Does the Fourteenth Amendment to the U.S.
Constitution give the president authority to order the Treasury Secretary to
raise debt above the existing debt limit? I contend such authority does not exist,
at least as of 2013.
In December 2012, Jay Carney, the White House
spokesman, had “flatly renounced the 14th Amendment option, saying: ‘I can say that
this administration does not believe that the 14th Amendment gives the president the power to ignore
the debt ceiling — period.’”[1]
During October 2013, Wall Street, including investors and bank executives, was
quietly coming to the opposite conclusion. Of course, fear of a declining stock
market in the wake of a governmental default means that the financial sector
has a strong financial interest in forestalling default by finding sufficient
presidential authority in the Fourteenth Amendment.
Are these Wall Street execs qualified, whether by virtue of their jobs or wealth, to advise the White House administration on matters of constitutional interpretation? Image Source: Jason Reed/Reuters
“At the end of the day if there is no action and
the United States has a default looming, I think President Obama can issue an
executive order authorizing the Treasury secretary to make payments,” said
David Kotok, chief investment officer of Cumberland Advisors. “There’s always
been more flexibility in the hands of Treasury than they’ve acknowledged.”[2]
Kotok could cite some lawyers teaching in American law schools who claimed that
“the president could essentially ignore the debt limit imposed by Congress,
because the 14th Amendment states that the ‘validity of the public debt of the
United States, authorized by law,’ including for debts like pensions and
bounties to suppress insurrections, ‘shall not be questioned.’”[3]
Authorized by law is the key to
unpacking the fourth section of the amendment. The relevant passage in the section states: “The
validity of the public debt of the United States, authorized by law, . . .
shall not be questioned.”[4] Let’s
unpack it.
The validity of the debt incurred and being held
by the Federal Government shall not be questioned. The reference in the section
to debt incurred to suppress insurrection or rebellion provides a hint as to at
least one of the section’s purposes. The amendment was ratified in 1868 in the
wake of the war between the USA and CSA. Affirming the validity of the U.S.
Government’s debt implies that the debt incurred by the CSA was not valid and
thus not an additional obligation foisted on the U.S. Government. In any
rebellion, moreover, the validity of the government’s debt is naturally subject
to dispute, thus lessening its credibility even among citizens not in rebellion.
So the section acts to fortify by exclusion the validity of U.S. Government
debt. The question then becomes, which debt?
Is any debt that is incurred by the U.S. Treasury
automatically to be regarded as valid? Here we have arrived at the crux of the
matter. The “authorized by law” clause in the section qualifies the public debt
that is valid to that which has been
authorized by law. Having only a veto legislatively, the president cannot make law. That is the legislature’s task in the system of
separated powers. Debt that is incurred without legislation passed by
Congress—such as by an executive order by the president—is not valid because
such debt is not “authorized by law.” In fact, section five gives Congress the “power to enforce, by
appropriate legislation, the provisions of” the amendment.[5]
Obviously
financial and political interests go
into how various parties interpret the amendment. Even so, it is odd
that
rational beings would ignore “authorized by law” and conclude that an
executive
order is sufficient. Yet it is conceivable that given the severe
economic and
political impact of governmental default, some might argue as a
political analyst has done that “(d)esperate times require desperate
measures.”[6]
In other words, the end justifies the means.
I suspect that Wall Street executives would find
it rather easy to justify to themselves that the ends justify the means. In
this case, the means involves overlooking a clause in the amendment’s fourth
section, and thus violating logic and reasoning as if with impunity—as if
knowledge itself were valid only where it serves a particular financial good.
