Source: http://www.dorfonlaw.org/2011/07/
Timestamp: 2019-04-23 12:52:06+00:00

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I began work on my latest Verdict column on Friday, when a deal to raise the debt ceiling looked like a 50-50 proposition. It now looks much more likely, so I've retooled the column as something of an evergreen addressing the following question: What should the President do when faced with only unconstitutional options? It's a bit of a follow-up to, and expansion of, my earlier blog post on the topic. I explain how our constitutional law stubbornly refuses to acknowledge a substantial role for balancing, which is how the issue would be addressed in most other constitutional democracies.
Developing criteria for deciding among unconstitutional options presents one interesting possibility that should pretty clearly be rejected: Namely, doing whatever the heck you want. Let me explain.
In the example I discuss in the column, I assume that the President has three unconstitutional options: 1) Ignore the debt ceiling and borrow in violation of separation of powers; 2) Tax without congressional authorization and violate separation of powers; or 3) Fail to meet some obligations in violation of Section 4 of the Fourteenth Amendment. I don't say that all three are unconstitutional, just that we get an interesting problem if we assume that they are.
Now, suppose you are the President and you are presented with the above menu of options. Why not think outside the box? Here's another possibility: Order the army to force Congress to raise the debt ceiling without conditions. An abuse of your authority as President? Of course. Unconstitutional? Sure. But, you might think, as long as I've got to do something unconstitutional, I may as well do something that is really effective.
That's a pretty unrealistic example because it wouldn't be effective. The army might well refuse to carry out the order. And the markets would likely react very unfavorably to the new debt issued after the President's coup. But suppose that weren't true. Or suppose that the President did something else that might be more effective. He could, for example, order the printing of more money in violation of the statutory cap on greenbacks in circulation. That might not even be unconstitutional, just illegal. Of course, any time the President willfully violates a federal statute that is itself valid, he could be said to be acting unconstitutional in that he violates his duty to take care that the laws be faithfully executed. But is this more unconstitutional than any of the other options?
Some of what the foregoing shows is how difficult it may be to say for certain in any given case that all of the options are unconstitutional. There will often be some constitutional options that are either off the table for political reasons or too awful to be considered on policy grounds.
That last point suggests to me that whatever the right test is for deciding among unconstitutional options, it probably should include a substantial consideration of consequences. In sufficiently extreme cases, bad consequences could be enough to rule out a constitutional option in favor of an unconstitutional one.
I suspect that beat cops make this sort of calculation all the time in weighing the costs and benefits of complying with the Fourth Amendment. Suppose that a law enforcement official has probable cause to believe that a major dealer in illegal arms has a large stash of weapons in his secret lair. The officer could wait to get a warrant but the lair is far from a court house and there is very poor cell phone reception outside the lair. (Wouldn't you choose such a spot for a secret lair?) However, the officer cannot really be sure that there is an exigency justifying a search without a warrant. Still, he might risk undertaking the search anyway, because even if the search violates the Fourth Amendment--and thus the fruits of the search would not be available in the prosecution's case in chief in a subsequent criminal prosecution of the arms dealer--the contraband will be confiscated. Here, the officer could make a judgment that the potentially unconstitutional action is better than the constitutional one.
In a sense, all I'm saying here is that we shouldn't fetishize the Constitution in the same way that we shouldn't fetishize the law. Legal philosophers debate whether there is a prima facie moral duty to obey the law, but almost no one takes the position that there is an absolute duty to obey the law. Ditto for the Constitution.
That will do it for me for this week. I'm speaking at the annual Practicing Law Institute Supreme Court Review session tomorrow and then on vacation for a few days. Neil Buchanan will post for the remaining days this week. I think he'll find a few economic-policy-related news items to address.
Consider this another in my occasional series that might be titled something like What's Wrong with our Constitution. A couple of weeks ago, I explained how the impasse over the debt ceiling would not arise in a parliamentary system of government. Now to explain how the American conception of judicial review may be leading both Congressional Republicans and President Obama to keep driving straight ahead rather than swerving to avoid the collision.
First, a disclaimer: The metaphor of a game of "chicken" to which I have just alluded is almost entirely misplaced, because Obama and the Senate Democrats have already conceded an enormous amount to the Republicans. Recall that in the past, the debt ceiling was simply raised. The only reason we are even at an impasse is because of the Republicans' decision to use the occasion of the debt-ceiling bill as an opportunity to extract spending cuts that they were unable to achieve during the ordinary budget process. Both the Senate bill and the President's negotiating position from the beginning have accepted the framing: They are willing to make very substantial budget cuts. The key issues that have divided the parties are whether the cuts are accompanied by much smaller revenue increases and how much the debt ceiling is raised. Passage of the Senate bill or acceptance of the "grand bargain" President Obama was offering Speaker Boehner last week would represent a gigantic policy victory for the Republicans. So in an important sense, President Obama and the Congressional Democrats have already swerved. But having done so, they found that the Republicans swerved right with them. So the question now is whether either party will swerve out of the way, given their new trajectories.
Okay, enough of the game-of-chicken metaphor. Now let's think about the situation more straightforwardly as a negotiation. An important factor in whether parties to a negotiation reach a deal is how they perceive the alternatives. In general, the more that their predictions align, the more likely they are to strike a deal. Consider settlement negotiations between the parties to a lawsuit. Let's say that the plaintiff predicts that going to trial has a net positive value of $1 million. Just to make up some numbers: Plaintiff thinks he has a 50% chance of establishing liability, and that the most likely damages figure is $2.2 million, so the discounted value of winning is $1.1 million minus costs of litigation, which he estimates at $100,000. Now let's suppose that the defendant has the same estimates and costs. If so, the defendant should be willing to offer a settlement up to $1.2 million (the discounted expected cost of losing at trial plus the expected litigation costs), and so the case should settle for something between $1 million and $1.2 million. But what if the defendant thinks it much more likely that he'll win at trial? Let's say the defendant thinks there's only a 1 in 4 chance of losing at trial. If so, he'll offer no more than $650,000, which the plaintiff will reject as less than his expected value at trial (assuming no risk aversion). The case won't settle. In order to encourage settlement, the legal system has invented a number of ways of bringing the parties' respective evaluations of the case closer together, such as mini-trials.
To be sure, even when parties have exactly the same view of the probabilities, they may not settle. In the first scenario, we can imagine that the defendant offers only $1,000,001.00, but the plaintiff refuses to accept. Even though accepting the offer is better than going to trial, the plaintiff may feel that he's entitled to more than $1 of the $200,000 trial-avoidance surplus (that surplus being made up of the parties' collective saved litigation costs). Still, a case like this is much more likely to settle than a case in which the parties' views of the merits are far apart.
Now back to the debt ceiling negotiations. Part of what's going on is the Republicans insisting on keeping all or nearly all of the surplus. Another part of what's going on is that this is a multi-player negotiation, rather than a bilateral one. But some piece of what's going on is different assessments of what happens in the case of no legislation being enacted. The Republican leadership of Speaker Boehner and Senator McConnell appear to agree with the conventional wisdom that Republicans would be blamed for non-payment of Social Security, government shutdown, etc. That's why they--and especially Boehner, who had a first-row seat to the 1996 govt shutdown--have been willing to cut a deal. But I suspect that at least some of the Tea Party backbenchers think that President Obama would take more of the political heat for making the decision, for example, to pay bondholders but not elderly Social Security beneficiaries. Maybe they're right; maybe they're wrong. However, so long as their political calculus differs substantially from that of the President, Congressional Dems, and their own leadership, they are likely to hold out.
Admittedly, the 14th Amendment option has not been at the forefront of the discussions among the main political players. But it's there in the background, and it casts a lot of uncertainty--and therefore potential for divergent assessments--over how things will play out. Suppose Obama decides to withhold Social Security checks, no doubt arguing that Republicans forced his hand. A beneficiary then sues. Will the courts say Section 4 of the 14th Amendment is justiciable? If so, will they hold that Social Security benefits count as part of the "public debt" under Section 4? If yes, what will be the remedy? How long would it take the case to get to the Supreme Court? Would there be an injunction in place pending review? These and other questions all open the way to widely different views of the merits, and thus make a bargain less likely.
In many other constitutional democracies, at least some of these uncertainties could be resolved in advance through an "abstract" case. Some U.S. state courts also have the power to issue "advisory" opinions. But under longstanding practice and precedent going back to the George Washington Administration, our federal courts cannot issue advisory opinions. In many contexts, we have found ways around that problem. For example, if a private debtor were threatening not to pay his creditors, the creditors could sue for declaratory or injunctive relief in advance of the actual default. But a challenge of the sort I'm imagining in advance of the stoppage of Social Security payments would be dismissed by the federal courts as unripe, and thus advisory.
The longstanding rule against advisory opinions is a fair, though not inevitable, interpretation of the Constitution's Article III and the broader principle of separation of powers. But in times like these at least, it is a defect in our Constitution.
In my column this week, I discuss the U.S. Supreme Court's decision in Davis v. United States, which held that if police conduct a search that is authorized under existing appellate precedent interpreting the Fourth Amendment, then the evidence that results from that search is admissible at trial, even if the High Court announces (after the search but before the conviction becomes final) that such searches actually violate the Fourth Amendment. The Court takes the position that the exclusionary rule, under which a judge keeps illegally obtained evidence from the jury's consideration at trial, is a costly way of inducing police to comply with the Fourth Amendment. Suppression ought therefore to be limited to cases where it will most effectively deter Fourth Amendment violations -- cases in which police have behaved culpably (i.e., deliberately, recklessly, or with gross negligence) in performing a search or seizure. In my column I discuss the changing face of the exclusionary rule over the last century, and I challenge the Supreme Court's conclusion that effective deterrence requires police culpability. The Court, I argue, confuses fairness (of punishing only those who do something culpable) with deterrent value.
In this post, I want to discuss the difficulty we have, on both sides of the aisle, in ignoring concepts of "fairness" when it comes to the exclusionary rule. Quite apart from the Court's desire to limit exclusion to cases in which police deserve to have their efforts undermined and frustrated, it is common to think about the suppression of evidence in terms of what everyone deserves.
For opponents of the exclusionary rule (and for some supporters as well), it is clear that a person who commits a criminal act deserves to be punished. The fact that police search the criminal's home without probable cause or without a warrant, moreover, does nothing to diminish this desert. Say, for example, John Doe murders his wife. By coincidence, then, police decide to search John Doe's home, without probable cause, because they smell donuts when they walk by and they feel an overwhelming craving for them. They break into the house to look for donuts, in other words, and instead find the body of John's murdered wife. The behavior of the police in this case was totally inappropriate. They were searching a person's home to find donuts to steal. Yet John Doe nonetheless deserves punishment for murder, just as much as he would deserve it if the police had received a call from a reliable informant and sought a warrant to look for the body that they found. If John Doe escapes punishment because the police lacked probable cause, most people outside the A.C.L.U. will find this result unfair, to society, to the victim's family, and to justice itself, which requires that people pay for their crimes.
For strong defenders of the exclusionary rule, the introduction at trial of evidence obtained in violation of the Fourth Amendment is itself unfair. By benefiting from evidence taken illegally, the police (and everyone represented by the State in wanting John Doe punished) unfairly benefits from having violated the Constitution. John Doe, moreover, suffers the unfairness of landing in prison (or death row) only because the police violated his Fourth Amendment right to security against unreasonable searches. Like a million-dollar lottery winner who stole his winning ticket, the government is cashing in on its own unlawful conduct, thereby adding insult to injury.
A cooler-headed assessment of fairness suggests that once police perform an unreasonable search and seizure that turns up reliable incriminating evidence, it becomes impossible to achieve fairness for all parties. Suppression unfairly protects someone who deserves to be punished, while introduction unfairly exploits a constitutional violation to yield benefits that would otherwise have eluded the violator. And those who debate about the exclusionary rule have a difficult time avoiding the issue of fairness, even when they seem to be talking about something else (such as the marginal deterrent value of exclusion). This reality suggests that most people would have an easier time if we were able to deter Fourth Amendment violations without suppressing evidence of wrongdoing, when the perpetrators of wrongdoing (whether the criminals or the police) are less salient and our appetite for just desserts less intense. Utilizing the exclusionary rule to bring about an optimally efficient state of affairs seems inevitably to clash with the intuition that justice and fairness to the individual actors at issue are more important than the utility maximization that the exclusionary rule is currently tasked with achieving.
In their dueling speeches on the debt ceiling impasse, both President Obama and Speaker Boehner reached for a very familiar analogy between the government and private actors. President Obama analogized our situation to that of a family that is maxing out on its credit card. Speaker Boehner contrasted the responsible behavior of companies that balance their books with the behavior of governments that do not.
As any competent macro-economist will tell you, the analogies are deeply flawed. Individual families and businesses do not have the capacity to manipulate interest rates and the money supply, but the government does. Individual families and businesses acting in ways that don't correlate with the behavior of others do not cause contractionary cycles through the paradox of thrift when they save money. But drastic government reductions in spending in a recession can trigger that effect. Etc.
Nonetheless, with polls showing that most Americans don't really understand the debt ceiling debate, it's understandable that politicians would try to frame the issue in simple terms. I tend to think that the framing favors the Republican position right off the bat, because it cuts out the unique role that the government can play, but that fight is probably lost already, with very little appetite in DC for more stimulus.
Even accepting the framing, though, there's an obvious piece missing. Consider the following line from Boehner's remarks: "if you're spending more money than you're taking in, you need to spend less of it." Well, yes, sometimes, but doesn't it depend what you're spending the money on? Suppose you're spending more money than you're taking in because you're unemployed, and you need to spend some of your savings now to eat, pay rent, and look for a job. Wouldn't you be better off continuing to spend on these necessities, even if to do so you need to borrow some money?
More fundamentally, the private finance analogy trades on a misdirection play about sources of revenue. Again, let's accept the basic framing and suppose that mom and dad collectively earn $50,000/year after taxes, but that their expenses have gone up because one of their kids needs services that health insurance doesn't fully cover, so that for a few years, anyway, their annual expenses will be $60,000/year. Under Boehner's formulation, "the solution to this crisis is not complicated: if you're spending more money than you're taking in, you need to spend less of it." The family should simply spend less. But if they're already spending only on necessities, how do they do that? If they can, isn't the better option to "take in" more? Perhaps mom or dad can work an extra shift or a second job, or the family can take on a border, or whatever.
The insidiousness of the private finance framing is that it doesn't readily produce the analogous option for government--which is also to "take in more," i.e., to raise taxes. The reason this option doesn't appear salient is that taxing people doesn't "feel" like working a job to earn money. But of course, collecting taxes is the main way that our government "earns" money. So if politicians were to be honest about the analogy, they would recognize that raising taxes is like working a second job.
To be sure, taxes aren't the only way that government can take in more money without borrowing. In some resource-rich countries, the government owns the natural resources and sells them directly. The problem with this approach is it tends to lead to autocracy. See, e.g., Libya. In other countries, the government derives a substantial portion of its revenues from government-run businesses, but this tends to lead to corruption and economic stagnation. See, e.g., Egypt. So long as no one is advocating nationalization of much of American business (and no one is), the only fair comparison to the second job is raising taxes.
There may be sound reasons not to raise particular taxes at particular times, but the mere assertion that we need to "live within our means" is not among them. For the government, raising taxes is a form of living within our means.
Last week, in United States v. Bagdasarian, a panel of the U.S. Court of Appeals for the Ninth Circuit held, 2-1, that the defendant, who was described by Judge Reinhardt's majority opinion as "an especially unpleasant fellow," did not violate the law forbidding threats of violence against Presidential candidates when he posted messages on the internet using racist language that approved of violence against then-candidate Obama. The opinion was joined by Chief Judge Kozinski, with a dissent by Judge Wardlaw. It's interesting and noteworthy in part because of an introductory portion of the opinion in which the court places Bagdasarian's comments in the context of political invective throughout history as well as characterizing some of the opposition to candidate Obama as significantly racist.
The case itself is interesting because of how the court deals with the evidence of whether Bagdasarian posed a "true threat" both objectively and subjectively, as required by prior 9th Circuit precedent. The panel held that the proof of subjective intent was required under the First Amendment, as interpreted by the Supreme Court in Virginia v. Black. I'm not sure I agree with the court's bottom-line ruling. The government introduced evidence that Bagdasarian had in his possession .50 caliber weapons and ammo, and his message board postings referred to just such a weapon along with what the court called a "prediction" and an "exhortation" to use them against Obama. Taken together, I think one might conclude that they show both objective and subjective intent. The court thought otherwise, though, and I'm not especially interested in parsing the facts. For an excellent discussion of how to decide whether Bagdasarian's postings should count as true threats under the existing doctrinal test, I recommend Julie Hilden's new column on the case on Verdict.
I am more interested in the question of what kind of showing with regard to intent the First Amendment should be interpreted to require in the first place. The Bagdasrian court is right that the Black case pretty clearly requires that a subjective intent is required. I want to ask whether that makes sense.
The difficulty, here as in other contexts, is that subjective intent is difficult to prove. One can only prove it by external manifestations. And so, as a kind of short-cut, we might want to permit the government to prosecute people for making statements that, as perceived by an objective observer, appear to be made with an intent to carry out the threat (or something close, like intimidation). The worry that drives the rule in Bagdasarian and Black is that someone might use words that objectively convey a true threat even though he did not intend them that way. And so, to protect free speech, the Court disavows an objective test.
This strikes me as over-protective of speech. So long as people are on notice that statements which objectively convey a threat could subject them to criminal prosecution, there is no unfairness in prosecuting them for making such statements. To be sure, notice satisfies due process concerns but not free speech concerns. I can live with that. To my mind, the speech value of a statement that credibly threatens another person with death or bodily harm, even if intended only as a cruel joke or a bluff, has so little value as a contribution to the exchange of ideas, that I would define it as falling within the constitutionally proscribable category of true threats.
Thus, if I were writing on a clean slate, I would fashion a First Amendment rule that allows the government to prove a true threat by showing either subjective or objective intent to make a true threat.
There has been a lively discussion on this blog and elsewhere regarding the President's constitutional obligations and options in the current political impasse, with the possibility of a government default looming only weeks away. When Professor Dorf informed me that Professor Tribe wanted to publish a second guest post on the topic here on Dorf on Law, responding to my most recent post, I was delighted, and I suggested that we give him the last word on that debate. Our exchange has brought clarity to some issues, and it was generous of Professor Tribe to provide two guest posts, but all good things must end. Reading the content of his second post confirms my sense that the back-and-forth between us has graduated to the stage where it would be better continued (if the parties decide to do so) in a journal format, rather than on various blogs. (If nothing else, it is notable that my most recent post and Professor Tribe's response were both close to 3,000 words, which is roughly three times the normal length of a DoL post.) In any case, I thank Professor Tribe for his time and effort.
In Professor Dorf's post on Wednesday, he offered a useful summary of the debate, describing the points of disagreement and apparent agreement between Professor Tribe and me. I think it is fair to say that nothing in yesterday's post by Professor Tribe would alter the essence of Professor Dorf's summary, especially the nature of the choices that the President faces in the next few weeks. Professor Tribe's description of the option to mint platinum coins adds an interesting possibility, of course, but if the President does not engage in that novel option (nor in Professor Dorf's suggestion of selling Alaska back to Russia), the President would be faced with the choice of increasing tax revenues, cutting expenditures, or issuing debt above the debt ceiling. Professor Tribe has argued that the President's proper choice is to exercise (constrained) discretion in reducing spending below appropriated levels, whereas I have argued (both under a 14th Amendment analysis and a separation-of-powers analysis) that the least bad choice is to borrow in excess of the current debt ceiling.
As I noted above, our reasons for continuing to disagree could best be explored elsewhere. My purpose here is to analyze the consequences of something on which Professor Tribe and I apparently agree. Each of us have said that Congress's power to tax is so central to its role and purpose in our system of government that it would be a serious matter indeed for any president to impose taxes without congressional authorization.
I was being circumspect for a reason that goes beyond my debate with Professor Tribe. My concern in creating a hard distinction between the spending power and the taxing power is that the real-world distinctions between taxing and spending are notoriously porous. One of the most important debates within tax policy circles, which has intensified over the last few years, concerns the concept of "tax expenditures" -- a term that captures the counter-intuitive idea that a government can spend through the tax code. In a world where every politician wants to be in favor of tax cuts (which has been especially true for the last thirty years or so) and against spending increases (which has become even more politically salient in the last few years), politicians have figured out that it is expedient to call relabel all of their favored projects "tax cuts."
The list is familiar. We could send checks to people who buy houses, but instead we let them reduce their tax payments by giving them a deduction for mortgage interest. We could pay businesses to increase the wages of the working poor, but instead we create an earned-income tax credit that uses the Internal Revenue Code to increase the living standards of those workers. We could spend money to reimburse people for extraordinarily large medical bills, but instead we allow a deduction for medical expenses in excess of 7.5% of adjusted gross income. And on an on. From a budgeting standpoint, this is nothing more than a labeling exercise. Spending $50 billion on farm subsidies is the same as not collecting $50 billion in revenues due to farm "incentives," and the deficit or surplus is the same in either case.
From my perspective, therefore, it is difficult to assess the relative importance to Congress as an institution of its power to tax versus its power to spend. Even so, I can see a strong case to be made that, from both a political and a constitutional standpoint, taxes are importantly different from expenditures.
Suppose, in any case, that there is no budget deal by Aug. 2. (As of this writing, there is no deal even between the President and Republican leaders -- much less reason to believe that any deal will get through Congress.) Suppose further that, whether for reasons such as those offered by Professor Tribe or for any other reason, the President then decides that the best response is to prioritize spending, thus using his discretion to withhold payment from people and businesses who otherwise would have received checks from the federal government. For that matter, even if the current impasse is resolved before Aug. 2, suppose that people come out of this crisis believing that spending will be withheld at the president's discretion in the budget showdowns that are sure to follow.
All of this creates a clear incentive to relabel as "tax cuts" as many spending programs as possible. As I noted, there are already strong political incentives to do so. This crisis will, therefore, intensify those incentives. Any legislator worth her salt is now on notice that it is not sufficient to win a battle to include spending for any particular program in the current budget. Appropriated spending -- under easily foreseeable circumstances -- might well never be disbursed. We should, therefore, expect to see congressional staffs try ever harder to run everything through the tax code.
As a tax professor, I guess this is good news for me! Are there, however, any reasons to worry about this new incentive to relabel government activities? Many of my colleagues believe that the trend toward spending through the tax code is categorically a bad thing. I confess that I am fairly skeptical of that position, for reasons that I will surely write up as a blog post sooner or later. For now, I will leave that normative question aside. As a predictive matter, it seems clear that we should expect the current political crisis to accelerate the trend of reducing "spending" and increasing "tax cuts." Should future presidents need to find spending to withhold, therefore, they will find fewer candidates for the ax.
Professor Tribe Replies to Professor Buchanan Replying to Professor Tribe Replying to . . . .
With all respect, this formulation is deeply confused and question-begging. The key word in the sentence just quoted is “spending.” And the “current standoff” has not arisen because, but for the debt ceiling, the Treasury would have independent authority, attached to various spending measures, enacted after Congress’s enactment of the $14.3 trillion ceiling, to borrow money in excess of the ceiling in order to satisfy federal bondholders and meet the government’s other obligations. Were that the case, nobody would be focusing on the statutory ceiling in the first place because it would, for all practical purposes, already have been lifted by more specific, subsequent measures. The standoff has arisen because (1) but for the statutory debt ceiling, the Treasury would have authority to spend money beyond what would then be in the Treasury’s coffers; (2) the debt ceiling prevents it from obtaining the additional money by further borrowing, AND (3) the Treasury is not slated under current law to obtain that money from other sources of revenue such as taxation.
In other words, it is the combination of the ceiling and all other extant revenue-raising arrangements that would leave us with insufficient funds to meet all of the nation’s spending commitments come August 3.
It is essential for his argument that Professor Buchanan justify singling out one particular element in this combination of revenue-raising arrangements—the debt ceiling—as the cause of any default on the public debt and therefore as unconstitutional. He writes, “my statement about the debt limit is premised on the existing structure of both spending and taxation. If current tax laws do not provide sufficient revenues to cover current spending, then the only way to get the remaining money that must be spent is by borrowing it.” This claim echoes recent remarks by President Clinton, who (in embracing the "constitutional option") said that lifting the debt ceiling "is necessary to pay for appropriations already made" (emphasis added).Thus, Professor Buchanan arbitrarily takes one element of the “combination” of revenue arrangements—the tax laws—as his fixed starting point. If we hold the tax laws fixed, he argues, then the debt ceiling will be what stands in the way of raising enough revenue to avoid default; therefore, the debt ceiling must be unconstitutional.
This argument suffers from two fundamental flaws.
To begin with, there is no basis for treating the tax laws as fixed. One could just as easily argue instead: “If the current borrowing laws do not provide sufficient revenues to cover current spending, then the only way to get the remaining money that must be spent is by imposing higher taxes.” This approach would lead one to conclude not that the debt ceiling is unconstitutional, but that the laws fixing current tax rates and creating various tax loopholes are. Thus, Professor Buchanan’s argument still does not distinguish taxing from borrowing.
Worse still, even if we grant Professor Buchanan’s premise that the “existing structure of both spending and taxation” must be taken as fixed, his conclusion still would not follow. For Professor Buchanan is simply wrong in asserting that, “[i]f current tax laws do not provide sufficient revenues to cover current spending, then the only way to get the remaining money that must be spent is by borrowing it” (emphasis added). Contrary to Professor Buchanan’s suggestion, there are plenty of other ways to raise more money to cover current spending.
One example: printing the money necessary to cover all the nation’s spending commitments. Let us look at that option further. Just as there is a debt ceiling limiting the amount of money that can be borrowed, there is also a currency ceiling limiting the amount of banknotes that can be printed. Compare 31 U.S.C. § 3101 (“The face amount of obligations issued under this chapter and the face amount of obligations whose principal and interest are guaranteed by the United States Government … may not be more than [$14.3 trillion]”) with 31 U.S.C. § 5115 (“The amount of United States currency notes outstanding and in circulation … may not be more than [$300 million]”). Therefore, even if we begin by taking the “existing structure of both spending and taxation” as a given, Professor Buchanan would still have another hurdle to surmount: why is it the debt limit that must fall, rather than the paper money limit?
Here is another option: the Treasury could mint coins to cover all the nation’s spending commitments. As Jack Balkin has pointed out, 31 U.S.C. § 5112(k) authorizes the Treasury to mint platinum coins in any denomination. Balkin suggests that the President could exercise this authority to mint a couple of trillion-dollar coins. By doing so, the President could put an end to the problem created when the Treasury’s revenues are insufficient to meet its spending commitments, without violating any existing federal law. If we accept Balkin’s interpretation of the relevant statutory provision, the central premise of Professor Buchanan’s argument—that default is guaranteed to occur under extant statutes come August 3—isn’t even true to begin with.
Of course, raising the debt ceiling might be a wiser move from a policy standpoint than simply printing more money or issuing new forms of currency. But this is not a constitutional distinction on which Professor Buchanan is entitled to rely in order to pronounce the debt ceiling unconstitutional, while leaving the ceiling on outstanding currency notes—and other elements of our revenue-raising arrangements—intact.
But Professor Buchanan is not finished yet, for a further argument rears its head in the concluding paragraphs of his post. Professor Buchanan cites Perry v. United States for the proposition that the "validity of the public debt" "embrac[es] whatever concerns the integrity of the public obligations." According to Professor Buchanan, "the Perry language about 'the integrity of the public obligations' is not merely aspirational. ... '[T]he validity of the public debt' can be brought into question by much more than simply failing to pay narrowly-defined debt. ... Failing to pay people who are owed money, when due, under current law casts serious doubts on the government's reliability as a debtor. ... This means that there can be no prioritization of payments ... under the Constitution."
What is Professor Buchanan driving at here? As far as I can tell, his contention is that prioritization is impermissible because it would "cast serious doubts on the government's reliability as a debtor," thereby impairing the "integrity of the public obligations" and questioning the "validity of the public debt." The implicit premise here is that any action that "casts serious doubts on the government's reliability as a debtor" must be unconstitutional.
(1) The Perry language on which Professor Buchanan relies is indeed dictum, contrary to his suggestion that the language cannot "easily demoted to dictum status." The Perry Court held that "the facts alleged by the petition fail to show a cause of action for actual damages." 294 U.S. 330, 358 (1935). Thus, anything the Court said about the meaning of Section 4 cannot be part of the Court's holding. Indeed, Justice Stone—who provided the fifth vote for the Court's judgment—noted that much of the Court's analysis was "unnecessary." He therefore refused to join "so much of the opinion as may be taken to suggest that ... although there is and can be no present cause of action upon the repudiated gold clause, its obligation is nevertheless ... superior to the power to regulate the currency" 294 U.S. at 361 (Stone, J., concurring).
(2) Even if the Perry language were a holding, it would not justify the premise that whatever casts doubts on the government's reliability as a debtor violates Section 4. If a debtor's "reliability" were reduced, its ability to obtain favorable interest rates for future loans would be harmed. But the "validity" or "integrity" of its already extant debts or obligations would not in any way change.
(3) In any event, there are no evident limits to Professor Buchanan’s proposed rule under which anything that "casts serious doubts on the government's reliability as a debtor" would violate the Constitution. Running huge budget deficits in any given year might make creditors question the government's reliability (witness Greece); would Professor Buchanan argue that any sufficiently large annual deficit violates Section 4? A failure on the part of politicians to reach a deal on the debt ceiling within a few days might also make creditors question the government's reliability; would Professor Buchanan argue that President Obama and the Senate would violate Section 4 by rejecting whatever debt ceiling measure emerges from the GOP-controlled House of Representatives? The absurdity of these results suggest just how strained is the interpretation that produces them.
(4) In the same vein, I would also note that racking up enormous levels of aggregate debt could also cast serious doubts on the government's reliability as a debtor. The more debt one incurs, the more interest one must pay later; the more interest one must pay, the harder it will be to raise the money necessary to pay that interest; the harder it is to raise the money necessary to pay interest, the more probable default becomes; the more probable default becomes, the less reliable one is as a debtor. Thus, like the ouroboros, Professor Buchanan's argument ends up swallowing itself: in the attempt to show that the present debt ceiling is unconstitutional, his argument ends up showing that the Constitution would require a cap on the amount of debt that may be incurred after all.
I should add that, while I continue to believe, for all the reasons explained above, that one cannot logically claim that the ceiling on total U.S. public debt, as opposed to other aspects of federal law that equally limit the amount of revenue the Treasury is collecting, is “the” cause of whatever default is projected to occur on Aug. 3 and is, on that account, a violation of Section 4, I would certainly acknowledge that there is a dramatic psychological difference between the debt ceiling and the mix of tax and spending laws that are expected to combine with that ceiling in order to cause a default unless corrective action is taken by Aug.2.
To see that this is so, one need only note that the underlying legislation authorizing the floating of new bonds by the Treasury would remain in place and wouldn’t need to be expanded or creatively enlarged upon once the ceiling were erased or, less extremely but more creatively, raised by (say) $1 or $2 trillion. The borrowing infrastructure, in other words, is already in place and, when we are about to hit the ceiling, that underlying infrastructure wouldn’t need to be creatively rewritten or reconstructed by a president determined to employ the so-called “constitutional option” in order to crash through the ceiling without causing any concrete disturbance or fiscal discontinuity. For the president to promulgate any specific higher debt ceiling on his own would no doubt look too much like legislation and so isn’t an option that’s on the table. What a president purporting to exercise the constitutional option would do, I assume, is direct the Treasury Department to shut its eyes (at least for the time being) to the one-line statutory restriction of $14.3 trillion (as written in 31 U.S.C. §3101) upon the underlying legislation that would otherwise entitle the Treasury to keep borrowing as though nothing had happened. Nothing resembling a presidential enactment of altogether novel borrowing authority would be required.
The situation would closely resemble one in which the underlying legislation authorizing borrowing by the Treasury hadn’t been supplemented, beginning in 1917, by the enactment of any dollar ceiling at all but had instead been drafted with a sunset clause – one saying that the Treasury Department is authorized to borrow money by floating redeemable bonds in any chosen face amount and at any chosen interest rate, and without regard to the size of the aggregate U.S. public debt – but only through August 2, 2011, after which the borrowing authority automatically expires.
Erasing or simply ignoring that sunset clause in order to continue floating bonds beyond August 2 so that the U.S. could continue to pay its debts and meet its obligations would, to be sure, constitute a formally legislative act. (I set aside the fact that it might be a more transparently futile act than continuing to float bonds once the aggregate debt exceeds $14.3 trillion because, one supposes, the purchasers of U.S. bonds issued after the expiration of a preexisting sunset date might be even more nervous about whether those bonds are worth the paper they’re written on than would the purchasers of bonds issued after the aggregate dollar ceiling had been reached.) But I can understand those who might be tempted to say that such an act – whether ignoring a sunset date, or ignoring an aggregate dollar ceiling – wouldn’t be truly comparable to the kind of legislative act that raising tax rates, for example, would entail. If the president could raise those rates by 1% on his own, then he could double them on his own, and we’d be off and running. But permitting the president to ignore a limitation on the executive’s borrowing authority that would, if obeyed, cause a violation of the Constitution if all else were held constant feels somehow different.
Courts have certainly been known to sever constitutionally troublesome parts of legislation in the course of exercising their undoubted Article III power to remedy proven constitutional violations in circumstances where the result of doing so has been to extend the reach of legislation beyond its originally enacted scope; perhaps the executive branch should be deemed to enjoy a parallel remedial power even though it is to Congress that Section 5 of the Fourteenth Amendment specifically entrusts the task of rectifying violations of other parts of that Amendment. Perhaps it is that “simply” erasing either a financial ceiling or a sunset clause – “severing” such a ceiling or clause from the underlying borrowing legislation – at least has the feel of something distinguishable from a creative, affirmative exercise of lawmaking power. I suppose that the essence of my position has been that this intuition is only that – an intuition.
What makes me doubt that intuition in this circumstance is imagining intermediate cases, cases in which the proposed exercise of executive authority looks like it’s somewhere between “mere” disregard of a cap on dollars or “mere” disregard of a sunset clause and the other end of the spectrum, that of raising tax rates without permission from Congress.
Here’s such an intermediate case: If the president were to decide, for instance, to increase the flow of revenue into the Treasury by terminating all of the Bush tax cuts (or all of those tax cuts on taxpayers above a certain income level) a year or six months ahead of the time they are all slated to end under the congressional legislation now in place or, to take a case closer to the maximally creative end of the spectrum, if the president were to direct the IRS to terminate the real estate mortgage interest deduction, would one identify any such action as a mere erasure of a limit on revenue intake or would one describe it as a usurpation of legislative authority?
If we would have to conclude that an executive act to end the mortgage interest deduction, or even a presidential act to accelerate the termination of some or all of the Bush tax cuts, were continuous with a presidential act adding a 1% surtax on all federal income taxpayers, then it would seem to follow that presidential authority to disregard a sunset clause on incurring new debt is likewise continuous with such tax-hiking authority, and that presidential authority to disregard a dollar cap on aggregate debt is likewise on the usurpation end of the spectrum of possible executive actions.
I’m still waiting to see a convincing argument for distinguishing in principle between legislative restrictions on government borrowingauthority and legislative restrictions on government taxing and other forms of revenue-raising authority. I have to say that seems implausible to me, but I can’t rule out the possibility and thus would be interested in hearing/reading more.
Over the weekend, Professor Laurence H. Tribe posted some thoughts here on Dorf on Law, responding to my July 11 column on Verdict and my July 12 and July 15 posts on this blog. In turn, my column and posts had been largely written in response to Professor Tribe's influential op-ed in The New York Times, in which he argued that President Obama lacks constitutional authority (under the 14th Amendment, and more generally under separation-of-powers principles) to ignore the debt limit, should Congress fail to raise the limit before the Treasury loses its ability to pay all of its legal obligations.
I continue to agree with Professor Tribe that the best solution would be for Congress and the President to find a way forward through standard political procedures, resolving a political crisis that is completely avoidable. Even in light of Professor Tribe's additional arguments, however, we continue to disagree about what the President's options are, should the crisis not be resolved.
Professor Tribe's arguments can be placed into three categories. First, there is a preliminary matter regarding the authority to borrow under existing budgetary law. Second, there is the question of the applicability of Section 4 of the Fourteenth Amendment, and whether it should be read to invalidate the debt-limit statute. Finally, he offers a constitutional argument that the President -- when presented with a collection of laws that cannot be simultaneously executed (because they are mutually contradictory) -- can and must make spending cuts at his (limited) discretion, rather than ordering Treasury to borrow more money to cover the government's obligations.
As a threshold matter, Professor Tribe says that he is "at a loss to see why Professor Buchanan assumes" that the spending laws currently in effect include the authority to increase borrowing. He walks readers through a quick tutorial regarding the various ways that the law might authorize borrowing, allowing that "[s]ome spending laws might conceivably be written in a way that includes such authority." Saying that he has not "personally seen any spending laws written in a way that includes such authority and certainly can’t accept the premise that each spending law necessarily contains its own built-in borrowing authorization," he then describes the role that spending laws and taxing laws serve in the budget.
None of this says anything about the current situation. It merely says that Professor Tribe does not know whether or how current law enables the government to borrow money. Yet he ignores my actual argument, which is that the current political crisis is premised on the fact that the debt limit will be binding. That is, the only way for the current standoff to have any meaning is if, on August 3, the Treasury would otherwise be legally authorized to borrow money in excess of the current debt ceiling. If that is not true, then there is no reason to have this debate, because the federal government would not be on the brink of engaging in spending that exceeds the debt limit. Indeed, the Treasury could not even try to borrow money, and if it did, it would be violating not the debt-limit statute but its legal authority to issue debt.
Furthermore, the solution to the current crisis could not be to raise the debt-limit, because doing so would not provide the statutory authority to increase the debt. I am fully aware that there are times when every political player in Washington seems to share a common delusion, but it would be rather astonishing if this entire political crisis were based on the false belief that the government was about to exceed its borrowing authority. If I were writing a law review article, I would dutifully detail the statutory scheme under which borrowing authority has been vested in the Treasury, but honestly, I do not see how we are even having this debate if any of us thinks that current law does not authorize borrowing that would push the government past the current debt ceiling.
Tribe further asserts that I am incorrect to describe the debt limit as preventing the government from paying for its authorized spending commitments, because the debt limit "merely limits one source of revenue that the government might use to pay its bills. Similarly, the tax code limits a different source of revenue—taxation—that the government might also use to cover its expenditures." Obviously, my statement about the debt limit is premised on the existing structure of both spending and taxation. That is the essence of the debate: If the current tax laws do not provide sufficient revenues to cover current spending, then the only way to get the remaining money that must be spent is by borrowing it. "Professor Buchanan simply does not explain why the one is constitutional, and the other unconstitutional – or why one, but not the other, becomes unconstitutional under sufficiently dire fiscal circumstances." Let us now turn to that issue.
Professor Tribe rejects the argument that Section 4 of the Fourteenth Amendment makes the debt-limit law unconstitutional. He says that I err by misreading Section 4 to apply to all spending commitments as "public debt" that "cannot be questioned," whereas the better reading is that "public debt" means only Treasury securities (i.e., contractual commitments by which the government has borrowed money and promises to repay lenders principal plus interest), not any of the government's other legal commitments to pay money to any other parties.
My mistake, Professor Tribe says, is in engaging in an overly-broad reading of Section 4, which is one of the Constitution's "precise, hard-wired, rule-like provisions". He then offers five reasons why I am wrong to assert that debt and obligation "mean the same thing." Of course, I never argued that there is no difference between debts and obligations. I argued that all obligations that are due on a particular day -- whether those obligations involve paying principal or interest on U.S. Treasury securities, or paying Social Security benefits, or paying a contractor for services rendered -- are debts in the meaningful sense that the government has to pay them, and that treating some as optional undermines the public debt in precisely the way that Section 4 is designed to prevent.
Professor Tribe's fourth and fifth arguments (labeled "Common sense" and "Precedent," respectively) illustrate the distinction. He points out that the Congress could legally change authorized appropriations, including Social Security. What he does not point out is that Congress may do so prospectively. That is, it may certainly decide not to pay doctors the same reimbursement rates under Medicare in 2012 as it did in 2011. It may not, however, decide on the due date that it is not paying the then-current reimbursement rates under the law. As a commenter on one of my previous posts pointed out, recent Supreme Court precedents (U.S. v. Winstar Corp., 518 U.S. 839 (1996) and Cherokee Nation v. Leavitt, 534 U.S. 631 (2005)) confirm that the government's statutory spending obligations are legally binding commitments that the government was free not to enter into in the first place, but that it cannot ignore once it has committed to pay the funds.
Again, my point was not that there is never a difference between the meanings of the words debt and obligation. Instead, the question is what it means under Section 4 to say that the validity of the public debt shall not be questioned. After discussing the logical incoherence in this context of describing an obligation to pay money to a private holder of of a government bond as a "debt" but an obligation to pay money to a private holder of a government contract or other obligation as "not a debt," I turned, naturally, to see whether the courts have spoken.
Even in light of the textual and other points to which Professor Tribe draws our attention, the Supreme Court in Perry v. United States stated: ""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." In other words, the Perry court is saying that Section 4 is not limited to Treasury securities.
Professor Tribe dismisses this as "a stray dictum in a plurality opinion from 1935." I suppose that "stray dicta" lie somewhere on a continuum between "regular dicta" and "rank dicta." In any event, I fail to see how the Perry language can be so easily demoted to dictum status. Describing the principal that allows us to understand Section 4's overall meaning strikes me as a perfect example of what courts do, whether in 1865, 1935, or 2005. In any case, I am happy to rely on the Court's only express statement to date that -- in this context -- "the validity of the public debt" includes concerns about "the integrity of the public obligations."
Indeed, we can see the illogic of limiting the definition of debt in this context by considering what the word "debt" could be limited to mean. In a narrow sense (consistent with Professor Tribe's treatment of the matter), the debt is the value of the securities issued by the Treasury that are currently outstanding. The debt is what we currently owe. The interest on that debt, however, has not yet been paid. The obligation to pay interest is simply a contractual commitment, which the federal government has promised to honor on the relevant future due dates. If we were to read "the validity of the public debt" in the sense in which debt is not merely an obligation, then a government could affirm the validity of the public debt merely by promising to pay back the principal, but not the interest. The principal, after all, is the debt that we owe today, whereas the interest is to become due at some point in the future.
It is precisely this possibility, however, that motivates our concern about undermining "the full faith and credit" of the government. No bondholder would be satisfied to learn that the government does not really owe interest, merely because interest is not included in the amount of currently outstanding debt. Yet their claim for payment of interest on any given due date is merely a claim that the government owes them money as of that date, not today.
This is why the Perry language about "the integrity of the public obligations" is not merely aspirational. The ratings agencies have recently been warning that any failure to pay a public obligation -- principal on a Treasury security, interest on a security, or any other public obligation -- will be considered an "event" that will undermine the credit rating of the government, thus raising borrowing costs in the future. In other words, "the validity of the public debt" can be brought into question by much more than simply failing to repay narrowly-defined debt.
The Fourteenth Amendment, therefore, is directly applicable to a situation in which the government might not pay its obligations. Failing to pay people who are owed money, when due, under current law casts serious doubt on the government's reliability as a debtor; and we must not enforce laws that would prevent obligations from being paid. This means that there can be no prioritization of payments -- reducing expenditures as necessary to stay under the debt limit -- under the Constitution.
Even assuming that there is no violation under the Fourteenth Amendment, however, Professor Tribe allows that there might be a constitutional issue involved with prioritization, under separation-of-powers concerns. That is, even if the debt-limit statute is constitutionally valid, the combination of the current tax laws, spending laws, and debt limit will soon prevent the President from carrying out his duties to execute the law. Professor Tribe then asks whether there is a way to know what must give. He concludes that it is the spending authorized under the current budget, not the debt limit, that the President is constitutionally authorized to alter.
Professor Tribe offers an analogy to the line-item veto, noting that the Supreme Court's decision in Clinton v. New York held that the president may not cancel appropriations that Congress has authorized. I would add that what it being considered here is much more extreme than a line-item veto, because prioritization of spending allows the president to adjust levels of spending unilaterally, whereas the line-item veto only allows the president to make all-or-nothing decisions about spending items. If, for example, Congress has authorized $10 million to be spent on housing vouchers, a line-item veto would force the president to accept all $10 million or nothing at all, whereas prioritization would allow the president to reduce spending by any amount at all. As a usurpation of Congressional authority, therefore, prioritization is extreme. If the line-item veto is unconstitutional, then prioritization would be even more of a violation.
Again, however, Professor Tribe frames the problem as a choice between valid laws, and he says that even Clinton does not protect duly-enacted spending legislation from being cut due to the debt limit, because it would be even worse to do otherwise.
Professor Tribe's argument, however, describes the President's options not as three choices -- spending, taxing, and borrowing -- but as two: "executive control over spending [or] executive control over revenue-raising." His analysis thus treats taxing and borrowing as the same thing: raising revenue. Clearly, however, both Congress and the President (as well as everyone else) treat borrowing and taxing quite differently, and the history of this country makes it clear that borrowing and taxing are not the same thing. "No taxation without representation," for example, can hardly be read as a call for the government neither to tax nor to borrow.
I am perfectly happy to concede that Congress's power to tax is highly prized and jealously guarded. Even within Professor Tribe's framing of the argument, however, it is clear that Congress's power to determine spending levels is much more jealously guarded than its ability to set a limit on debt.
While the Impoundment Act is necessarily imperfect, it establishes that Congress has aggressively disapproved of presidential encroachment on its spending authority -- encroachment of precisely the type that prioritization represents. Consider, by contrast, Congress's actions regarding the federal debt limit. Enacted in partial form in 1917 and then in its present form in 1939, Congress has raised the debt limit without fail, treating it (until this year) as a mere formality. That is not to say that Congress puts no weight on the debt-limit statute. After all, Congress has not repealed it. As a matter of priorities, however, Congress's protection of its constitutionally-endowed spending powers has been much more aggressive than its protection of a claimed ability to set a limit on the debts that its own laws otherwise necessitate.
Finally, consider how Congress itself would set its priorities. The prevailing standard for determining how a Congress would act under these circumstances is the "reasonable Congress" approach, not actual Congressional intent. How would a reasonable Congress want a President to proceed?
If the President refuses to spend, people are harmed immediately, perhaps irreversibly. For example, if the President cancels some Medicaid spending, people can be forced to do without life-saving treatments. If, on the other hand, the President borrows more than Congress allows under the debt ceiling, any harm is in the future ("impoverishing future generations" and other such claims) or is diffuse (perhaps slightly higher interest rates -- though that would not happen in today's economy). Moreover, if Congress is truly unhappy with a higher level of debt, it can decide in subsequent years how to reverse that -- what combination of spending cuts and tax increases it wants to enact to bring the debt back down.
A reasonable Congress, then, would choose to have the President violate the debt limit, rather than cut spending or raise taxes. Of course, they would not be happy with that choice, but the exercise here is about choosing the least bad among three bad options.
In short, while I found Professor Tribe's arguments here on Dorf on Law engaging, they still do not add up to an adequate defense of the enforceability of the debt-limit statute. The statute is unconstitutional under Section 4 of the Fourteenth Amendment, because the debt limit threatens the integrity of all government obligations. Even if the debt-limit is otherwise constitutional, however, it must give way to validate Congress's control over spending and taxation.

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