Obama Nixes the 'Let's Just Call the Debt Ceiling Unconstitutional' Option

Prominent legal scholars, along with many bloggers with no legal training whatsoever, recently have been floating the possibility that if a deal isn't struck to raise the federal debt ceiling before Treasury's August 2 deadline, then the Obama administration should use a clause in the 14th Amendment to declare the debt ceiling itself unconstitutional and continue to issue debt as usual. An interesting idea! But the Obama administration now appears to have taken this "constitutional option" off the table.

The Treasury secretary himself has cited Section 4 of the 14th Amendment in public — although mostly to stress the importance of reaching a debt deal, not as a warning about how his department could use it to declare the statutory debt ceiling law unconstitutional:

Section 4. 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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

When this was ratified after the Civil War, the idea was to prevent Southern Democrats from nullifying the Union's war debt — which they could be taxed to help pay off — if they regained power. The "constitutional option" proponents' loose interpretation of this is that it's designed to prevent politics from getting in the way of Treasury's ability to pay the debts it had incurred. Would this rationale pass legal muster in the Supreme Court if the Obama administration were to declare the ceiling unconstitutional? Who knows! It's never been tested.

But some Democrats have been supporting this option because they claim it gives Obama the leverage he needs to squeeze a debt deal out of Republicans. If the deadline passed and the government just continued paying its bills as usual, they say, then this incentivizes Republicans to take the deficit-reduction deal that's on the table or have nothing at all. On the other hand, it would also launch an endless constitutional crisis, the public would likely turn against Obama for a power-grab, it would basically destroy Congress' ability to get a 2012 budget passed this fall, and we'd spend the next year talking about the Impeachment Trial while the economy continues to plummet.

These all seem to be moot arguments, however, as of this morning. The Treasury Department's general counsel wrote a letter to the New York Times today in which he indicated that the administration has no intention of triggering the "constitutional option":

The New York Times
620 Eighth Avenue
New York, NY 10018

To the Editor:

Contrary to Professor Laurence Tribe's assertion (Op-Ed, July 8), Secretary Geithner has never argued that the 14th Amendment to the U.S. Constitution allows the President to disregard the statutory debt limit. As Professor Tribe notes, the Constitution explicitly places the borrowing authority with Congress, not the President.

The Secretary has cited the 14th Amendment's command that "[t]he validity of the public debt of the United States… shall not be questioned" in support of his strong conviction that Congress has an obligation to ensure we are able to honor the obligations of the United States. Like every previous Secretary of the Treasury who has confronted the question, Secretary Geithner has always viewed the debt limit as a binding legal constraint that can only be raised by Congress.

Sincerely,

George W. Madison
General Counsel

You can argue that even if the administration had no intention of doing this, it should have played the bluff longer if it was beginning to make Republicans squirm. (Republicans tend to know when Democrats are bluffing well before Democrats themselves know they're bluffing, though.) But it seems like this 14th Amendment thing would just delay the inevitable confrontation. Unless Republicans allow a small percentage of extra tax revenue to be part of a deficit-reduction deal, the country will default and send us back into a wretched financial crisis. Republican politicians may want a bad economy to hover over Obama's re-election campaign, but they probably don't want all of their assets, and their big donors' assets, to go down the shitter. Force them to make the right choice, and pummel them if they don't.

Besides, the most likely explanation for this surreal debate is still that a deal's been worked out for some time, in secret, and our dear leaders will just fuck with us until the last minute. (And no, Howard Kurtz, high-level manipulation is not commendable "adult" behavior.)

[Image via AP]