Where Does the Debt Ceiling Even Apply?

I realize that this might come as a shock to RBC readers, but sometimes Congress passes statutes that conflict with each other.  What do courts do when faced these problems?  And what does it have to do with the debt ceiling?

Well, consider this problem.  Congress passes a debt ceiling bill.  Then it passes a bill directing the President to pay for something, say the Army.  But the only way that the President can pay for the Army, given the fiscal situation, is to borrow money to do it.

Usually, when faced with this dilemma, courts will apply the “last-in-time” rule, which is just what it sounds like: the last-in-time statute wins.

So how does this apply to the debt ceiling?  If Congress passes annual appropriations in 2011, directing the President to spend money on, say, the armed forces, it would not be implausible to argue that the debt ceiling simply does not apply as a matter of statutory construction.  (Note that this is not a constitutional argument about the Public Debt Clause).  Clearly, the issue would turn on the precise wording of the statutes, but if these statutes direct the expenditure of funds, and the President must choose between either violating these statutes, or violating the debt ceiling, then he would be on good legal grounds if he chose the former.

Let’s go through some categories:

1)  Annual appropriations, such as the armed forces, education, EPA, etc.  Certainly these would post-date the debt ceiling, which was last enacted in 2006.

2)  Entitlements. Entitlement programs do not get annual appropriations, although generally their mandatory language is quite strong.  Thus, this would turn on when the entitlement program was enacted.  That would militate against payment under the last-in-time rule.  However:

Case A.  Updated entitlements.  Many entitlement statutes were enacted many years ago, but were updated.  For example, Congress created Medicare in 1965, but updated it last year.  Indeed, the Affordable Care Act is untelligible without essentially incorporating the original Medicare provisions of 42 United States Code by reference.  One could argue, then, that Medicare and Medicaid are last-in-time to the debt ceiling.

Case B. Older entitlements.  The big one here is Social Security (or more precisely, the old age pension provisions of the Social Security Act, which is what we’re really talking about).  I’m not sure, but I don’t think that Social Security has been amended since 2006.  That might mean that if its provisions and the debt ceiling apply, then the Social Security checks don’t go out.  Good luck with that one.  Depending upon how the trust fund works, this might be irrelevant because Social Security has the claim on those funds.  And since the trust fund holds its money in Treasury Bills, the SSA might be a creditor under the Public Debt Clause! 

But apart from Social Security, there are other older entitlements that don’t have the old age pension program’s structure.  For example, Supplemental Security Income (SSI), which assists more than 8 million aged, blind, and disabled, is paid out of general revenues.  I believe that the same is true with the Supplemental Nutrition Assistance Program (SNAP), better known as Food Stamps.

Again, none of this is certain, because courts generally don’t like to find conflicts, and they will look closely at statutory language to see if there is a genuine conflict.  But it’s very plausible to suspect that there will be a lot of genuine conflicts.

So on a purely statutory basis, a preliminary analysis shows that the Republicans get some but not all of what they want from blocking an increase in the debt ceiling.  They won’t be able shut down the government, or block Medciare and Medicaid.  But they will be able to cause a lot of pain and suffering to low-income aged, blind, disabled people, especially those who suffer from undernourishment.  I suppose that that will make them sleep better at night.

Author: Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic - Land Use, the Environment and Local Government. He grew up and still lives in the San Fernando Valley, about which he remains immensely proud (to the mystification of his friends and colleagues). After graduating from Yale Law School, and while clerking for a federal appeals court judge in Boston, he decided to return to Los Angeles shortly after the January 1994 Northridge earthquake, reasoning that he would gladly risk tremors in order to avoid the average New England wind chill temperature of negative 55 degrees. Professor Zasloff has a keen interest in world politics; he holds a PhD in the history of American foreign policy from Harvard and an M.Phil. in International Relations from Cambridge University. Much of his recent work concerns the influence of lawyers and legalism in US external relations, and has published articles on these subjects in the New York University Law Review and the Yale Law Journal. More generally, his recent interests focus on the response of public institutions to social problems, and the role of ideology in framing policy responses. Professor Zasloff has long been active in state and local politics and policy. He recently co-authored an article discussing the relationship of Proposition 13 (California's landmark tax limitation initiative) and school finance reform, and served for several years as a senior policy advisor to the Speaker of California Assembly. His practice background reflects these interests: for two years, he represented welfare recipients attempting to obtain child care benefits and microbusinesses in low income areas. He then practiced for two more years at one of Los Angeles' leading public interest environmental and land use firms, challenging poorly planned development and working to expand the network of the city's urban park system. He currently serves as a member of the boards of the Santa Monica Mountains Conservancy (a state agency charged with purchasing and protecting open space), the Los Angeles Center for Law and Justice (the leading legal service firm for low-income clients in east Los Angeles), and Friends of Israel's Environment. Professor Zasloff's other major activity consists in explaining the Triangle Offense to his very patient wife, Kathy.

17 thoughts on “Where Does the Debt Ceiling Even Apply?”

  1. I think the analysis is even simpler than this.

    Congress passed taxes and a budget ordering spending be above what is possible under the most recent debt ceiling, and thereby repealed the ceiling by implication.

    As Congress makes the decisions on taxing and spending, the ceiling is it a limit on Congress, not the President.

  2. As you’re making arguments about the validity, constitutionality, or applicability of the debt ceiling, please do keep in mind that next time around, the President may be a republican, and the House have a democratic majority. Make sure that your arguments are just as valid in that case.

  3. Hans, in this particular case, I’m entirely comfortable with that. If there is a Republican president and a Democratic House, and the debt ceiling becomes a problem, I am entirely in favor of the President declaring, for the reasons listed above and others, that the debt ceiling does not apply and ignoring it IN ORDER TO CONTINUE TO RUN THE GOVERNMENT AS DIRECTED BY ALL OF THE EXISTING APPROPRIATIONS. That’s a key caveat. What I don’t want is an administration, Republican or Democratic, in a position where it starts picking and choosing which parts of the budget it likes and will continue to fund. THAT is absolutely not within the constitutional scope of the executive.

    Any solution that involves not ignoring the debt ceiling involves exactly that problem. How Brett can argue that any other solution is forbidden because it would unconstitutionally shift power from Congress to the administration and yet ignore the elephant in the room eludes me.

  4. @Hans — I don’t think that there should be a debt ceiling at all; that would make the US like other advanced democracies. So I wouldn’t worry about a GOP President with a Dem House. But your point is well-taken.

  5. I don’t think that there should be a debt ceiling at all; that would make the US like other advanced democracies.

    A salient, but hardly a salable point these days…

  6. Why do you think the relevant date is 2006? Didn’t President Obama sign legislation increasing the debt ceiling in February 2010? And is it relevant that Congress has not enacted a budget for the current fiscal year?

    One other question: How does your theory affect the common legislative practice of giving federal agencies more obligations than they can fulfill out of existing appropriations? I’ve never seen anyone argue that a “last-in-time” rule would apply and allow for the expenditure of unappropriated funds. Am I missing something?


  7. Hi Jon —

    The authorization/appropriation issue seems pretty straightforward to me. There is no last-in-time issue because appropriations and authorizations don’t conflict. Authorizations don’t purport to appropriate, right?

    Don’t know about the date: my understanding is that the last one was 2006, but the general analysis wouldn’t change — importantly, with the ACA. My understanding is also that the Obama-Boehner deal a few months ago did in fact represent a budget. Maybe it isn’t a budget in the Budget Act sense, but I think that the analysis would still apply.

  8. JHA,
    RE the last-in/first-out issue, I don’t know who’s right. But surely you agree that if directed by Congress to spend money on various projects in various amounts, and also directed by Congress to stop issuing debt and coming up with money to spend, a solution in which the President had the authority to selectively stop funding particular projects and programs according to their whims and preferences would in fact be the worst outcome?

  9. Social Security can also spend down the bonds in the Trust Fund. The bonds should be a component of the existing debt ceiling. There should be no “might be” about it.

    At any rate, we have a great opportunity to find out if those bonds are indeed “real” or not!!!!!! Rubber. Meet road.

  10. Hans,

    I do not recall that form or argument during the Bush Younger Great Usurpation of 2001-2009. I guess then it has absolutely no validity.

  11. JZ —

    On authorization/appropriation, many authorization statutes create non-discretionary duties that cannot be fulfilled due to the lack of appropriations — duties that would be judicially enforceable were there money to spend, so I think the example is illuminating, though not determinative.

    WT —

    If the President were to make his decision based on “whim,” I’m still not sure this is worse (constitutionally) than allowing a President to issue debt unilaterally. (I’m not sure Clinton v. New York was decided correctly either.) But that’s not the scenario I’d envision. Rather, I’d expect a President to prioritize, much like Presidents have done during government shutdowns and other shortfalls. Executive discretion is not the same as decision by whim.

    In any event, I encourage you all to look at Jack Balkin’s latest post on this, particularly his suggestion that (absent a true emergency) a Presidential decision to issue debt unilaterally would be much like Truman’s attempt to seize the steel mills in WWII.


  12. Dear Mr. Adler,

    Please unwind for the peanut gallery your opinion that Congress can, apparently, appropriate money and direct spending it does not fund, but when the President spends, it is “unilateral”, and by implication an “unwarranted” action.

    Really, I long for the instance whereby Congress declares war and the executive is, er, disinclined. Can we then assert Congress acted “unilaterally”?

  13. bobbyp —

    I don’t understand your question. What would be “unilateral” is the issuance of debt without express congressional authorization — much like Truman’s seizure of the steel mills was unilateral, even though he claimed it was necessary to ensure there was sufficient steel production to maintain the military efforts in Korea that Congress had authorized.

    I readily concede Congress has acted poorly here — and for some time. The debt limit should never have been severed from the budget and appropriations process. But Congressional malfeasance does not, in itself, justify executive overreach. Again, I’d refer to Balkin’s post on this point.


  14. JHA,
    I read what I take to be the Balkin post you’re referring to. It’s quite long, and it’s mostly about Balkin believing that the President can “borrow” authority he does not possess once an actual emergency has manifested, in the national defense. But, relevant to the issues at hand, it would appear that Balkin’s views are:
    1) The President cannot borrow beyond the debt ceiling unless the markets are in free fall.
    2) The President can do a government shut-down; or he can cut whatever programs strike his fancy, and I quote:

    The President must use every available legal option to preserve the validity of the public debt, through accounting measures, and through selectively deciding which bills to pay and which to delay paying.

    Now, obviously it would be nice if those decisions were made entirely on the basis of what will have the least impact. But I note that there’s nothing in there to stop the President from stopping those programs he likes least, or those his political base likes least. This is a prescription that makes a mockery of Congress’s role in appropriating funds, and – given that the President can refrain from issuing bonds to whatever extent is necessary to create the required shortfall – it’s pretty close to one-man rule of the budget, at least in therms of making cuts to it, so long as we remain in deficit.

  15. Hans says:

    “As you’re making arguments about the validity, constitutionality, or applicability of the debt ceiling, please do keep in mind that next time around, the President may be a republican, and the House have a democratic majority. Make sure that your arguments are just as valid in that case.”

    Considering that there has never been such a crisis for decades except when there is a Democratic President and a Republican House, I’m not worried.

  16. I think that the public debt clause probably controls this issue. And even if it doesn’t, the standing question that JZ has previously raised may prevent anyone from ever getting an answer anyway. Still, this particular argument seems like a loser to me. The last-in-time-rule is a more general rule of statutory construction that will often bow to other rules. Specifically for this purpose, I’m thinking of the cannon that a more specific statute will control a more general statute.

    The issue here is the President’s authority to borrow money. The debt ceiling addresses that question directly. Appropriations bills, while obviously related, don’t address that specific authority. There is a significant incoherence in authorizing more spending than revenues and then restricting borrowing ability, but that’s the point of a debt ceiling, however misguided.

  17. Equity regards as done that which out to have been done. The true debt ceiling is one penny more than total appropriations (fortunately tax revenue fills most of the fiscal gap). :o)

    The Secretary of the Treasury shall…
    (3) issue warrants for money drawn on the Treasury consistent with appropriations;
    (4) mint coins, engrave and print currency and security documents,
    31 USC 231

    Miscellaneous permanent appropriations
    Necessary amounts are appropriated for the following…
    (2) to pay interest on the public debt under laws authorizing payment
    31 USC 1305

    The Secretary of the Treasury may borrow on the credit of the
    United States Government amounts necessary for expenditures
    authorized by law and may buy, redeem, and make refunds under
    section 3111 of this title.
    31 USC 3004(a)

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