About the crisis: The GOP is right. So is Obama. That’s why it’s a crisis.

Larry Kummer, Editor

11 years ago

Summary: We can learn lost lessons about our government from the debt crisis. Much of what’s said in the media is wrong, chaff thrown to confuse us. Here are some simple facts about the crisis. Both sides are right. If they cannot agree, there is a simple but perilous solution. It has worked before and will work again — but must not be overused. This is the third in a four part series.
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Contents

Introduction: our problem
The Republicans are correct
The President’s Options
The 14th Amendment
Other posts in this series
For More Information

(1) Introduction: our problem

The Republicans in Congress are using their leverage to change ObamaCare, entitlement spending, and tax policy. They are holding government spending hostage, and threatening to force the government to default on its debt. The slowdown (not a shutdown) is depressing the economy and harming a large number of Americans. Unless Congress acts, sometime after October 17 the Federal government will default on its bonds.

(2) The Republicans are correct

Many of us have forgotten the basics of our system.

Congress and Presidents have equal legitimacy as elected representatives of the people.
Control of spending is among the greatest powers of the legislature, and has been a powerful tool to shift power from Kings to the people.
Therefore the House has both history and law on their side in this battle with President Obama.

Democrats argue that Washington’s rules of polite conduct trump law and logic, as if conflicts about high public policy should be run like Sunday afternoon monopoly games — where consulting the actual rules is a no-no.

For details see this excerpt from “Government shutdowns are the worst kind of budgetary reversion, except for all the rest“, Gary Cox (Professor of Political Science, Stanford), blog of the Washington Post, 3 October 2013:

Who came up with the idea that budgets should be delayed as a means to force the executive to adopt policies it doesn’t want to?

The idea goes back to England’s Glorious Revolution, where MPs fought hard to put the Crown on a short financial leash, so that they could control Crown officials’ actions. Although they did not use the term, English arguments about what would give Parliament bargaining leverage vis-à-vis the Crown hinged on the budgetary reversion. Because expenditure authority would lapse every year, forcing portions of the government to “shut down” in contemporary American parlance, parliamentarians were assured the Crown would seek a new budget every year — whereupon they could bargain for attainment of their various goals.

As James Madison put it, “This power over the purse may…be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.”

… when given the power a shutdown reversion confers, the “immediate representatives of the people” have, in country after country, done precisely the sort of thing that the House Republicans are now doing. They have sought to force the executive to adopt “just and salutary” measures, using the threat of a government shutdown. Examples include the Australian episode noted by Max Fisher, Chile before and after its civil war of 1891, and various European countries that subsequently sought to create what was dubbed parliamentarisme rationalisé in the interwar period.

… There are two and only two institutional reforms that can reliably avoid the bargaining failures that lead to shutdowns. … {see the article for more}

(3) The President’s options

President Obama’s actions to protect the United States in response to Congress must conform to the following three laws:

The debt ceiling, originally established by the Second Liberty Bond Act of 1917 (see this Congressional Research Service report)
The Federal Reserve Act, that forbids direct lending by the Fed to the government
The 14th Amendment, line 1 of Section 4: “The validity of the public debt of the United States, authorized by law … shall not be questioned.”

Should Congress press the issue, it will become a Gordian Knot. During the past two centuries Presidents have encountered several Gordian Knots. Sometimes the knot won. Some Presidents untied the knot. Some cut the knot, as did Alexander the Great.

Georgia sought to steal land from the Cherokees. In 1832 the Supreme Court ruled that Georgia could not impose its laws upon on Cherokee land (Worcester v. Georgia). In legend Jackson said “John Marshall has made his decision, now let him enforce it!” In fact he ignored it.
The Civil War as the largest of knots. Starting in April 1861 Lincoln suspended habeas corpus in some areas, a power specifically granted to Congress in Article I of the Constitution. He ignored Court orders to stop, including one by the Chief Justice of the Supreme Court. Congress retroactively approved in March 1863.
The Great Depression was a string of knots. FDR was prepared to defy the Supreme Court if it ruled unconstitutional the 1933 resolution of Congress ending gold convertibility. The Court did so in Perry v. United States (1935), but also denied the bondholders’ claims for relief.
Elected on a peace platform while preparing for war, FDR tied his own knot. He aggressively bent the 1930s Neutrality Acts to help Britain. Actions such as the ironically named Neutrality Patrol were interventions to help Britain.
To fight an unpopular war, in June 1950 Truman committed US troops to the Korea without Congressional authorization (details here).

Presidents can act according to their understanding of their duty and oath. Their ultimate limit is Congress’ power of impeachment. But each such trans-Constitutional action by a President bends the Constitution. So far it has rebounded successfully, and often to our benefit. If overused or misused, the time will comes when a President goes too far — bending the Constitution until it breaks.

President “Make my day” Jackson, by Thomas Sully. We like bold leaders.

(3) The 14th Amendment: the heart of this crisis

While this provision {of 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. We regard it as confirmatory of a fundamental principle … and the expression “validity of the public debt ” embraces whatever concerns the integrity of the public obligations.
— Supreme Court ruling in Perry v. United States (1935)

What if the President decides the needs of the United States are paramount, as stated in the 14th Amendment, and defies Congress by issuing debt in excess of the debt ceiling? He can act in the tradition of our greatest Presidents. I believe the majority of the American people would applaud his actions to override the Republican initiative. Would this be the best thing to do? The correct thing to do? Only time can answer such questions.

From “Under What Circumstances Can The President Ignore the Debt Ceiling? “, Jack M. Balkin (Prof Constitutional Law, Yale), 6 July 2011:

Under these circumstances, the President would authorize the issuance of new debt if he believed that it would stabilize the situation and prevent default and economic catastrophe.

Without Congressional authorization, this action would be of very dubious legality. Indeed, without subsequent authorization, it would be illegal. … But in extreme circumstances the President would do so anyway, arguing, like Lincoln, that Congress can approve what he does after he does it.

… Such an act, in my view, is not legal when done, but it may become legal later on, if Congress approves. But it is a dangerous maneuver. If Congress does not approve it after the fact, then the President has acted illegally, and he may be impeached and removed from office.

For more by Prof Belkin about the 14th Amendment: “The Legislative History of Section Four of the Fourteenth Amendment“, 30 June 2011. After years of obscurity, this clause’s day of fame might come soon.