Obama, Democrats not ready to play 14th Amendment card with debt ceiling

Law professors, Democratic senators and liberal commentators have recently raised a tantalizing possibility for ending the congressional wrangling over raising the federal limit on borrowing:

President Obama could simply declare the debt ceiling unconstitutional and be done with it.

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July 5 (Bloomberg) -- Michael Purves, chief market strategist and head of derivatives research at BGC Financial LP, talks about U.S. fiscal policy and the debt ceiling.

July 5 (Bloomberg) -- Michael Purves, chief market strategist and head of derivatives research at BGC Financial LP, talks about U.S. fiscal policy and the debt ceiling.

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Advocates of this approach cite the 14th Amendment of the Constitution, which states that the “validity of the public debt of the United States . . . shall not be questioned.”

On Wednesday at a White House question-and-answer session held via the Web service Twitter, Obama said the debate over raising the $14.3 trillion debt ceiling shouldn’t become a constitutional question.

“I don’t think we should even get to the constitutional issue. Congress has a responsibility to make sure we pay our bills. We’ve always paid them in the past,” Obama said. “The notion that the U.S. is going to default on its debt is just irresponsible.”

But many Republicans have said they will not vote to raise the debt ceiling, and Obama is struggling to strike a deal with Congress that would get enough Republican and Democratic votes to raise the limit.

Obama’s team has warned that it needs to get an agreement done by July 22 so Congress has time to pass legislation by Aug. 2. If the debt ceiling isn’t raised by then, Treasury Secretary Timothy F. Geithner has warned that the U.S. government will default on its debt. That, he says, would have severe consequences for the economy.

The constitutional provision at issue — Section 4 of the 14th Amendment — is a post-Civil War invention. The North had borrowed heavily to finance the Civil War, and it wanted to make sure that the Southern states reintegrating into the Union wouldn’t try to shed responsibility for the nation’s debt.

“The purpose of that clause was to prevent the political branches from using default or repudiation as a political threat,” said Jack Balkin, a constitutional law professor at Yale Law School. “It was designed to prevent this kind of gamesmanship.”

Geithner underscored the Constitution’s requirement that the government meet its obligations at a question-and-answer session in late May. He pulled out a pocket copy of the Constitution and read the relevant passage, though he did not use it to suggest that the president should bypass Congress.

Nobody in the White House has since suggested that Obama is considering invoking the constitutional argument if Congress fails to raise the debt ceiling. And White House spokeswoman Amy Brundage said Wednesday night, “Despite suggestions to the contrary, the 14th Amendment is not a fail-safe that would allow the government to avoid defaulting on its obligations.”

But that hasn’t stopped commentators — and even a few Democratic senators — from raising the possibility.

Many law professors say that Obama would have to do a few things before he tried to declare the debt ceiling unconstitutional. For starters, he’d have to use the government’s available resources to cover obligations for as long as possible. That might include using existing tax revenues and selling the nation’s gold.

There’s also a question of what constitutes a debt under the Constitution — for example, whether it includes Social Security and Medicare payments or government contracts.

But if all measures to meet the nation’s obligations were exhausted, Obama would be “entitled to take whatever measures are necessary to pay . . . our debt at all times,” said Gerard N. Maglioc­ca, a law professor at Indiana University.

That might require instituting new taxes or issuing more debt, regardless of what Congress says, according to Magliocca, who noted this is a little-researched aspect of constitutional law.

Larry Rosenthal, a professor at Chapman University School of Law, said he doubts the argument that Obama could declare the debt limit unconstitutional. The debt ceiling, according to Rosenthal, limits the president’s ability to issue more debt. It doesn’t say that the existing debt is invalid. So if the president runs out of borrowing authority, he must find other ways — including suspending government programs — to pay the debt.

“What the government can’t do under the 14th Amendment is repudiate a debt that’s been authorized by law. It can’t say, ‘I’m not going to pay,’ ” Rosenthal said.

Rosenthal said a more persuasive argument is that the agreement in April to fund the government through the remainder of the 2011 fiscal year implicitly increased the debt ceiling. By passing that agreement, Congress essentially instructed Obama to spend money in the coming months. To pay for programs Congress authorized, the government will have to borrow money.

“It’s basically an order to the executive — pay this money,” Rosenthal said. Even if the debt ceiling would block him from doing so, “when two laws are in conflict, the more recent law is understood to supercede the first law.”

 
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