like what's happening in Europe right now: Germany holds a pistol to Greece's head and announces that private creditors have to take a haircut or they'll pull the trigger; the ECB holds a pistol to Greece's head and threatens to pull the trigger if there's any haircut for bond holders; Greece puts a pistol to it's own head and threatens to pull the trigger if everybody else doesn't pony up. Winner is whoever convinces the others he's the craziest.

It's all the finest kind of political Kabuki of course, unless one of the players slips up & one of those guns goes off. Personally, I don't think one should go around pointing guns at heads that you don't intend to shoot. Accidents happen.

[TampaYankee]

I think I understand the bits about the facts and constitionality of using the 14th amendment but regardless would not this still allow the House to not fund various or all bills unless and until the debt ceiling issue is "decided"? What am I missing or not considering? Interesting, indeed.

Best regards,

RA1

The following is predicated on the likelyhood that the 14th Ammendment is controlling over U.S. Debt obligations.

I believe the point is that the 14th Ammendment 'decides' the debt ceiling issue. The Treasury does not need Congressional Authorization to make principle and interest payments on the debt which are due. It can issue bonds notes etc. to make such payments i.e. borrow to make such payments due if cash reserves are not on hand. In fact, the 14th can be interpreted that the Treasury MUST make such payments. Rather than holding a gun to the heads of U.S. creditors and credit rating, it turns out to be only an index finger.

Congress still has the authority to authorize all new and continuning spending but cannot block servicing the debt by failure to fund it. So, in throwing a tantrum, Congress may choose not to fund certain spending such as defense, social security checks, etc. They have that choice every day of every term. They have exercised that authority regularly whichever party has been in power. That is how we got to where we are. They serve at the pleasure of the people and subject to the pressures of the people and the lobbyists.

The one thing they cannot do is veto or threaten to veto authority to make debt payments unless they get their way. That goes for one party in Congress too. So says the 14th Ammendment. So there is no knife to the throat of the economy in order to get their way much as they want us to believe or much as they might have thought.

The one thing I do not understand is why this aspect of the 14th Ammendment hasn't been highlighted years earlier and removed the periodic debt ceiling Kabuki Dance that has become ritual for both parties.

I think this changes the entire dynamic of the discussion. If I were Obama then I would:

Ask the White House Counsel to give a legal opinion on the 14th Ammendment requirements for debt service,

That if that opinion were that the 14th REQUIRES or authorizes that debt be serviced independent of Congressional authorization, then

I would declare the debt limit issue resolved by Constitution obligation,

That necessary and sufficient borrowing would be undertaken for debt service as the Treasury determines and the Constitution requires, and

That I urge continue continued effort with Congress to enact a long-term deficit reduction bill by September 1.

That takes coercion off the table and puts the deficit reduction ball on a level playing field. Oh, and it puts a little heat on Congress to work to a compromise in a timely manner, or forego the August recess to get it done, or to admit that resolving the deficit takes second place to the August recess.

[RA1]

Thanks for the replies, MSGuy and TY-

What do you mean by politics with no coercion? Hasn't politics in the US been squabbling between and among the parties since day one? Isn't that BOTH the bad and good news about politics in the US? If it takes long enough and survives enough criticism, perhaps it will turn out to be as right as possible? No guarantees.

Best regards,

RA1

There is already talk in Congress to remain in session during the Independence Day holiday. We shall see.

[TampaYankee]

In addition to White House Legal Counsel I would ask opinions from three recognized Constitutional Law Centers.

[TampaYankee]

Interesting comment from one of the talking heads on Cable -- I can't recall which one -- mentioned that the House might impeach Obama if he went over the heads of Congress. He also mentioned that if so then there was no way the Senate would convict with the Dem majority.

I would be an interesting saga if so. I think Obama would be the big winner if he played it right -- but that is an if. That being: when Congress refuses to step up and pay the bills that Congress incurred then the President has to step in to pay the bills as the Constitution demands.

This wouldn't phase most on the right but it would seem responsible to those in the middle which is where elections are won and lost. At the least, it wouldn't hurt him.

[MsGuy]

...one of the talking heads on Cable...mentioned that the House might impeach Obama if he went over the heads of Congress.

Seems to me we are edging back into pistol to your own head territory here.

A country planning on issueing a couple of trillion bucks in new debt (under the most wildly optimistic estimates), not to mention rolling over several trillion more in existing bonds, shouldn't be going out of its way to raise questions as to its reliablity as a debtor.

US national debt per (income)taxpayer: $129,540

[lookin]

US national debt per (income) taxpayer: $129,540

There was a time , back in the fifties, when corporations would have shared 30% of that tax burden. They're good for only 6% now.

No doubt they've been investing the savings in job creation.

[TampaYankee]

Seems to me we are edging back into pistol to your own head territory here.

It wouldn't phase me. The country cannot let one party resort to extortion to get its ideological way. If I believed I had the Constitution's sanction to pay debt due then I wouldn't hesitate to do so. If I didn't believe I had it then I'd draw a line at what I believe to be fair compromise and let the chips fall where they may. You cannot give in to extortion way beyone reasonable compromise else you might as well go home and cede the government to the other party. Don't even bother to run again. You are done.

[Guest epigonos]

This is the type of political maneuver that ALWAYS comes back to bite the initiating party in the ass. If the Obama administration tries to use it the Republicans will appeal it to the Supreme Court. Our system, for better or worse, over two centuries, has evolved to the point that the Supreme Court and ONLY the Supreme Court may interpret the Constitution and that includes the 14th Amendment. If there is any ambiguity it has become the responsibility of the Supreme Court to clarify that ambiguity. The big question is whether or not the Court could take the case. I would bet that the Court conservatives would vote to do so. My uneducated guess is that we would then see a 5/4 decision against the Obama Administration. The one thing that is certain is that there is no way the Court would be able to render a decision by August 2nd. unless that decision is to refuse to take the case.

[TampaYankee]

This is the type of political maneuver that ALWAYS comes back to bite the initiating party in the ass. If the Obama administration tries to use it the Republicans will appeal it to the Supreme Court. Our system, for better or worse, over two centuries, has evolved to the point that the Supreme Court and ONLY the Supreme Court may interpret the Constitution and that includes the 14th Amendment. If there is any ambiguity it has become the responsibility of the Supreme Court to clarify that ambiguity. The big question is whether or not the Court could take the case. I would bet that the Court conservatives would vote to do so. My uneducated guess is that we would then see a 5/4 decision against the Obama Administration. The one thing that is certain is that there is no way the Court would be able to render a decision by August 2nd. unless that decision is to refuse to take the case.

It's far from clear that the Court would take the case. On several occasions they have refused to get between Congress and the Executive. Assuming they did, it is not clear that the conservative justices would rule against.

Also, there is the precedent where the Court ruled against President Jackson and he ignored them. The only remedy to that is impeachment with conviction - tough sledding with the President's party in the majority in the Senate.

This debt ceiling thing is not a conservative issue, it is a radical politics issue. Both GOP and Dem congresses have ALWAYS passed the debt ceiling - conservative or not. This is about political strategy and idelology and not conservative values about the debt ceiling.

It is not clear to me that the conservative justices would rule against the application of the 14th Ammendment just because they are conservatives or generally conservative leaning. I doubt they would subvert a fair reading of the Constitution to push political leverage for ideological purposes. That would be, by far, the most damaging aspect to our country to come out of this debt ceiling crisis. Forever after, the Court would be viewed as a political arm for or against the party in power.

On another note, this is starting to get interesting as we get down to the wire. I think the Progressives are getting ready to did their heels in if Obama caves in any profound way on entitlement benefits. Unlike the tea partiers in the House, the Progressives CAN kill any conceivably likley bill. Boehner & Obama will need them to pass anything the Senate is likely to accept, IMO. There is no way the Senate will accept a bill passed by a GOP majority in the House.

[Guest epigonos]

As to whether or not the Supreme Court would accept an appeal of an Obama Administration decision to use the 14th Amendment to raise the National Debt Ceiling there is absolutely NO way of anticipating what the Court would do. A multitude of legal scholars were convinced that there was NO way the Supreme Court would accept Gore vs Bush in 2000 yet they did.

The story that Andrew Jackson chose to ignore a Supreme Court decision regarding to removal of the Cherokee Indians from Georgia by the state government is a MYTH. The Supreme Court NEVER ruled on this subject. The Court determined that it lacked original (trial) jurisdiction over the case. John Ross, the petitioner, would have had to re-file his case in a District Court, then petition the Supreme Court to hear it on appeal. This never happened. Everything Chief Justice John Marshall wrote about the federal government’s obligation to the Cherokee was personal opinion, NOT part of a legally binding decision.

If the Obama Administration were to use the 14th Amendment in this case and then ignore an unfavorable decision of the Supreme Court a Constitutional crisis of overwhelming magnitude would follow. Impeachment proceeding would immediately be implemented in the House of Representative. Obama would “likely” be impeached and the Senate would hold a removal trial the outcome of which would be in doubt. Senator Charles “Chuck” Schumer of New York, a very forceful Democrat has stated categorically that the 14th Amendment WILL NOT be used in this situation.

[TampaYankee]

A multitude of legal scholars were convinced that there was NO way the Supreme Court would accept Gore vs Bush in 2000 yet they did.

Good point. After that, anything is possible.

Thanks for illuminating the Andrew Jackson story. I learned something today.

If the Obama Administration were to use the 14th Amendment in this case and then ignore an unfavorable decision of the Supreme Court a Constitutional crisis of overwhelming magnitude would follow. Impeachment proceeding would immediately be implemented in the House of Representative. Obama would “likely” be impeached and the Senate would hold a removal trial the outcome of which would be in doubt. Senator Charles “Chuck” Schumer of New York, a very forceful Democrat has stated categorically that the 14th Amendment WILL NOT be used in this situation.

Yes, it would be a brouhahah and probably not good for his reelection. Even if the SOTUS eventually overturned his decision the horse would be out of the barn as far the immediate servicing of the debt. That would give additional time to those who walked off cliff to reconsider their positions under new pressure from the public and Wall St. to come to some realistic compromise.

As for Schumer, his comment is more hopeful than factual. Do you really believe that Obama would allow the country to default due to Congressional intransigence? If so then he would be malfeasant in his oath to support and protect the Constitution. Personally, if it comes to it I'd rather see Obama ignore an adverse Supreme Court ruling, should it come to pass, if the alternative is to let the country default. Let the Senate and then the voters decide which path the country is to take.

[Guest epigonos]

Tampa I really don’t think you would want Obama to ignore an adverse decision of the Supreme Court under ANY circumstances. If he were to do so it would NOT create brouhaha it would create a constitutional crisis the likes of which this country has NEVER experienced with the possible exception of the Civil War. In fact it would likely destroy our system of division of powers. It is the responsibility of the Executive Branch of our government to provide the muscle for the enforcement of decisions made by the Judicial Branch. If the President refuses to do so then the Judicial Branch of government would become meaningless and powerless. This has NEVER happened in the history of this Republic.

In 1957 the last thing in the world Dwight Eisenhower wanted to do was sent troops into Little Rock, Arkansas to enforce the Supreme Court’s decision on school integration. Eisenhower has strong personal doubts that military force was the way to successfully accomplish integration. Yet on September 25, 1957 members of the United States 101st Airborne Division lined the entrance and halls of Little Rock's Central High and escorted Melba Pattillo from class to class.

In 1974 the last thing in the world Richard Nixon wanted to do was turn the Watergate tapes over to Federal Judge John Sirica. The case, United States v. Nixon went to the Supreme Court on July 24, 1974 and the Court unanimously (minus the recused Justice William Rehnquist) upheld Sirica’s subpoena of the Watergate tapes. Nixon then turned over the tapes.

If the United States Supreme were to decide that the President of the United States under provisions of the 14th Amendment does NOT have the power to unilaterally raise the debt decision and the President were to ignore that decision the reaction the House of Representatives would immediately impeach him. The United States Senate would then likely remove him from office. The Senate is extremely protective of what it sees as it constitutional prerogatives. Senators are highly independent and arrogant satraps who do not look kindly upon what they consider the usurpation of their powers. It is clear how much support, in a case like this, the President would get even within his own party in the Senate.

Under NO circumstances does this country want or need to face a constitutional crisis of this magnitude at this time.

[TampaYankee]

Tampa I really don’t think you would want Obama to ignore an adverse decision of the Supreme Court under ANY circumstances. If he were to do so it would NOT create brouhaha it would create a constitutional crisis the likes of which this country has NEVER experienced with the possible exception of the Civil War. In fact it would likely destroy our system of division of powers. It is the responsibility of the Executive Branch of our government to provide the muscle for the enforcement of decisions made by the Judicial Branch. If the President refuses to do so then the Judicial Branch of government would become meaningless and powerless. This has NEVER happened in the history of this Republic.

Maybe, maybe not. I'm doubtful. Consider the pressure the Court would be under. If the President let it be known that he would service the debt, the SOTUS notwithstanding, the Court might be reluctant to hear the case, or, if it did to rule adversely. The Court also has its status to preserve. If this crisis had the potential to marginalize the Court everafter they might not want to press a showdown over a specific interpretation of the words of the 14th Ammendment that clearly call on the Debt to be respected, i.e. serviced.

If the United States Supreme were to decide that the President of the United States under provisions of the 14th Amendment does NOT have the power to unilaterally raise the debt decision and the President were to ignore that decision the reaction the House of Representatives would immediately impeach him. The United States Senate would then likely remove him from office. The Senate is extremely protective of what it sees as it constitutional prerogatives. Senators are highly independent and arrogant satraps who do not look kindly upon what they consider the usurpation of their powers. It is clear how much support, in a case like this, the President would get even within his own party in the Senate.

Asumming the Court did overturn his action, I do not think it is obvious that there would be 67 votes in the Senate for conviction. Politics being what it is some of his party would support him on their own -- maybe enough. Combine that with the very strong support Obama would likely receive from the Wall St and Big Business community and a good part of the population, wavering Senators might find the backbone to hang tight with the Pres. It is very hard for politicians to overlook their own narrow self interest as we are constantly reminded.

I admit there is a lot of uncertainty should this come to pass. There is much less uncertainty about the long term adverse effects of default on the economy, at least according to economists and business leaders almost unanimously -- that means on business, bonds markets, jobs, savings, .... The potential for a new millineum version of the 1930s is not inconceivable, with the long term recovery that accompanied it. That might include the potential collapse or sacking of Social Security, Medicare, Medicaid, 401Ks. Is all of this certain to happen? Who knows, but it cannot be ruled out either. The Depression was caused only by bad economic policy and investment practices/decisions unfettered by regulation. There was NO default by the Federal Government to aggravate the Depression.

IMO, the GOP seeks to roll back this country values and government to the preDepression era. They are threatening poison pill tatics to do it, or at the least to deny a second term to Obama and reclaim both Houses so they can do it. The GOP is playing with real fire here. It could burn our house down. That cannot be permitted to happen.

There is also no broad based taste for the country reverting to a pre New Deal status in terms of social saftey nets, government activism on food, drugs, work place safety, the environment,...

Finally, I submit that a minority party holding a gun to the head of the President/Majority party 'that it is their way or the highway' would do as much to damage the fabric of our government on a lasting basis. Poison pill approaches to legislation just cannot be tolerated or accepted as a precedent for minority despotism over the elected majority. If the SOTUS is willing to sanction that then it deserves to be ignored. I do not come to this lightly as I respect our separation of powers and want to see it upheld and maintained. But all of our segments of government need to respect the rights and powers of the others and of the democratic process. The Founding Fathers crafted a government meant to work ONLY THROUGH COMPROMISE of representatives selected by the electorate.

[MsGuy]

And while all this 14th Amendment stuff is working itself out in the courts and Congress no doubt flocks of folks will be lining up to buy all those T-bills of doubtful legality.

Taking the 14th Amendment route is kinda like betting the pistol to your head will misfire.

[TampaYankee]

And while all this 14th Amendment stuff is working itself out in the courts and Congress no doubt flocks of folks will be lining up to buy all those T-bills of doubtful legality.

Taking the 14th Amendment route is kinda like betting the pistol to your head will misfire.

I concede that if it gets to that point the Full Faith and Credit of the United stated might be destroyed anyway. I think that might ultimately depend on the reaction by the people/ business institutions and the political pressure to recognize the sale of bonds. Congress could sanction ex post facto.

But if the credit goes in the crapper then at least we wouldn't have conceded the democratic system that has served the country well for 235 years to minority party poison pill despotism. Remember, all of this discussion is predicated on the proposition that an acceptable compromise is beyond reach and we face imminent default. The threat to act without Congress is a measure to put a gun to their head to solve the problem. As with all threats they mean nothing if there is no willingness to follow through with them.

All the conjecture about what the Court would do is just that until the Court is faced with the actual case. The more I ponder this and the stakes involved I believe they would find for the President or walk away rather than sanction the chaos that would be created. It might be very different if the words were not in the 14th Amendment but they are there and open to reasonable interpretation. Given one interpretation that leads to government crisis and economic meltdown or another that avoids it albeit with some very narrow swing in power from the Congress to the Executive, some power justifiable by words of the Constitution, I cannot see the Court opting for the former, even if only by 5 to 4. However we will never know if Obama accepts default as his response to Congressional intransigence. I still maintain he would be malfeasant to do so.

What other alternatives are there to capitulation and changing the nature of our democracy forever, not to mention loosing our country's identity forged in the post WWII era? Either way we may suffer economic catastrophe, but we do not lose our principles of governing and modern era identity. Some may not share those concerns. That is what elections are about.