The 14th Amendment (non)Option

The President can no more borrow money on his own say-so than he can raise taxes on his own say-so. Both powers are clearly assigned to the Congress. So the “14th Amendment Option” is entirely imaginary.

The Constitution assigns to the Congress the power to “borrow money on the credit of the United States.” (Art 1, Sec. 8, second clause.) That’s right after the power to tax.

The President can no more borrow money on his own authority than he can impose taxes on his own authority. Any attempt to do so would be a clear violation of the Constitution.

It is not the case that the debt ceiling is a statutory control imposed on an otherwise empowered President. The Congress used to authorize debt issuance on a case-by-case basis, the way it commissions officers. Then it switched to authorizing debt issuance up to a fixed limit. But without Congressional authorization the Constitution does not allow the President to borrow money. Period.

The 14th Amendment says that the validity of the debt shall not be
questioned. It does not give the President any authority to do anything whatever. If the Republicans allow the government to run out of money, the Treasury has to stop writing checks.

Yes, that’s a bad outcome, which is why we should do everything we can to put pressure on Congressional Republicans to do the right thing. Inventing imaginary ways out of the problem just tells the infants then can keep on making messes because the grown-ups are available to clean up after them.

Update Yes, some of the lunatics have gamed this out. Sarah Palin says that it would be an impeachable offense either for the President to not pay the debt or to borrow to pay it past the limit set by Congress. 

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact:

119 thoughts on “The 14th Amendment (non)Option”

  1. Given that much of our economic standing is rooted in rock-solid confidence in US Treasuries, resorting to a 14th Amendment solution to the debt ceiling is clearly problematic since it would be controversial and need to be litigated. None of that process would justify confidence in US Treasuries.

    That said, wouldn’t there be a legal argument that the act of appropriating money, which can only be done (and has only been done) by Congress is ipso facto authorization to borrow the money if the government doesn’t have cash in hand to follow the appropriation?

    1. There’s a legal argument that left is right, and up is down. There isn’t, however, a good legal argument.

      You know, I’ve been getting beaten up, (Metaphorically, thanks to the physical distance.) for months for saying exactly this.

      1. What you have never done (and Mark doesn’t really do, either) is explain why it is so clear that Congress’ power to authorize debt cannot be ignored by the executive while its power to authorize spending can be.

        1. Congress doesn’t merely authorize spending, it mandates it. So with no increase in the debt limit, Congress orders the executive to spend certain monies, and forbids the executive to spend those same monies. Surely there’s a constitutional question there that Mark’s argument doesn’t address.

          1. If Congress orders the President to bend a spoon using the power of his mind, I’m not sure if that raises a “constitutional” question. If Congress passes an appropriation, for which there is no money, the money simply can not be spent. I suppose the House could impeach the President over the failure of arithmetic, but the House can impeach a President for snoring too loudly.

        2. Because the command to spend money is a statute, and the lack of power to borrow is constitutional. Given the choice between violating a statute, and violating the Constitution, the choice to violate the statute is forced.

          Maybe it would clarify the reasoning if I asked, why does it not occur to you the President could resolve this issue by simply collecting a tax the legislature has not enacted? It would be no more a violation of the Constitution than his borrowing money the legislature has not authorized, and would clearly leave the debt less questioned.

          It’s a very basic principle in American law: You can’t violate the Constitution in order to obey a statute. The Constitution trumps statutes, if they come into conflict, the statute always loses.

          1. Congress’s command to spend money may be a statute, but the requirement it imposes on the President is the constitutional one of taking care that the laws be faithfully executed.

          2. Brett,
            Please note that even if you were right – and Herschel’s point seems reasonable, and suggests you’re not – the President doesn’t get to ignore laws because he wants to, nor even if he thinks they’re unconstitutional. Take for instance DOMA: Obama thought it was dumb, and thought it was unconstitutional (on which point the Court later agreed), and refused to have his Solicitor General argue in court that it was Constitutional – but Obama couldn’t refuse to follow it; it was the law, until it wasn’t. There are some areas where the Administration can set priorities and call for prosecutorial and regulatory discretion; paying the bills isn’t one of them. Even if your argument were right, by following your prescription and failing to borrow and to spend money Obama would be violating statutes that set forth his duties. This would (rightly, normally) be in itself an impeachable (and convictable) offense, even by your book.

            Do you honestly not see this? Or do you just want to get on your high horse and dictate that you know which rules it’s OK for the President to break?

          3. Statutes often contain penalties for their violation. The Constitution does not. Given this, I’d rather disobey the Constitution.

      2. You know, I follow this site pretty closely, but there are a few posts and comments that I don’t get a chance to read. So can you do us a favor and point us to the comment or comments in which you were threatened with bodily harm? Or if they were removed, the comments by the moderators that noted the deletions?

      3. I assume that your “pithy” response means that you are incapable of engaging with the legal analysis supporting the 14th amendment option or with the reasoning that it would be a bad idea, even in a moment of grave peril to our republican form of government, to risk the confidence of people worldwide who consider the USD the ultimate reserve current and our country a safe haven by submitting the issue to the courts.

      1. A short smart-aleck answer would be anybody a court agrees has standing. But wouldn’t an obvious place to start be anyone who holds currently-authorized debt, because of a purported effect on the value of said security? Can’t sue congress for not acting, can’t sue “the market” for responding, could try to sue the executive for doing something. It would be done only for the sake of setting up a constitutional/impeachment test case, of course.

        1. A holder of the debt probably wouldn’t have standing since he wouldn’t have suffered any injury and, while I don’t believe the question has ever arisen, I don’t think it would be possible to obtain prospective relief against the federal government and, indeed, sovereign immunity might make such a lawsuit impossible. I think everybody basically has some variation of “taxpayer standing” which is to say, no standing at all.

          Also, unless the court wants to do a rerun of Bush v. Gore, I can’t see them getting in the middle of this. If the Political Questions Doctrine still means anything in the aftermath of Bush v. Gore, it means that the courts are going to run from this whole business like Dracula would run from Van Helsing, his cross and his garlic.

    2. Technically, it has never been decided that only Congress can borrow money or that only Congress has the power of the purse. A lot of conservatives made arguments during the Reagan and Bush Jr. years that the president’s “commander in chief power” created an implied power to appropriate and spend money free of congressional restraints.

      Why couldn’t one argue that the president’s duty to “take care that the laws are faithfully executed” combined with the 1974 Impoundment Act creates an implied power to raise the money the president is required to spend by any means necessary (print more money, sell more bonds, raise taxes on the rich)?

      1. In the same sense it technically hasn’t been decided that only the Senate votes on treaties or nominations. At some point the demand that something which is clearly stated in the Constitution be decided is simply fatuous.

        1. Except in recent times treaties aren’t handled as treaties. For example, the North American Free Trade Agreement, a treaty if ever was, was ratified by simple majorities of both houses of Congress. So perhaps it hasn’t been decided after all.

          1. Or perhaps our politicians are just getting tired of complying with the Constitution, and what has been decided is that it doesn’t matter.

      2. The president is the commander and chief of the armed forces, not of the country or of the citizenry.

  2. The 14th Amendment argument is that as a matter of statutory construction demanded by the 14th Amendment, by appropriating money Congress ipso facto authorizes the issuance of debt in order to pay the the appropriations that by law must be spent, regardless of any preexisting debt ceiling. Any appropriation coming later in time than the most recent debt ceiling limit is incompatible with the debt ceiling and, as the legislation passed later in time, voids the debt limit.

    Congress does not have the power to appropriate money without authorizing either the taxes, borrowing, or printing of money necessary for the appropriations to occur.

    1. Yes, if Congress refuses to pay the bills it will be doing something wrong. That fact does not give the President any power he doesn’t otherwise have, and he doesn’t have the power to borrow money.

      1. So clearly the requirement that the President spend all the money appropriated by Congress (which is merely a statute) must be unconstitutional and the President must have the power to refuse to spend money.

        1. Try to think of it as a requirement that the President spend all the money he has that is appropriated by Congress. And that he has the power to refuse to spend money he doesn’t have.

          1. But it’s at his discretion, basically. So he could decide, for instance, not to send any Social Security checks to districts represented by Republicans, if he needed to decide how to not-spend Social Security money he doesn’t have.

          2. The only way you can arrive at this conclusion is if you conclude that Article 1, Section 8 imposes no requirement on the executive to spend the money that Congress appropriates. As it never talks about the power to refuse to spend money at all any interpretation that allows what you say would imply that he can refuse to spend money even if he does have it. As I think this would be a stupid interpretation, I’m forced to conclude that the appropriations of Congress are binding on the executive and any attempt to not spend the money would be just as unconstitutional as would be any attempt to borrow it.

          3. Somehow, I suspect that if the President were to decide to spend money how he saw fit within the limitations set by a lack of available funds – full funds for (insert liberal priority) and no funds for (insert conservative priority), for example – Brett would not hasten to praise his bold action as Constitutional, but would rather call him a dictator and usurper. And lets not get me started on what would happen if Obama decided to arbitrarily cancel some tax credits on the same theory.

            Look, Brett, and get it through your barriers to understanding: Congress has mandated payments to various budget items, and is now threatening to stop supplying money for same. Obama probably can’t whistle the money up, nor borrow it on his own authority; nor can he ignore the spending requirements, and nor can he (and nor should he) choose among the spending requirements. An impossible situation is being created, unless the crazies you voted for back down on their hostage-taking.

          4. That’s not strictly true, either. Under the 1974 Impoundment Control Act (which we’ve discussed here numerous times) the president is required to carry out the full objectives of programs that Congress has authorized and, specifically, he can’t order money impounded. The money has been voted by the Congress and the president is obligated to spend it.

            Yes, it’s certainly true that neither Train v. City of New York nor the 1974 Act envisioned a situation in which Congress has appropriated the money while simultaneously denying the president either the taxing or borrowing authority necessary to carry out
            Congress’s orders. In fact, there’s no exception in either Train or the 1974 act that empowers president to refuse to spend money he doesn’t have at the moment because, again, nobody ever expects the Republican Party. Legally, he’s in the same pickle whether he refuses to spend the money Congress has already appropriated or decides that the Constitution implicitly grants the the authority to do whatever is necessary (raise taxes or borrow or just print money) to ensure that the laws requiring spending are faithfully executed and the debt of the United States is not called into question.

            Ironically, it’s a construction of that domestic laws that mirrors one the Republicans have come to look upon as a core constitutional principle. Think of it as the unitary executive in the domestic arena.

        2. It’s worse than that. The President has no authority to refuse to obligate the money by hiring workers and issuing contracts. He also has no ability to pay the bills as they come in if Congress refuses to extend the borrowing limit, just as a corporate officer would have no basis for refusing an order from the CEO or the Board to sign a lease, even if the company did not in fact have money enough to pay the rent.

          1. The only way you can arrive at this conclusion is if you conclude that Article 1, Section 8 imposes no requirement on the executive to spend the money that Congress appropriates.

            What people seem to be missing here is that Article I isn’t the whole picture. The duties and responsibilities of the President are laid out in Article II. Article II Section 3 requires of the President that “he shall take Care that the Laws be faithfully executed”. If the law requires the executive to spend money under a given statute, and also forbids him to spend the money absent an authority to borrow it, which constitutional provision is the controlling one? Why should it be the latter and not the former?

          2. @Herschel, this is a good point that should have been raised before and which I have seen in other discussions. Which law must he break?

            Remember Clinton and the perjury trap he was maneuvered into. Palin hinted at this today, apparently, and I wouldn’t be surprised if some of the gop’s brains trust isn’t thinking along the lines of maneuvering Obama into impeachment through setting up a legal trap like this. They’ve been itching to do it, just need a pretext. And this is the same crew that’s beating up on Obama for shutting national parks after they got their way and shut the government. They’re not bound by consistency, but use it against everybody else.

            Personally, I think that’s one reason why the administration is being so absolutely scrupulous in talking about what legal authority they have to do what. And if it isn’t why, it should be.

          3. Altoid, I think it is correct that the President has an argument that he can issue debt under the Take Care clause, but let’s not compare an actual constitutional crisis (the current one) to what Clinton faced. The easy way to avoid a perjury trap is don’t commit perjury. All he had to do is say “yes, Monica Lewinsky performed oral sex on me several times at the White House”. That would have been EASY for Clinton to do, would have been the right thing to do, and there is no comparable option that Obama has in the current fight. It isn’t as though just telling the truth will solve Obama’s problems, but it would have solved Clinton’s.

          4. ” Which law must he break?” “and also forbids him to spend the money absent an authority to borrow it,”

            A basic error: The debt limit doesn’t forbid the President to do anything. It authorizes him to borrow a certain amount. If he borrows money beyond the debt ceiling, he’s not violating any law, he’s violating the Constitution.

        3. Nope. Constitutionality of Impoundment Act of 1974 upheld in Train v. New York City. The president has no power to refuse to spend money as instructed by Congress. No exceptions.

          1. The debt limit doesn’t forbid the President to do anything. It authorizes him to borrow a certain amount. If he borrows money beyond the debt ceiling, he’s not violating any law, he’s violating the Constitution.

            The debt limit authorizes the President to borrow a certain amount and no more. If he borrows more he is violating the law, which he has the duty to faithfully execute. If he fails to spend money that the law commands him to spend, he is violating the law, which he has the duty to faithfully execute.

      2. We don’t actually know whether, for instance, the 14th amendment created in the president an inherent power to borrow as needed and at his discretion to protect the credit of the United States. I know one can argue that such an implied power is unlikely and open to abuse but, really, the entire constitutional structure is a house of cards that has dozens of ambiguous or contradictory provisions. The whole thing was cobbled together and depends on a certain degree of comity that is now probably gone for at least the lifetime of the Republican Party.

        Oddly enough (given our long history of disagreements about Obama), I’d argue that it’s unnecessary for me to engage with the analysis underpinning the 14th amendment option since I accept accept Obama’s argument that the legal correctness of these options is irrelevant since it would be potentially catastrophic to invoke them even if they were perfectly valid. I suggest that you, on the other hand, are obligated to engage more directly with the constitutional analysis since your argument seems to leave open the possibility that gambits such as the 14th amendment option might be worthwhile if only they were legally or analytically supportable. I don’t thin you’ve even come close yet.

      3. Why doesn’t it, exactly? The whole constitutional edifice is filled with implied powers and other kludges.

    2. Rather than arguing that Obama will be doing something unconstitutional if he does not issue new debt (given that all authorization for taxing, spending and debt issuance resides in Congress), it appears (ex post?) that Congress did something unconstitutional with its last vote on (either) spending or taxes since that (will have) led to the breach in the debt ceiling.

    3. Why does the 14th Amendment (in your interpretation) only authorize the issuance of debt? Why doesn’t it authorize raising taxes, printing money, or selling the assets of the Government? I really find your interpretation difficult to sustain. Your new appropriations bill isn’t incompatible ONLY with the debt ceiling; it is equally incompatible with any law that stops the Administration from raising money by any means whatsoever.

      1. Because they want to borrow money, of course.

        This implied power business only cuts the way they want it to cut. Why not just say, that if Congress doesn’t authorize the revenue or borrowing to pay for spending, it has implicitly repealed the spending?

        Because they want to spend the money.

        1. The “they” you speak of, Brett, is Congress, and not (as your tone seems to imply) “the President and his irresponsible, spend-crazy liberal supporters”. Congress has required/mandated/ordered that the money be spent. It has not levied enough tax nor authorized enough borrowing to pay for the money it has ordered to be spent. What in your view should the President do?

          You seem to claim that since the President has no power to tax or borrow under the Constitution, he has a weaker obligation to spend than he has not to borrow or tax. I doubt strongly that there is any legal principle to that, especially in light of Article II provisions quoted earlier. One way or the other, he’d be breaking the law. Why should Congress place him in that position? How, legally, can it?

          1. In addition, Congress has made decisions on what to spend the money on; if the debt ceiling is hit, who decides what does and does not get fiunded?

  3. Well, our founders couldn’t possibly have envisioned a situation whereby The House passes an appropriation bill, and then, refuses to utilize the mechanics of writing a check. This isn’t even close to the wiggle room they left in the 2nd Amendment, “a well-regulated militia.” And, to quell any doubt as to the sanctity they placed on paying our bills they even added the exclamatory suffix, “Shall not be questioned.”
    I always felt that the Teahadists would eventually “cross the line,” and attempt some action that even their most die-hard acolytes would find hard to swallow. I mean, taken to an infinitely extreme, extreme, one could argue that gravity and evolution are “just theories.” However, “Shall not be questioned,” pretty much precludes any such ambiguity.

    Let’s face it, this is just a mistake, a mechanical error in writing a law that had a built-in, unforeseeable, defect. And, the fact that it’s so obvious that even the looniest of the loonies can’t deny it, helps explain why the R’s are sitting on a 20% approval rating.

    1. I suspect very few (as in none) of the founders were around when the 14th amendment was added, so “they” were not responsible for the “exclamatory suffix”.

    2. let us recall that from 1979 to 1995 whenever an appropriations bill passed it contained a rider that automatically authorized an increase in the debt limit commensurate to the appropriation. this was ended in 1995 under the direction of speaker gingrich who felt that it would give the house republicans added leverage to use against president clinton. why a later democratically controlled house never reinstated that is a bitter mystery.

    3. No one is questioning the validity of any existing debt. There may be a default, which would be terribly reckless and stupid; but the government will continue to owe the money.

      1. Yes, the Executive is mandated to obligate the funds. It’s also mandated to pay the bills, if the money is present to pay them. Of course, since “must” implies “can,” it cannot be mandated to pay bills with money that doesn’t exist. So, yes, it is within the power of the Congress to force the United States to default on its obligations. Blame that on Madison and Hamilton. Blame the fact that we have a Congress which just might do that on the Tea Party, Murdochized news, the Koch Brothers, and the willingness of the business class to play footsie with lunatics as long as the lunatics promise low taxes on the rich and loose regulations on business.

        But don’t blame Barack Obama. He simply doesn’t have any legal options if Congress does the wrong thing.

        1. Mark, I’m still not sure how you are coming up with a presidential power to ignore the requirement to spend the money appropriated that is so obviously more imperative than the power not to borrow money not authorized. A passive violation of the constitutional order is still a violation.

        2. Mark,

          I think what’s confusing many people (myself included) is that you seem to be conflating two quite separate and distinct things. One is whether the “unorthodox” option such as reliance upon an inherent power created by the 14th amendment or the Platinum Coin or selling “Obama bonds” are technically legal. The other is whether they are viable under the circumstances regardless of their legality.

          Obama is lacking good options not because these unorthodox solutions are obviously illegal or unconstitutional but rather because their unorthodox nature itself creates a substantial element of risk since their legality would have to be ratified by a court, which is a time consuming process under the best of circumstances. Obama’s point was that this period of uncertainly was intolerable and might itself trigger the disastrous collapse of confidence in our currency and debt that the 14th amendment option or Obama bonds were intended to forestall.

          That is why Obama has ruled these things out. Now, it might turn out that the Republicans are intractable and there is no way to extricate the country from this situation except to pay a ransom that will guarantee nothing except more and worse trouble with these gangsters in the future, in which case “must” will indeed imply “can” (as it has with so many other “implied” powers). Basically, if he can’t do any better, he’ll go home with the best available woman at closing time (which might look a lot like the 14th amendment option or the Platinum Coin). I’m just suggesting that we not make arguments that we might all wish to take back later.

  4. Count me with those who think that come Thursday, if the Congress has failed in its clear constitutional duty to raise the debt limit to cover expenditure it has already authorised, the President has the moral and probably constitutional duty to avoid a collapse in the faith and credit of the US goverment. If he has to sacrifice a black goat at midnight on the White House lawn, he should do so. Personally – and I’ve not seen strong technical arguments why this is infeasible – I would go for “Beowulf”‘s workaround of issuing zero-par consols, or bonds with a 15% coupon per $100 par. Both tricks obviously violate the intention of the debt limit act, but not its wording.

    1. I agree. But there may be a timing issue with geting the high-coupon bonds sold in time to avoid a default, especially since an auction would be needed, I guess.

      Start Wednesday. Or maybe there is already an arrangement for swapping debt in place with some Wall Street outfits. That would be fun.

      1. There would surely not be any announcement ¨we are in default¨? As a practical matter and independently of a broad or narrow reading of the 14th Amendment, Lew will service the debt first, ahead of defence contractors and retirees. I cannot believe (but YMMV) the assertions coming out of Treasury that it´s technically impossible to prioritise payments, especially as they are doing exactly that with the shutdown. The default would be piecemeal and in slow motion; more and more creditors of all types would find their payments delayed. The federal payments system would be disrupted by the desperate kludges needed to stay within current cash receipts. Even after the limit was raised, it would take a while to get back to normal. Meanwhile, out in the markets …

        1. James,

          I don’t quite understand your comment. I use the word “default” rather loosely, to describe missing any sort of obligation, whether missing it is technically a default on debt or not.

          1. If a bond issuer fails to meet a payment, there is a precise meaning and mechanism. The creditors will declare that the bond issuer is in default on bond x, which may trigger cross-default clauses on other bonds y and z. For the US government, how does a retiree or Lockheed declare the US government in default when the expected cheque is delayed?

          2. James,

            Of course the retiree couldn’t claim default, though Lockheed may have some sort of recourse. I do understand that the word “default” has a technical legal meaning that would not apply to missed Social Security payments, for example, so maybe I shouldn’t use it loosely.

            Still, there are seriously negative consequences of the government’s failure to make promised payments, whether those are debt payments or something else. A business that fails to pay its suppliers may not be in default on its debt, but there are consequences nonetheless. So it is, only worse, with the US. Confidence in the credit of the US would diminish, there would likely be an economic downturn, future borrowings would be at higher rates, etc.

            Still, all this is secondary. I fundamentally agree with you that Obama should take what measures he can to get things paid, and the high-coupon bond idea strikes me as worthwhile. Maybe it would be illegal, but I don’t see why.

        2. James, it’s not just a technical problem. As noted above, the President has no Constitutional authority to refuse to pay the obligations of the United States as they come due, as long as money is present to pay them.

        3. James,

          Lew has said that he has no ability to pay the debt first. If you take him at his word, then there will be a point when the government will default on something. For the moment, I see no reason not to take him at his word about the ability of the government to pay some kinds of bills but not others. We are in entirely uncharted waters here.

          If the first obligation to come due when the government runs out of money is Social Security then presumably the oldsters won’t be paid that day. If the first obligation to come due is interest or principal on debt, then the government will have to default on its debt obligations. Whether they put out a press release or not, it would be impossible to keep the missed payment secret and so this would be effectively an announcement that we are in default.

          Whether the debt holders or the oldsters will have the priority seems to me to be the quintessential political question, especially since there are at least two constitutional mandates that are in direct conflict (“take care” combined with the 1974 Impoundment Act vs. the 14th amendment’s requirement that the president not allow the government’s debt to be called into question).

          If push comes to shove, I vote for depositing the coin, paying the bills and daring the Republicans to impeach Obama.

          1. ¨I see no reason not to take him at his word about the ability of the government to pay some kinds of bills but not others.¨ Hoew do you account for the orderly government shutdown, which has involved exactly the prioritising you and Lew say is impossible? The shortfall is roughly similar in the two cases.

          2. Hoew do you account for the orderly government shutdown, which has involved exactly the prioritising you and Lew say is impossible? The shortfall is roughly similar in the two cases.

            It may be of a similar magnitude but it is of an entirely different nature. With the debt ceiling, Congress has mandated spending but not allowed the executive the money to pay the bills. You seem to be under a misimpression about the shutdown; the government has money but Congress has not authorized the spending. There aren’t any bills being presented to the Treasury for which payment has to be prioritized.

          3. Michael Neal: The debt limit does not void previous taxation law, so money is coming in, just not enough for appropriated spending. In the shutdown case, Congress seems to have authorised ¨essential¨ spending only: nore or less in line with tax receipts, at two-thirds of the normal budget. Both are close to an instantly balanced pay-as-you-go budget, far below anything Paul Ryan has proposed. The differences seem to be (I´ve not seen a professional analysis) that the ¨essential¨ spending is still a tad higher than tax receipts, and above all the timing of taxes and expenditures is mismatched. Governments like businesses and households borrow to handle liquidity problems. The dent limit, but not the shutdown, would create a liquidity crisis.

      2. Not necessarily. The Treasury could basically arrange a bailout by selling the “consols” to the Federal Reserve. That could be accomplished within the space of a single day, perhaps even a single hour. The question and the unpredictable answer is how the currency and bond markets (and also foreign holders of the unimaginably vast amount of $100 bills) will react. This proposal is probably technically far less legal than the Platinum Coin but suffers from the many same defects in terms of risking a crisis of confidence.

        If I had to pick an option, the Platinum Coin may suffer from bad optics but it’s unquestionably legal. Even if the Federal Reserve refused to accept it, I doubt it would take more than an hour or two for an honest, non-movement Republican district court judge to rule that it’s legal tender and has to accepted for deposit to the government’s account.

        1. I suppose they could, but it looks to me like swapping them for existing debt is the cleanest approach. Maybe you could do the swap with the Social Security Trust fund. By my calculations a thirty-year Treasury with a 15% coupon is worth about three times its face value. Shorter maturities get less of a multiplier. The Trust Fund holds about $2.6 trillion in Treasuries. So give it a matching value of high-coupon bonds. A complete swap might involve one to $1.5 trillion, reducing the outstanding debt by a trillion or more.

          1. The optics are far better than the Platinum Coin. Banks and pension funds know perfectly well how to price 15% AAA- bonds. That´s why I picked the number; 50% or 100% coupons have more leverage on the debt limit, but put you back into bizarro territory. Consols are rare in the US, but there are billions outstanding in Britain from past wars, and British financial intermediaries and professional investors know how to price them too. American ones might have to look it up in a textbook.

            On the legal doubts. Who´s going to sue to have Boehner Bonds declared invalid? The Platinum Coin would be more likely to be challenged as it´s so weird and Kenyan-socialist.

            I repeat, none of these manoeuvres deal with the psychological shock to the financial markets, the risk of panic, or the long-term damage to the creditworthiness and cost of borrowing of the US government.

          2. I’ve been seeing versions of this floating around – but while I can imagine that they might assuage some of Wall Street’s fears (forcing money into a banker’s pockets is a good way to calm them down), isn’t it awfully expensive? The fear of a default is that we could have to pay much higher rates on future debt, and we could lose the massive international subsidy that comes from being the main global reserve currency, with a huge number of dollars purchased to line bank vaults overseas. Avoiding that is important! But wouldn’t setting up 15% bonds or similar amount to paying the default premium (and then some) voluntarily, in the hopes that future borrowing won’t pay any premium at all? And won’t the lenders insist on getting at least some premium in future once they know we can be forced by circumstance and by the need to save face to pay one?

          3. Warren: the 15% coupon does not mean that the effective interest rate would be anything like that. In an efficient market – and that for US government debt comes close – the coupon does not affect the effective interest rate at all. A 15% coupon consol should sell for exactly three times the price of a 5% consol. The relationship would be very similar, but not exactly identical, for 30-year bonds with the same rates, because the redemption value comes into it. That’s why Byomtov and Beowulf and I think the Treasury could sell 100-par long bonds at 15% for 300 or so.
            What would – will, since the US goverment is already in a creeping default, as Felix Salmon says – raise borrowing rates is the situation, not the mechanism. There would probably be a short-lived spookiness premium for Boehner bonds. But markets price much weirder stuff routinely: Tsarist railway bonds and the like.
            The US Treasury employs people who have been living debt for 30 years. We can assume they have thought through this, and many other options. What I can’t believe is that in the disaster scenario they would sit on their hands and do nothing.

  5. Mark: I think you are conflating two things that should be kept separate. (1) Can Obama do this? and (2) Should he announce in advance that he will? The answer to number 2 is clearly no, no matter what the answer is to number 1.

    1. I agree. But I also fail to see any ambiguity in the constitutional provision that gives the Congress, and not the President, the power to “borrow money on the credit of the United States.”

      So yes, I think a happy outcome is likelier if all the players think that the country will be well and truly screwed if the debt ceiling isn’t raised. But, independently of that, I also think hat the country will, in fact, be well and truly screwed if the debt ceiling isn’t raised.

    1. OK. I’ve read those essays. Foley and Brown read the same Constitution I do. So does Posner, except that he thinks the President can do whatever he damned well pleases in “exigent circumstances.” Galbraith thinks the Treasury can just write checks for money it doesn’t have. Geohegan thinks the creditors should sue; maybe they’d win, but that doesn’t tell the President what to do in the meantime. And Amar seems to think that prioritization is both legally and technically feasible, though he makes no argument for either proposition, and he makes the obviously false assumptions that (1) the bills coming in next week will be for work not yet performed, and (2) that the threat of default somehow frees contractors and public employees (including the uniformed military) from their obligations to perform their functions.

      Not a single one of them offers a syllable of justification for the notion that the President can unilaterally borrow money on the credit of the United States, which is the notion I was disputing.

      So unless you can give me some reason to doubt my proposition, I’ll keep right on believing it.

      1. But the Constitution, Article II Section 3, also doesn’t give the President the authority to refuse to spend money that Congress has ordered him to spend. How does the President’s lack of authority to borrow money without Congressional authorization trump his obligation to faithfully execute the duly enacted laws that require him to spend the money?

      2. No one is asking you to doubt that proposition. What we are doing is pointing out that not borrowing that money involves a Constitutional breach that is just as clear to us as that one. You need to grapple with the second half of our contention, not just repeat your proposition over and over agian.

      3. Mark,

        I think what’s confusing many people (myself included) is that you seem to be conflating two quite separate and distinct things. One is whether the “unorthodox” option such as reliance upon an inherent power created by the 14th amendment or the Platinum Coin or selling “Obama bonds” are technically legal. The other is whether they are viable under the circumstances regardless of their legality.

        Obama is lacking good options not because these unorthodox solutions are obviously illegal or unconstitutional but rather because their unorthodox nature itself creates a substantial element of risk since their legality would have to be ratified by a court, which is a time consuming process under the best of circumstances. Obama’s point was that this period of uncertainly was intolerable and might itself trigger the disastrous collapse of confidence in our currency and debt that the 14th amendment option or Obama bonds were intended to forestall.

        That is why Obama has ruled these things out. No because they are unconstitutional or unworkable. Now, it might turn out that the Republicans are intractable and there is no way to extricate the country from this situation except to pay a ransom that will guarantee nothing except more and worse trouble with these gangsters in the future. So maybe he’ll go home with the best available woman at closing time (which might look a lot like the 14th amendment option or the Platinum Coin).

        You and others here seem to be dismissing some of these options out of hand at a point in time when there’s no reason to do so. At this point, I would follow Obama’s lead on this and focus not on the legality of these unorthodox solutions but on the fact that they are untested and unorthodox, with everything that implies for confidence in our nation’s stability. He was very careful not to completely, irrevocably foreclose some of these options and I think everybody on the Democratic side should do the same in spades. When the guy is right, he’s right—and I really do think Obama’s right on this situation.

        Again, for that reason, I see no good purpose being served even to discuss these alternatives. Let’s keep our options open with a bit of subtlety and ambiguity. Let’s focus on the dangers of untried and unorthodox solutions that will probably be tied up in litigation for years, which will itself horribly undermine our creditworthiness, and not make arguments that we might all wish to take back later.

        1. This is Jack Balkin´s argument and it´s sound for Obama. However, I think it beyond the bounds of a reasonable risk to fear that GOP Congressmen will seize on speculations in the left blogosphere to say that not raising the debt ceiling wouldn´t be so bad. Especially as the speculations are about end runs round the debt limit that would make it far less harmful, and hand power to the Presidency. For the GOP, default has to be disastrous or the threat goes away.

  6. Seems to me we’re getting back into platinum coin territory. No matter how ridiculous it sounds, I never heard anyone present a compelling argument for why it would be unconstitutional. There is no other solution (other than Congress reaching a deal) about which that can be said. ANY other solution/workaround/gimmick that has been proposed carries a clear basis for a potential constitutional challenge. So I say go for it. The very absurdity of it might even cause a few people enough discomfort to actually pull their heads out of the bubble and take a look at reality.

    1. a potential constitutional challenge

      I repeat the question I asked above: Who would suffer an injury that would give him standing to sue?

      1. Frankly, I find the whole “Standing” issue to be pernicious quite often, at least in the cases I hear about (ie newsworthy federal cases). I understand why it’s a useful way to dispose of cranks and time wasters, but I think we need a robust public-interest exception for when a case is of sufficient importance to our society. I’d place the warrantless wiretapping within that (no one can sue, the courts have ruled, because no one can prove they were tapped, even those with pretty good circumstantial evidence), and I’d place this within that as well. Who you’d give the standing to is a problem, but it’s been solved before, as with the DOMA case.

        1. The standing requirement comes from Article III’s statement that the judicial Power shall extend to various Cases and Controversies. I don’t know what the framers had in mind, but Article III on its face says nothing about a plaintiff’s having to have suffered an injury. The standing doctrine is highly political and is used to keep people the justices don’t like, such as those concerned about the environment or the expenditure of taxpayers’ money on religion, out of court.

          1. I think you’ll find that the standing requirement comes from the common law, not Article III.

          2. Mostly you’ll find that in actual practice the standing requirement comes yanked out of five asses sitting on the Supreme Court. While standing may sometimes be clearly established by law in a contested case, lack of standing in a contested case is almost always a matter of judicial whimsy, not law. There are no coherent rules governing it.

      2. Nobody has standing if Obama takes unilateral action to pay the government’s obligations regardless of whether he uses the “take care” clause, the 14th amendment, the coin or sells “Obama bonds”. The requirement is an actual or threatened concrete injury. If the court applies the body of existing law on standing in a reasonable way, nobody is suffering a sufficiently individual, concrete injury to have standing.

        1. Debt holders who are being paid have no standing: If Obama acted to pay the interest and principal as it came due, nobody would suffer such an injury. Holders of debt coming due or owed interest obviously wouldn’t be injured since, as I mentioned, they will have been paid in full and on time. Holders of debt not yet due wouldn’t have suffered any injury since their bonds are current and, because of the unilateral executive action paying the obligations of the United States as they come due, there is no longer any realistic prospect of not being paid.

        2. Citizens who are unhappy with Obama unilateral action in paying money or depositing the coin or whatever have no standing under Schlesinger v. Reservists to Stop the War and taxpayers unhappy about those things have no standing under Valley Forge.

    2. Yes, I was wondering why this option just disappeared. It was talked about a fair amount the last time this situation came up. Jon Stewart even did a bit on The Daily Show regarding it. Stewart dismissed the idea, to the chagrin of a number of fans, almost exclusively on the basis of it seeming strange and impolitic. But neither Stewart, or any of the commenters at the time, refused the option on its being unconstitutional or even unworkable. The right wing would be apoplectic. Sure. They’re already apoplectic. And default on the debt would be worse. They’d move toward impeachment. But there’s already plenty of talk of impeachment. My thought is let them drive that clown car off the bridge. Avoiding certain economic catastrophe will sharpen the terms of discussion.

      1. By the way, please note that I am not citing Jon Stewart as an authority on anything! I was citing The Daily Show simply as evidence of how much the “platinum coin” option had worked its way into the extant political and legal discourse.

    3. The big problem with the platinum coin idea has nothing to do with its constitutionality. It’s that the Fed might not accept the coin. If it doesn’t then an administration attempt to use it only makes the problem worse.

      This is why, as a practical matter and contrary to what one might think from my above comments, I think the best policy choice for the administration to make in the instance of a debt ceiling breach is to do exactly what Mark suggests: default. There are a number of different things the government could try to prevent it, from the platinum coin to holding Treasury auctions anyway to prioritization to just printing money in some other fashion but they all involve a level of legal uncertainty that would largely unravel their effectiveness in preventing the disaster. So they should just bite the bullet and take the move that causes the greatest short term pain in the hopes that that forces Congress to do its job.

      I just don’t think Mark’s argument about the constitutionality of it as nearly as clear cut as he does.

      1. “It’s that the Fed might not accept the coin.”

        Upon what basis would they do so? The statute is fairly unambiguous.

        1. The statute is only unambiguous to those who know what answer they want. If you admit legislative intent to the discussion AT ALL then it becomes pretty clear that this is not what Congress intended. And since there are plenty of times that courts do reason based upon legislative intent, the law becomes ambiguous in a real hurry.

          1. I looked at this very carefully the first time the idea was floated. Absent judicially endorsed creative deconstruction, I can only say that in the past 30 years I’ve been doing legal stuff, this is the least ambiguous, most consistent and homogeneous group of statutes and cases I’ve ever seen. The power to mint a platinum coin and assign to it whatever denomination the government wants is explicit, just as another statute makes it explicit that such a coin would be legal tender and yet another statute makes it explicit that the federal reserve must accept the coin and credit its face value to the government’s account. There’s no case law that creates any ambiguity and, indeed, all of the cases have insisted on a very literal, direct reading of the relevant statutes.

            All that’s advanced against that very solid weight of clear statutory language and case law is some mumbo jumbo about how the “spirit” of the law should mean that you can’t do this. I’ve never seen any legal analysis of the coin’s defects that wasn’t pure crap. Personally, I prefer my spirits in bottles.

          2. If either of you think that the way this would play out in practice (and the “in practice” part is far more important here than theory) all I can say is that I think you’re kidding yourselves.

          3. In actual practice any tea party judge who wanted to declare the platinum coin option unconstitutional could do so and would be upheld by three to five members of the Supreme Court, regardless of the current state of the law.

          4. What is so hard about answering a direct question? I concede that there would be all kinds of judicial squabble, OK? Now, answer my question. Upon what basis would the fed refuse to take the deposit from Treasury? Please cite applicable statute. Thank you.

          5. Faced with a choice between violating the Constitution, violating the law, and violating “legislative intent,” why would anyone think that the President should go with one of the first two?

  7. I wondered earlier about the 14th Amendment and how it would apply to this situation. IIRC this provision was written to (1) prevent newly reconstructed Southern states from canceling Union debts and (2) prevent them from redeeming Confederate bonds.

    It seems that there are two distinct questions requiring expertise in two different fields. The first requires knowledge of Constitutional law. The second requires knowledge about who in his/her right mind would buy bonds issued under a cloud of uncertainty, and what kinds of interest rates they would insist on before purchasing them.

    RBC is about as good an online community as you can ask for, but we probably sound like a bunch of internists discussing spine surgery: a lot of knowledge of some basic principles, and an ability to tell sense from nonsense in a number of areas, but not up to the task of working out the nuances of the detailed issues involved. That is fine and dandy with me. The Tea Party has shown its unfitness to govern; that is something most of us can recognize. The ramifications of the Constitutional options are probably a bit of a stretch for most of us.

  8. …which is why we should do everything we can to put pressure on Congressional Republicans to do the right thing.

    But in their eyes pulling down the temple of fiat currency is the right thing….
    While nearly simultaneously submitting bills to keep the US dollar the world’s currency:

    They would default the dollar while insisting on it.
    Mark, how are you going to put pressure on that kind of stupid?

    I noticed the DJIA was down a mere 10 points today after Friday’s 100+.
    I suspect that the markets are beginning to sense the good news out of the Senate doesn’t apply to the Vandals in the House…
    And an old George Bush quote is starting to dampen the exuberance:

    “This sucker could to down.”

  9. Mark, you are so right.

    It kills me to keep reading about these miniature bubble-worlds people have constructed in which there are only two laws, the debt ceiling and and appropriations bill. Which one should the President break? It doesn’t work like that. Given an appropriations bill, and no money in the Treasury, there are thousands and thousands of illegal things the President could do to raise money:

    –Lease the Grand Canyon
    –Raise income taxes
    –Seize money in private bank accounts
    –Have the Navy capture oil tankers as prizes
    –Sell the gold reserves in Fort Knox

    And none of them are any more illegal than issuing debt not authorized by the Congress. Full stop. Some very smart people seem to think that an appropriations bill creates some kind of legal short-circuit that enables the Administration to just do whatever the hell it wants to raise money, like the way Introduction to Logic teaches us that you can derive anything from contradiction. It’s nonsense.

    1. That is so totally not the point. It’s not that an appropriations bill authorizes the executive to do whatever it wants to raise the money to pay for it; it’s that there is a conflict between the executive’s duty under Article II and the legislature’s prerogative under Article I. If the Congress mandates the spending of ten dollars on program X, the President is obligated to spend ten dollars on program X. If the Congress fails to provide the ten dollars, the President is nonetheless obligated to spend it. The President, that is to say, is placed in a position where he cannot faithfully execute the law. That doesn’t mean he is magically endowed with the authority to issue debt. But at the same time he is not magically endowed with the authority to ignore the legal mandate that he spend the ten dollars on program X. I don’t know how you resolve that conflict, but you don’t resolve it by pretending it doesn’t exist.

      1. With respect, it is entirely the point. There is assuredly a conflict, and the conflict is as you describe it in your response: appropriations have been mandated, and there is no money for them.

        The conflict is NOT, as many people have tried to say: here is Law A which says don’t borrow any more money, and Law B which says spend more money. Which one (of the two) should the President ignore?

        It is precisely that false reduction of the whole universe of laws into two only (the Debt Limit and some Appropriations Bill) which leads to a lot of spurious reasoning. (Such as: the appropriations were passed after the debt limit, and so render it void. Well, why don’t they render the Internal Revenue Act void, too?)

        My belief is that, in this situation, the President has been told to spend money which he does not have and can not raise. So the best answer for what he should do is to spend only as much money as there is in the Treasury, and send a polite note to Congress asking them to pull their heads out of their backsides. And how are payments to be prioritized? The obvious first answer is by date due, although it’s not the only reasonable answer.

        1. I don’t see how you can acknowledge both the conflict between the two legal obligations of the executive and the constitution’s role in creating the problem and then simply wave your hands and create a new legal order based on what seems most sensible to you. In the first place, if that’s an acceptable method then it should be just as acceptable for my side to wave our hands and say that there’s an implied power to raise money that’s already been appropriated and to do whatever is necessary to prevent the debt from being called into question. If you have your best answer, you should accept that others might have a different best answer that they prefer.

          Remember, the debt ceiling is a statutory requirement, not a constitutional one. Prior to 1917, the United States had no debt ceiling and the way money was raised seems to have been pretty much all over the place in terms of how debt was sold. Sometimes it was thought that only Congress had the authority to approve specific bond issues but other times it looks like the executive proposed to sell bonds and it was up to the Congress to disapprove of the president’s plan to sell bonds.

          We are in completely uncharted waters. Nothing about this situation was foreseen by the framers,and indeed the root of many of our current problems is the inability of of the founding fathers to understand the difficulties and dangers inherent in the presidential system. Indeed, Madison in Federalist 51 is entirely focused on usurpation and divided government without really understanding that a government of some many check and balances that it frequently veers off into gridlock, yet endures because of fixed terms, is a recipe for disaster as we’ve previously seen in Latin America and now here.

          As I often say: “Nobody expects the Republican Party!”

          1. The relevant sentence in the 14th Amendment says that the validity of the debt “shall not be questioned.” You’re making one passive clause do a lot of heavy lifting if your interpretation is that the President thereby has the power to do “whatever is necessary to prevent the debt from being called into question.” Again the passive? Called into question by whom? You? Editorial writers? Is it a legal concept of long standing that a debt is deemed “called into question” when someone misses a payment on it? Because that would be news to me.

            It is not clear what that sentence of the 14th Amendment actually _does_–and I suspect it probably does nothing, in a practical sense. It’s a bit of rhetoric with no legal bite. At the most, I think it could be understood to prevent the government from repudiating the national debt. (On the theory that denying a debt must entail questioning it.) And you do not repudiate a debt if you miss a payment, or even restructure the payments with your creditors.

            But it does not empower the executive, at a time when amendment writers had learned to add empowering language where they wanted it.

    2. Though it would be really entertaining to listen to the gold bugs howl as Obama floods the market with what’s in Fort Knox.

  10. Nobody has yet mentioned invocation of authority to act on the basis of national security.

    That is a fig leaf King Kong could invisibly hide behind and as far as I know has been held by the courts to justify an enormous range of executive actions, including, if memory serves, some extraordinary financial measures Lincoln took. It could probably cover almost anything Obama wanted to do. That said, he’s already said market reception would prevent him from issuing bonds on presidential authority– in other words for pragmatic reasons.

    I don’t know that there’s any legal or constitutional authority for prioritizing, or how possible it is technically. They’re saying it’s not possible, although a former treasury official _has_ said that interest payments are made on a separate system. If it’s “simply” a matter of setting up a category filter, I’d just filter out anything that pays any defense procurement and be done with it. Defense contractors and other creditors should be delighted to do their bit in the perfect assurance they’ll eventually be paid. I know, I know, politically impossible. Plus, no programming fix on patched-together, probably uncommented code that’s so old nobody’s around who remembers what it does, could possibly be simple. Testing it out could take weeks.

    Besides, credit issuers are big on something called “unitary default,” meaning if I miss a utility payment it’s the same thing as missing a payment to the credit issuer. If Uncle Sam does it, it might not technically be default in the sense that triggers swaps and stuff like that, but– aside from being obvious lunacy– I think it’d be treated much more like unitary default.

    Those gasbags who’ve been talking about how we wouldn’t be “defaulting on our debt” (meaning only treasury borrowing) have, as I’ve heard somewhere, their heads so far up their asses they can clean their teeth from the inside.

    1. I find it difficult to visualize cleaning one’s teeth from the inside, or even to understand what it means. Oh,I know: the hands must follow the head up inside. Is that it?

  11. Would Obama have standing to request an emergency ruling by the SCOTUS on the debt ceiling law? It would appear to be in conflict with the 14th.

    1. Unlike Massachusetts, the US Supreme Court doesn’t give prior advisory opinions, as I understand it. He’d have to act.

      1. So Obama walks into the SCOTUS on 17 Oct (hyperbole, here) with a signed declaration that the debt limit has been exceeded. He asks for the ruling on whether it is constitutional and since there would be harm he also asks for an injunction against anyone enforcing the debt limit.

        1. But the argument against this that Obama made at his press conference still makes sense to me. If he does as you suggest, there’s going to be a lot of controversy and probably at least several months before a definitive ruling is handed down by the USSC during which there is a substantial risk of a market crash. Certainly there will be a lot of discussion about finding another world reserve currency and new worries about American stability. Even if he wins, the long period of uncertainly could easily be disastrous.

          And if the government would lose or the court invokes a prudential doctrine like the political questions doctrine, where would we be then? It would be chaos. A genuine risk of political and economic collapse.

      2. I agree. I think he has to act and then wait to be sued—which is the problem since the markets wouldn’t have an answer for probably months which would be very destructive of people’s confidence in the government debt, which, in turn, could have disastrous implications for the world’s economy.

        That’s why I would choose the coin. They might laugh but it’s the least likely to end up being overturned by the courts and it’s not relying on any sort of implied powers or a strained reading of the constitution. The legal ground is very solid and most people would see it as nothing more than the idiotic accounting tricks required by a Constitution that’s pretty much been held together up until now by what Ian Fleming called the “quantum of solace”.

    2. I honestly don’t know. This is well beyond my level of competence. My best guess, however, is that he couldn’t for basically two reasons:

      First, I don’t believe that such a case would be within the court’s original jurisdiction, meaning that the case would have to originate in a district court (probably in the District of Columbia) and move to the USSC only after the lower court had heard evidence, briefs had been submitted and the lower court had rendered a decision. I believe there is a way to bypass the Court of Appeals and take the appeal directly to the USSC. That would still take probably several weeks, if not several months. I don’t know of a quicker way, although if there’s somebody out there who does, I would be interested to know.

      Second, a more serious obstacle is the bar against advisory opinions. The USSC generally follows what’s called the “private rights model” which means that the power of constitutional exposition is an incident of the Court’s obligation to decide the particular “case” or “controversy” before it (i.e., constitutional litigation is essentially no different from torts, contracts, or other lawsuits. Consequently, it is often said that a focused, specific non-collusive adversary proceeding is a jurisdiction requirement under Art. III.

      Basically, that means the Obama administration couldn’t just ask for an advisory opinion about the debt ceiling law (such as whether it is overridden by an implied presidential power under the 14 amendment or whether the coin is legal tender or whether selling “Obama bonds” would be legal). What the “case or controversy” requirement usually means is that the government has to either act or at least say definitively that it’s going to act and then wait to be sued by somebody who really, truly opposes them. You can’t just dragoon your own plaintiff off the street and tell him what to say in the lawsuit. It has to be his owned lawsuit in which he has something at stake and he can’t be acting in collusion with the other side.

      Anyway, that’s what I think. Although, I admit the con law stuff is kind of rusty after all so many years and, anyway, these questions are considerably above my level—especially without lots of research.

  12. Mark,

    Realistically, the Constitution means whatever five or more members of the Supreme Court says it means. So you really can’t know in advance whether a particular course of action violates the Constitution or not (if you doubt me, consider Bush v.Gore). There are more polite ways of saying it and previous courts haven’t been remotely as aggressive about rubbing our noses in it but that’s what it comes down to.

    There’s a very respectable body of legal analysis advanced by people with the highest academic credentials that supports the 14th amendment analysis. I think the advocates are mistaken but I also remember being taught that the law is whatever is vigorously advocated and plausibly maintained under the highest court that can hear the case says it’s wrong. For myself, I was an advocate of the platinum coin but I was persuaded on the subject by what President Obama said during his press conference.

    The real issues is exactly as Obama described it. Whether the 14th amendment option is Constitutional or not doesn’t matter. Whether the platinum coin is legal tender or not doesn’t matter. What does matter is that invoking it and then waiting for the courts to decide its legality probably would roil the financial markets, risking a terrible economic crisis and jeopardizing America’s states as the world’s reserve currency and ultimate save haven.

    But that’s also why any sort of negotiated settlement between would be disastrous in the long run. If the Republicans are able to point to any change in policy or anything else, for that matter, as a result of their threat to trigger a showdown over the debt ceiling than the threat will continue to exists and the danger to confidence on US debt and the country’s political stability will only intensify next time the debt ceiling is reached. The safety of the republic demands that the Republicans be forced to accept a clean increase for both the budget and the debt ceiling.

  13. Agreed, that nothing in the 14th amendment gives the President the power to borrow or tax unilaterally.

    I’d guess that interest accruing under the Prompt Payment Act (or the Contract Disputes Act once Boeing [or whoever] has made a claim for interest due) doesn’t count against the debt ceiling. So, if you stop paying government contractors, they’re basically stuck waiting. A contractor who isn’t paid can sue, and win, and then wait for Congress to appropriate money to pay the judgment. The contractor doesn’t get to garnish tax payments or have a sheriff’s sale of Yellowstone, or any such thing.

    I don’t know the laws on those subjects, but my guess is that Medicare reimbursement payments are in the same place. If the government delays paying hospitals, they can sue, but have to wait for Congress to pay them.

    I don’t know what legally happens if a Social Security payment is late. Probably, again, a chose in action and an interest obligation, requiring an appropriation to actually pay.

    Obviously, the politics is another thing entirely.

  14. I’m still where I’ve been for some time, and this thread has only reinforced my belief: the logical course of action given the Republicans’ motivations is that they will force us into default, and hope Obama does something to minimize the pain of said default. As this thread makes all too clear, if he smash into the debt ceiling there are a lot of options that Obama may or may not have, and they all suck to greater or lesser degrees, and many may not even be legal, and those that are probably legal (the Platinum Coin, for example) are probably not advisable.

    The Republicans, or many of them need (or want):
    1) Not to back down: Obama gives them a big concession, or the country gets it.
    2) Not to be held responsible for bad consequences a year from now. Thus, they accuse Obama of perfidy when minor consequences of the shutdown attract attention (shuttered parks and monuments, for example), and they propose side deals to ease the pain of the shutdown on particular interests with special political valence (veterans, etcetera – not poor folks on WIC). This means they may want to force the debt ceiling crash, but they don’t want to be blamed for consequences of said crash, or at least not in a way people will remember in twelve months.
    3) Some way to accuse Obama of playing dictator, of breaking the law, or at least of playing shyster to evade the law (eg the Coin). Obama preventing or minimizing actual consequences of a debt ceiling crash would suit them perfectly: it means no material outcomes to blame them for (see #2), and they can push for impeachment – possibly seriously, possibly only in perfervid fundraising letters. See Mark’s update about Sarah Palin, and see this whole thread with its debates about Obama’s options, and their possible legality or illegality.

    At this point, Boehner can be the ineffective schmuck who let the Tea Party turn the House into a monkey’s tea party – or he can be the guy who drove Obama into breaking the law. His option of being a serious leader in control of an effective House has been precluded by events: he might as well go full nutzoid.

    1. Crossing the border of High Broderism

      All this makes sense.
      But there is a backstop.
      They’ve lost Friedman…
      A pox on both their houses has become a pox on one house:

      The reason so many mainstream Republican lawmakers want Obama to give something to Cruz & Co. is that they want to get out of this mess, but they’re all afraid to stand up to the far-right fringe themselves — with its bullying network of barking talk-show hosts and moneymen. But Obama shouldn’t take them off the hook. Only Republicans can delegitimize the nihilistic madness at the base of their party. (I wouldn’t exaggerate this, but I think Boehner underestimates how many mainstream Republicans feel their party is being stolen from them by radicals — and hunger for a leader who will take them on.)

      U.S. Fringe Festival:

      I don’t think the Teahadi have a chance to pull off any sort of Houdini-gets-out-of-jail-free-after-12-months-because-we’ve-all-forgotten.
      Nope. They’ve taken us and our markets to the edge one to many times for rage and blame to escape them…

      As for the Senator from Canada, he is the leader of nothing more than a dwindling tribe of irate monkeys.
      He has forfeited his Presidency before it ever even began.
      Even Dowd gets this correct:

      The boy frowns. “But Papa, didn’t the healthy Republicans realize the infected ones had lower brain functions?” “Well, son, they knew there was something creepy about the ringleader, Ted Cruz,” the man replies. “His face looked pinched, like a puzzle that had not been put together quite right. He was always launching into orations with a weird cadence and self-consciously throwing folksy phrases into his speeches, like ‘Let me tell ya,’ to make himself seem Texan, when he was really a Canadian.” The boy looks alarmed. “A Canadian destroyed the world, Papa?”

      Welcome to Ted Cruz’s Thunderdome:

      So I say unto you:
      It is the Republicans who are cooked. They’ve fucked themselves in their own ear. And I see no easy escape for them…

  15. I’ve been swinging back and forth on whether I think we’re fated to breach the ceiling or not. I’m now thinking that what Cruz and the radicals really want is for Boehner to sell them out, and pass clean bills, but they can’t say it without ruining their positions are the defenders of revolutionary purity. So far, Boehner hasn’t shown any sign of blinking.

    Why wouldn’t he? I suppose he’d rather have the TP folks seen as causing SS checks to be late and Boeing not getting paid on time than to capitulate and give the radicals the internecine bloodshed they want. There’s an interesting parallel to Obama’s position here: better to break the TP than to give in and be faced with new rounds of crisis/blackmail. Would late SS checks break the TP?

    My guess is that Boehner and his people are calculating that the actual financial consequences of breaching the DC aren’t that great, and go away completely once the DC is lifted. For all that injecting a little uncertainty into Treasuries is a bad thing, they’ll still be the best vehicle for their purpose, once the crisis passes. And it can pass quickly once the TP is broken.

    1. Well, it’s Tuesday and the current word is that the Senate will pass a bipartisan bill that’s dumb but not a Fnck You to Obama, and the House will pass a package of Derp on a party-line vote that might as well include the Onion’s famous claim the House will demand Obama’s firstborn daughter. There’s even a rumor that having passed this insult to Obama and the country, the House will go into recess – that it’s a take-it-or-leave-it proposition.

      It doesn’t look like a fix is in the works; it doesn’t look like Boehner wants one. As I said.

      1. Updating: the White House has (inevitably) rejected the rumored House Republican proposal as being a ransom demand … and word is that the Republicans couldn’t pass it anyway, because it wasn’t crazy enough. No sign we’re anything but screwed.

  16. Correct me if I’m wrong, but it seem to me the argument you’re making here applies just as much against Republicans who want to claim not raising the debt ceiling won’t be so bad because the administration can prioritize payments and insure interest on bonds will be paid. Just because the President is constitutionally bound to honor the interest payments on bonds due on Wednesday, does not somehow give him authority to ignore legal obligations to pay other obligations due a day before on Tuesday.

  17. “Inherent powers of the presidency”– remember that phrase? Haven’t heard it much lately from the ones who used to wave it around. Wonder why that could be . . . But just think what Darth Cheney might do if he was back in charge.

    Compunction, conscience, political caution, are all such terrible drags on a president.

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