The Debt Ceiling Cannot Force the President to Default On Our Obligations

JURIST Guest Columnist Neil H. Buchanan, of The George Washington University School of Law, says that Congressional failure to properly address the debt ceiling puts the Executive in an impossible situation with grave risks ...
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Last month, for the third time in a little more than two years, the US was on the brink of economic catastrophe, due to the threat that Republicans in Congress would not vote to increase the debt ceiling. Each time that the country has reached the brink of disaster, people have wondered whether there was some way for the President to prevent a default, even if Republicans in Congress refused to cooperate to allow the nation to pay its bills.

Unfortunately, those conversations were almost universally couched in the language of having the president "act on his own," or "side-step Congress," or "freelance" in response to Republican obstructionism. The reality, however, is that the president would be forced by congressional inaction to ignore at least one of Congress's laws. He would have no choice in the matter, because Congress would have put him in the position of trying to reconcile laws that are irreconcilable. There would, under those circumstances, be no way for the president to say, "Presented with no good choices, I choose to do nothing."

The debt ceiling law purports to limit the government's total obligations to a specific dollar amount. The only circumstances in which that law would be relevant, however, are when the president would otherwise be required to borrow more than the debt ceiling statute allows. For example, if Congress had passed taxing laws requiring the president to collect $2 trillion this year, and it had passed spending laws requiring the president to spend $2.5 trillion, the president could only fulfill his executive duties by borrowing the five hundred billion dollar difference. If we had already reached the debt ceiling, however, then the president would be unable to obey all of Congress's dictates.

In research published over the last year in three articles in the Columbia Law Review (one, two, and three), Professor Michael Dorf and I analyzed what the Constitution requires the president to do if he is ever faced with such a "trilemma:" taxing, spending, and debt ceiling laws that do not add up.

Stated this way, it becomes obvious that the president would have no "do nothing" escape hatch. The nature of the trilemma forces him to make a choice. If he tries to honor two of the laws in question, he will necessarily violate the third law. For example, if he tried to spend as much as Congress specified in its spending laws, but he also refused to issue debt above the ceiling, he would then be forced to collect more in taxes than Congress specified.

Some commentators have focused on an argument based on the "public spending clause" of Section 4 of the Fourteenth Amendment. Although I find that argument persuasive, the people who are not persuaded by it have failed to understand that, even without a Fourteenth Amendment challenge, the president would still face a trilemma, and he would thus have to choose which of Congress's laws not to execute.

Professor Dorf and I have argued that separation-of-powers concerns would require a president to choose what we call the "least unconstitutional option," under which the president would issue debt in excess of the ceiling. But how could this be so? How can the president simply "blow through" the debt ceiling, as some have characterized it?

The president, even if put into an impossible position by Congress, is still obligated to preserve Congress's role as the legislative body under the Constitution. If the president faces a trilemma, he must base his choice on two constitutional criteria: He must (1) exercise as little legislative power as possible, and (2) do so in such a way that allows Congress later to enact legislation that can undo his actions, if it so desires.

No other scholars have offered alternative criteria to ours, nor has anyone ever argued that our criteria are deficient in any way. And this is for good reason: The core structural innovation of the Constitution is the separation of powers. If we want to preserve the Constitution, we must require the president to act as modestly as possible, rather than allowing him to act like a "legislature of one."

Bizarrely, the shared assumption among Republicans and Democrats alike has been that the president must simply default on the government's spending obligations, if he is ever faced with a trilemma. That is, if we reach the debt ceiling, politicians on both sides of the aisle have simply taken for granted that the president would refuse to pay bills as they come due. As the White House put it repeatedly this fall, the only alternative to increasing the debt ceiling would be to default on spending obligations.

The reason that this is so bizarre is that it simply presumes that duly-enacted spending laws can be ignored by the president. They cannot. We are not talking about choosing to increase or decrease future levels of spending, after all. We are, instead, contemplating having the president refuse to honor legal claims for payment from the federal government, choosing not to pay the government's legal obligations, in full, on the date that they are due.

Whether the victim of such a default is the holder of a treasury bond who is owed an interest payment, or a hospital that has provided services to a Medicare patient, or a contractor that is owed a payment on a government project, the government owes the money on the date due, because Congress has previously passed spending laws that the president is required to enforce.

Therefore, if the president were to start to decide whom to pay, to "prioritize," in Washington parlance, he would be usurping Congress's most fundamental responsibility, which is to decide how to balance competing demands on the federal purse. When Congress passes spending laws, it does so as the result of a fragile coalition of interested parties, all of whom wish that they could have secured more funding for their favored priorities. The very essence of legislating involves making difficult choices and striking balances. For the president to substitute his priorities over Congress's is to usurp a fundamental power under the Constitution.

By contrast, if the president were to issue additional debt, his action would honor Congress's priorities regarding spending. He would not "spend as much as he wants," as some have tried to describe it. He would only spend exactly as much as Congress ordered, in the amounts and proportions that emerged from the legislative process. If Congress later decides that it really and truly wants the debt to be at a particular level, it retains the power to set future spending and taxation levels to achieve its goal.

It is possible, indeed, it is likely, that the financial markets would treat the additional debt with suspicion. That would almost surely mean that the new debt would require a higher interest rate. That, however, is not a legal argument, but rather an observation that if Republicans in Congress ever go through with their threats to create a trilemma, they will have imposed unnecessary costs on the American people. The increased interest payments will be the manifestation of an entirely political strategy gone terribly wrong.

Sane people understand that holding the debt ceiling hostage is no way to govern. Telling the president to rewrite the spending laws that Congress itself passed is to ask the president to take on too much power. If faced with a trilemma, he must do the least damage possible. That would mean that the president must honor Congress's will regarding taxing and spending by taking on the debt that is required to carry out Congress's orders. If Congress does not like that, it retains the power to do something about it, through the legislative process enshrined in the Constitution.


Neil H. Buchanan is an economist and legal scholar, a Professor of Law at The George Washington University in Washington, DC. He is also a Senior Fellow at the Taxation Law and Policy Research Institute at Monash University in Melbourne, Australia.

Suggested Citation: Neil H. Buchanan, The Debt Ceiling Cannot Force the President to Default On Our Obligations, JURIST - Forum, Nov. 17, 2013, http://jurist.org/forum/2013/11/neil-buchanan-debt-ceiling.php


This article was prepared for publication by Dan DeRight, an associate editor for JURIST's academic commentary service. Please direct any questions or comments to him at academiccommentary@jurist.org

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