A Plan B on the Debt Ceiling

The Obama administration now has a proven strategy to use next time Republicans threaten to breach the debt ceiling. But next time may not be like this time, and each time does real damage. Next time, someone needs a Plan B.
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The Obama administration's strategy to force Congress to raise the debt ceiling worked this time.

The strategy was based on lessons from the 2011 debt ceiling crisis, which went less well for the administration. This time, President Obama's resolute refusal to make concessions, the prospect of apocalyptic economic consequences and pressure from business forced congressional Republicans to capitulate.

The lack of alternative was an important part of the strategy.

"Whatever deal Senate leaders come up with to solve the fiscal crisis better work," Politico reported the day that the House and Senate finally voted to raise the debt ceiling, "because President Barack Obama has no Plan B if it doesn't."

The Obama administration now has a proven strategy to use next time Republicans threaten to breach the debt ceiling. The Obama administration should certainly not repeat the mistake of 2011 and make concessions under Republican threat.

But next time may not be like this time, and each time does real damage. Next time, someone needs a Plan B.

There is a Plan B that could make the next time the last time. There are two powerful arguments that the debt ceiling is unconstitutional.

First, the Fourteenth Amendment provides that "The validity of the public debt of the United States... shall not be questioned." Some congressional Republicans argue that only a small part of federal spending is "public debt," so the president can just "prioritize" those payments. To anyone not straining to defend the indefensible, most government spending -- Social Security benefits, bills for treating Medicare and Medicaid patients, veteran's benefits, bills from federal contractors -- is public debt, just as unpaid bills are debt for households or businesses. The failure to pay those bills would be unconstitutional.

Second, the president cannot adhere to the debt ceiling and faithfully execute other laws passed by Congress. Courts unanimously ruled against President Nixon's claim of power to "impound" funds appropriated by Congress for programs he disfavored. Tax laws enacted by Congress now fall $560 billion short of paying for the spending required by Congress' appropriations, however. Another law requires the president to pay the government's bills promptly as they become due. And the debt ceiling forbids the president to borrow.

One legal scholar compared the conflicting laws to a requirement that the president "drive simultaneously no faster than 45 miles an hour and no slower than 60."

Some scholars argue that the president can disregard the debt ceiling and unilaterally borrow to cover Congress' appropriations. Neil H. Buchanan and Michael G. Dorf, both law professors, argue that the president's "least bad choice" is to borrow unilaterally. Others argue that the president could borrow under inherent emergency powers to prevent a global economic collapse.

The argument that the president can "end government by brinksmanship and extortion" and declare the debt ceiling unconstitutional is obviously attractive. But there are also obvious problems. Investors would likely not buy legally suspect bonds except at exorbitant interest rates, nor accept those bonds as collateral in financial transactions, with perhaps the same catastrophic consequences as default.

Just as important, Americans do not expect the president to declare laws unconstitutional over the adamant objection of Congress. Americans expect courts to decide whether laws are constitutional or not.

Courts do not necessarily share that expectation. Courts may decide that the issue is a political question that the elected branches, Congress and the president, should decide. The courts generally require "standing," "an invasion of a legally protected interest" that is "concrete and particularized" to the person who brought the lawsuit. And courts usually refuse to decide questions about future events, since future events may not go as anticipated.

President Obama should welcome a court decision on which of the irreconcilable laws he must faithfully execute, however. A lawsuit would make plain that the constitutional violation was not President Obama's idea.

After default, the recipients of federal appropriations -- state and local governments, federal contractors, veterans, Social Security beneficiaries, hospitals that treat Medicare and Medicaid patients, and on and on -- will have standing to challenge the failure to provide funding appropriated by Congress. But some may have standing before default, when "the validity of the public debt" is "questioned," whenever that is.

Congressional Republicans would not be parties to the lawsuit but could appear as "friends of the Court" to defend the constitutionality of their conduct, a daunting task.

Markets panic quickly, but prompt legal action may forestall collapse. A court could issue an order to allow the government to borrow temporarily to "preserve the status quo," and require "expedited review."

Perhaps the courts will bestow upon the president power over spending beyond even Nixon's imperial ambitions.

The more likely and happier result would strike down the debt ceiling so the public debt will not be questioned, the president can faithfully execute the laws that conflict with the debt ceiling, and we will be spared more next times.

Brad Miller served from 2003 to 2013 as a member of the U.S. House.

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