In order to get their way on taxes and spending, Republicans in Congress are threatening to let the country go into default by refusing to raise the debt ceiling. If that sounds familiar, they played the same blackmail game in 2011, holding the government’s ability to pay its debts hostage to their will.
Contrary to popular perception, the debt ceiling is not a limit on new spending. It represents how much the government can borrow to cover spending that has already been approved by Congress. The limit was enacted by statute in 1917.
During last year’s crisis, Bill Clinton said that if he were in Obama’s shoes, he would invoke the 14th Amendment to unilaterally raise the debt ceiling. In an interview, he told The National Memo:
“I think the Constitution is clear and I think this idea that the Congress gets to vote twice on whether to pay for [expenditures] it has appropriated is crazy.”
Section 4 of the 14th Amendment says:
“The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pension and bounties for services in suppressing insurrection or rebellion shall not be questioned.”
Last year, Treasury Secretary Timothy Geithner agreed that the Amendment could be used to deal with the crisis, pulling it out and reading it aloud at a media breakfast. This year, a number of Democrats are urging the President to consider taking bold action, using the option to eliminate the threat that the country will default–and once again damage its credit rating, investor confidence, and the public’s opinion of Congress. In an editorial on Thursday, The New York Times concurred.
So far, Obama’s position has been that he doesn’t have the power to unilaterally raise the debt ceiling. A statement released by White House spokesman Jay Carney on Thursday said:
“This administration does not believe the 14th Amendment gives the president the power to ignore the debt ceiling — period.”
Legal scholars obviously disagree on the scope of the Amendment. Clinton and Obama both taught constitutional law yet they reached different conclusions. Cornell law professor Michael Dorf says the standoff leaves Obama with two unconstitutional choices–either not paying incurred debt or acting without Congress to raise the debt ceiling:
“It’s a little like a parent telling a child, ‘You have to buy some stuff at the store, and here’s how much money you can spend,’ but not giving the child enough money and saying, ‘But you got to buy all those things.’ And then forbidding the kid from borrowing enough money to make up the difference.”
Dorf concludes that the President should choose the “least unconstitutional” option, increasing the debt limit on his own, and issuing Treasury bonds to raise money. Bill Clinton said he would do that “without hesitation, and force the courts to stop me” in order to prevent a default. After all, the President can move with a speed that far outpaces the courts.