Yesterday, internet chatter exploded about a potential new solution to the debt ceiling standoff: just calling the debt ceiling unconstitutional and being done with it.
There's more than a whiff of liberal wishful thinking to this approach. If deemed legally sound, it would instantly end the debt ceiling debate, with nary a concession to Republicans. Poof! No more debt ceiling to reckon with, now or ever.
So is it legally sound? The answer is... no one really knows. No one has ever tested anything like the debt ceiling in courts before, so until the Supreme Court issues an opinion, there's simply not a "right" answer.
The argument against the debt ceiling is certainly credible, at least. It arises from Section 4 of the Fourteenth Amendment, which reads "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." This clause was inserted into the Constitution to reassure bondholders after the Civil War that the US government would continue to honor their debts. But it appears to extend beyond that narrow purpose, and create a constitutional bar to intentional default on the public debt that has been "authorized by law."
To a large extent, the strength of the constitutional argument depends on how you view the debt ceiling in the first place. Up until recently, the consensus view was that a failure to raise the debt ceiling would virtually mandate a US default. Essentially, the debt ceiling vote functioned as a big red DEFAULT button atop the federal government. And if that view is correct, well, it's probably unconstitutional, because Congress is constitutionally forbidden to opt for default. The Fourteenth Amendment prohibits big red DEFAULT buttons, and to the extent they exist, they shouldn't have any binding legal effect.
But there's an alternative view of the debt ceiling, espoused by, among others, Michele Bachmann. (I'm not trying to be cute here -- I literally just can't think of anyone else who had this view of the ceiling until recently.) In this conception, the question of whether to raise the ceiling is quite separate from the question of whether to repay our debt. Instead, these people argue that the debt ceiling is simply about the source of federal funding -- i.e., whether the federal government can borrow money for operating costs. If the ceiling doesn't get raised, the obligation to repay debts remains in place -- but in order to pay them, the government must find money elsewhere, by withholding or ripping up checks to military contractors, bureaucrats, soldiers, Social Security beneficiaries, and so on.
Proponents of the Bachmannite view would presumably argue that the Fourteenth Amendment applies only to debt "authorized by law." Since the debt ceiling, on its face, is about granting the government the authority to take on additional debt, the Amendment is inapplicable.
I, of course, prefer the former approach. A legalistic parsing of the Amendment's language might initially suggest that it draws a fine distinction between servicing preexisting debt and authorizing additional debt. More important, however, is the general thrust of the Amendment: "the validity of the public debt shall not be questioned." Rather than only forbidding certain budgetary practices, it appears to proscribe any activities that would call into question the soundness of preexisting loans to the US .
Would a congressional refusal to raise the debt ceiling call into question the soundness of preexisting loans to the US? Absolutely.
There are many, many problems with the Bachmannite understanding of the debt ceiling. Politically, it's devastating: we'd be literally taking money from the nation's grandmothers and turning it over to Chinese bondholders. How long could the government continue to service its debt before political pressure forced it to find some way out of its obligations to bondholders? Even if the government kept up payments on the debt, it's unclear whether US bondholders would be any more at ease. Sure, they're getting paid now -- but how much faith could they have in the US government's ability to make good on its long-term debt, if the government couldn't even make good on its short-term obligations to its own citizens?
Finally, and most importantly, while a failure to raise the debt ceiling may not trigger instantaneous default, hardly anyone believes that the country could avoid default without eventually raising the ceiling. In other words, there might be a timer on that big red DEFAULT button -- three weeks? four months? a year? -- but that doesn't change its nature. If Congress absolutely refuses to raise the debt ceiling, default will occur eventually, almost as assuredly as if it had passed a law announcing the total abrogation of all debtor obligations.
And that, in my view, makes the whole thing unconstitutional.
Nonetheless, Democrats would want to think long and hard before making this case publicly. The politics of doing so are complicated and risky. More on this topic later.