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E-MailRobert C. Hockett is the Edward Cornell Professor of Law at Cornell University. This post is based on his recent piece.
Writing in outrage for over a decade about the illegality of the putative ‘debt ceiling as I, along with several distinguished colleagues, have been doing, I am not a little relieved to see some of our longstanding arguments gaining traction. I am a little bit troubled, however, by how attention has centered almost solely upon the 14th Amendment to the U.S. Constitution.
The 14th Amendment is, to be sure, one of the grounds upon which the ‘debt ceiling’ must be declared null and void – for reasons even beyond those we’re hearing right now, as I’ll indicate. But there are at least five additional such grounds. It might then be helpful to elaborate them, along with their mutual complementarities, in summary fashion.
My hope in so doing will be to supply responsible members of Congress, our President, and his Treasury Secretary with the fortitude needed to end the present tragicomedy, now ritually repeated with dispiriting regularity any time that a Democrat is in the White House and Republicans hold one or both Chambers of Congress, once and for all.
I’ll proceed as follows: Part 1 provides essential constitutional and federal budgetary background information helpful in understanding the ‘debt ceiling’ and its obsolescence since 1974 if not its invalidity ab initio. Part 2 then elaborates the seven legal bases for treating the ‘debt ceiling’ as the nullity that it is. Part 3 then suggests a strategy for responsible legislators and executives in ignoring the ‘debt ceiling’ going forward, at least until its formal but unnecessary repeal. I then conclude and look forward.
Constitutional and Budgetary Background
Let’s start with the constitutional and legislative backdrop …
Articles I and II of the Constitution vest both Congress and the President with budgetary roles. All spending and revenue-raising must be legislated, and valid legislation must be passed by both chambers of Congress and signed into law by the President. Final budgets, such as they are, are accordingly joint Congressional and Presidential products – save in such rare circumstances as those in which Congress overrides a Presidential veto with a supermajority vote.
The Constitutional provisions that I have just channeled are broadly worded and prescribe very little as to the details of federal budget processes. These are determined, instead, by more legislation. In 1921, through the Budget & Accounting Act, Congress vested primary budget formulation responsibility with the President, establishing both detailed timetables and the predecessor of today’s Office of Management and Budget (OMB) to help shepherd the process along.
The ‘debt ceiling’ is rooted in this era, during which Congress relinquished its previous role as legislator of every distinct federal bond-issuance. This Congress did to afford the President – by their own law our primary budget-formulator – more flexibility in determining revenue sources for funding the growing variety of legislated programs. That’s right, the original ‘ceiling’ was about affording the President more discretion, not less.
It is no accident that the Liberty Bond Act of 1917 (original source of the ‘ceiling’), the 1913 vintage 16th Amendment to the Constitution authorizing the federal income tax, the thereby enabled Revenue Act of 1913, the Federal Reserve Act of 1913, and the aforementioned Budget & Accounting Act of 1921 all came in rapid succession. In effect, these enactments, all passed by Congress and signed into law by the President, constituted one coherent federal budget regime.
All of this changed, however, in 1974. The ‘crisis’ that occasioned the change was brought on, like so many others of the era, by President Richard Nixon. Nixon had an unfortunate tendency to think himself more ‘imperial’ than the Constitution allowed, and took it upon himself to decide with unprecedented frequency what Congressionally legislated and funded programs, even though he had signed them into law in the first place, were worthy of actual execution and funding.
The practice in which he manifested this proclivity was known as ‘impoundment.’ The idea was that instead of spending what Congress had instructed him to spend and what he had agreed, by signing their legislation, to spend, Nixon was routinely spending only what he wished to spend, while ‘impounding’ the rest – in effect, holding it hostage.
Congress put an end to this chicanery by passing the Congressional Budget and Impoundment Control Act of 1974, pursuant to which both Congress and the President go through detailed procedural steps in formulating their own budgets, which budgets are then ‘reconciled’ and collated before being legislated into law piecemeal through sundry program authorization and appropriations acts passed by Congress and signed by the President. (The Supreme Court closed all plausible loopholes in the Act in Train v. City of New York one year later.)
This is also the origin of the Congressional Budget Office (CBO), designed as a counterpart to the President’s OMB. In effect, then, what we have had for the past 50 years is an altogether new budget regime superseding the regime put in place 50 years before then. The earlier regime, in other words – including its ‘debt ceiling’ component – was implicitly repealed by the later regime.
You can see this by noting the logic – or shall we say the arithmetic – of the post-1974 regime. Pursuant to that regime the duly legislated federal budget first determines both revenue and spending, then assigns the President and his Treasury Department the task of filling any gaps between the former and the latter through debt issuance. And, since the President is prohibited under this regime from not spending what the budget mandates he spend, the regime effectively mandates that he borrow any time mandated spending exceeds mandated revenue.
We are now situated to see why the 1917 ‘debt ceiling’ as presently wielded like an AR-15 by a rump faction of the House Republican Caucus is actually no more than a leaky water pistol. For there is literally no way for the President to comply with the putative ‘ceiling’ as thus applied that does not entail his violating the federal budget itself as formulated pursuant to the 1974 regime that superseded the early 20th century regime.
And it is here that the seven legal grounds to which alluded above as additional to the 14th Amendment ground get their traction. Let us run through them quickly…
2. Seven Legal Grounds for Invalidation
The ‘Take Care’ Clause: Article II, Section 3 of our Constitution requires that the President ‘take care that the Laws be faithfully executed.’ President Nixon effectively violated this provision by not spending as Congress, through that law which is the federal budget, mandated that he spend. President Biden would be doing the same were he not to spend as the last federal budget requires that he spend, and were he not to borrow in so doing as that budget arithmetically mandates that he borrow.
The ‘Presentment’ Clause, a.k.a. ‘Line-Item-Veto’ prohibition: Article I, Section 7 of our Constitution requires that bills passed by both chambers of Congress be ‘presented’ as wholes to the President, which the latter then signs into law or vetoes. In Clinton v. City of New York (1998), our Supreme Court held that the Line Item Veto Act of 1996 violated this clause by purporting to permit the President to ‘cherry-pick’ which budget items would become law and which ones would be left on the cutting room floor.
Were President Biden to ‘prioritize’ payments mandated by the current federal budget as the aforementioned rump faction of the House Republican Caucus suggests, he would be doing precisely what the Court held that President Clinton couldn’t do and that Congress could not authorize.
The 14th Amendment: Article XIV, Section 4 of our Constitution provides that ‘[t]he validity of the public debt of the United States, authorized by law… shall not be questioned.’ The framers’ intention in enacting this Constitutional provision is of particular interest right now. The self-styled ‘Confederate States of America,’ controlled by slave owners, had pulled their members from Congress and endeavored to destroy our federal union ‘from without’ by launching military attacks upon Fort Sumter and other federal installations in 1861. President Lincoln and Congress incurred unprecedented federal debt (multiplying it 80-fold, from a bit over 64 million to 5.2 billion), in the form of Treasury securities sold to millions of patriotic Americans, in financing the successful effort to end that rebellion.
As the nation began healing at the Civil War’s end, concerns grew that Southern legislators readmitted to Congress would continue their effort to destroy our federal union, save now from within, by repudiating the war-occasioned federal debt that American statespersons since Alexander Hamilton had recognized as the essential financial binding agent holding our union together. Indeed, Southern legislators were quite open about their intentions on this score, which is precisely what occasioned the requirement that Southern states ratify the 14th Amendment as a condition of rejoining the Union rather than remaining militarily occupied conquered territories.
The applicability of the 14th Amendment to the present ‘debt ceiling’ insanity grows quite clear when we recall this history. It is a striking fact both that the aforementioned rump faction of the House Republican Caucus nearly all hail from former Confederate or Confederate-border states, and that many of them have called for a ‘national divorce’ while routinely speaking like, meeting with, or endorsing white supremacists. It is equally striking that most of these Jim Crow Republicans have been transparent about their aims in most current controversies to sow chaos and thereby pave the way for a Weimar style anti-constitutional putsch by their criminal ringleader and serial bankrupt in Mar-a-Lago, Florida – who has himself now explicitly called for default on the national debt.
This is precisely what the Debt Clause of the 14th Amendment is meant to preempt. But let us return now to the other legal grounds on which the ‘debt ceiling’ is unlawful, notwithstanding their being a bit less dramatic than the 14th Amendment ground just elaborated.
The ‘Later in Time’ Rule: It is a well established judicial canon of statutory construction that when an old law appears to conflict with a newer law or treaty, the older law must either be interpreted in a manner that does not conflict with the newer law, or be treated as having been implicitly repealed by the newer law. There are two ways in which this canon is applicable to our present ‘debt ceiling’ imbroglio.
First, the 1974 budget regime clearly displaces the earlier regime, including its ‘debt ceiling.’ This is made dramatically clear in the 1974 regime’s requiring both that the President execute the budget in full (no impoundments), and that s/he issue debt in so doing to fill any gap between spending and revenue. And second, any current budget enacted later in time than the last ‘debt ceiling’ hike of course supersedes the latter.
It is for this reason that I’ve often written that ‘the budget is its own “debt ceiling.”’ Indeed, in light of the anti-impoundment content of the 1974 Act, it is clear that the budget is both its own floor and its own ceiling. It is self-contained. It is the be all and end all of federal budgeting. It is the entirety of the law governing spending, taxing, and borrowing, with no role left to be played by the old 1917 Liberty Bond Act ‘ceiling.’
The ‘Absurd Result’ Canon: It is also a well established canon of statutory construction that, when a legal provision – either as written or as it would be applied – can be construed in more than one way and one such way would yield a result so absurd that the legislature cannot plausibly be taken to have intended it, the interpretation yielding that result must be considered mistaken.
In the present context, it is clear that the interpretation of the ‘debt ceiling’ proffered by the aforementioned rump faction of the Republican House Caucus would yield multiple absurdities of the relevant sort. It would require the President to violate contract obligations (which US borrowings assuredly are), the last-legislated federal budget of 2022, the 1974 Congressional Budget and Impoundment Control Act, and one or more of the three Constitutional provisions assayed above.
And that is to say nothing of the cataclysm that default on our national debt, which we’ve never reneged on before, would bring to the US dollar, to US debt servicing costs, to the US banking and financial sectors, to the nation’s pension and mutual fund holders, to the nation’s inflation rate and its broader economy, and indeed to the world’s capital markets and trading economy.
For consider… US Treasurys outstanding, valued at over $24 trillion, are by far the largest asset market in the world and easily the primary ‘safe asset’ held in all banking, pension fund, mutual fund and other business portfolios both at home and abroad. Our present regional bank crisis is occurring in response to what amounts to only a slight, temporary drop in the value of low yield Treasurys thanks to Mr. Powell’s rate hikes. An outright default would leave us nostalgic for the comparative placidity of this present troubled moment.
What is more, Treasurys are the sole ‘real world’ financial instrument able to play the role of the hypothetical ‘risk-free asset’ used in the pricing models employed by traders and their algorithms in valuing, buying, and selling securities on capital markets worldwide – from the celebrated Capital Asset Pricing Model (‘CAPM’) to models predicated on Steve Ross’s Arbitrage Pricing Theory (‘APT’). In effect, US default would leave trading houses flying blind. World securities markets would accordingly ‘plunge’ at best, seize-up at worst, until the status of US Treasury debt was again secure.
We would also see a collapse of the dollar worldwide as global reserve currency. Our currency’s value in relation to other currencies is rooted primarily in global demand for dollar-denominated financial assets, since we have relinquished goods export primacy to China. Since Treasurys are by far the most voluminous such asset, their collapse would bring the dollar’s collapse. This would of course instantly render the imports on which we continue to rely, including petroleum, far more expensive than they are now. Inflation would look more like that of Argentina or Russia twenty years ago than those of the presentday US.
This in turn is to say nothing of what would be our subsequent incapacity to maintain our military bases and other assets, not to mention pay the thousands of US military personnel, abroad. Only China would remain a global superpower, further abetting the moves it is already making, with Russia, Brazil, and other nations, to displace the dollar as what Giscard d’Estaing once called the US’s global ‘exorbitant privilege.’
Finally, as if the foregoing were not enough, even the serious prospect of US default would quickly raise debt-servicing costs, rendering our current deficit larger by orders of magnitude than it presently is – a consequence dramatically at odds with Republicans’ professed concerns in attempting to hold the debt ceiling hike hostage to massive budget cuts (which themselves would tank markets in view of fiscal spending’s now being our primary source of stimulus given Powell’s rate hikes).
It almost make you think that ‘fiscal responsibility’ isn’t what McCarthy’s Caucus is after at all – that what it actually wants is, as nosuggested above a Weimar style putsch amid monetary and financial chaos in 2024.
It is simply impossible to imagine the framers of the Liberty Bond Act of 1917 – who were seeking to facilitate the finance of the First World War effort – or indeed any member of Congress prior to the aforementioned rump faction of the House Republican Caucus, ever having intended even one of these outcomes, let alone all of them. It often is said that the Constitution is not a suicide pact. Even less, then, would be an unlawful and unconstitutional interpretation of the Liberty Bond Act of 1917.
The Lex Specialis, a.k.a. ‘Specific Trumps the General’ Doctrine: Another well established principle of statutory construction has it that, when two legal provisions appear on the surface to be applicable to the same subject and one of the provisions in question speaks more specifically to the matter at hand than the other, the more specific provision ‘controls.’ In the case of the ‘debt ceiling,’ this canon’s applicability is straight-forward.
31 USC §§ 1322-32, rooted in the aforementioned Congressional Budget and Impoundment Control Act of 1974, and 31 USC § 3123(a), rooted in subsequent 1982 ‘housekeeping’ legislation, respectively prescribe Congressional line-item budgeting in detail while pledging the full faith and credit of the United States to pay all principle and interest incurred on debt issued pursuant to budgets formulated through this process. 31 USC § 3101(b), by contrast, purports simply to apply a plenary limit on debt issuance across the board while also, importantly, subjecting that limit to changes periodically made in the plenary debt amount ‘by law through the congressional budget process’ prescribed in detail by 31 USC §§ 1322-32.
The upshot is that the ‘limit’ is effectively repealed to the whatever extent specific budget legislation, passed pursuant to the budgeting process prescribed in detail by 31 USC §§ 1322-32, that subsequently happens to exceed this more general ‘limit’ imposed earlier-in-time.
The ‘Constitutional Avoidance’ Doctrine: Finally, it is also a well established canon of statutory construction that, when a legal provision – either as written or as it would be applied – can be construed in more than one way and one such way would raise a Constitutional issue, the interpretation yielding that result should if possible be considered mistaken.
The applicability of this doctrine to the present imbroglio is, like those of the previous legal doctrines, quite clear as well. The ‘debt ceiling’ as interpreted by today’s Jim Crow Republicans would squarely conflict with the 14th Amendment as noted above. Either the interpretation, then, or the ‘ceiling’ itself must be deemed without legal force.
I hope that the point is now made. Neither the President, nor the Treasury Secretary, nor any responsible member of Congress need worry that there would be anything ‘legally questionable’ about either or both Congress’s and the President’s simply disregarding the ‘debt ceiling’ and continuing to make good on the nation’s legal obligations as always. No court would find otherwise.
There simply is no uncertainty here. Indeed, the law quite clearly, quite certainly and quite squarely requires one thing. It requires that Congress and the President alike recognize that the old 1917 relic known as the ‘debt ceiling’ as presently applied is null and void, and has been so both since its inception and especially since Congress smacked down the would-be ‘imperial’ President Nixon a half-century ago.
It also requires, accordingly, that all public officials simply ignore the supposed ‘ceiling’ going forward. This takes us to more strategic and tactical considerations …
3. A Strategy for Responsible Legislators & Executives Going Forward
It is clear that The White House and Senate should henceforth proceed in a manner that treats the ‘debt ceiling’ as a nullity. But how might the aforementioned rump faction of the House Republican Caucus react to their doing so? How will it respond to the President’s and the Senates declaration that the ‘debt ceiling,’ as the rump Republicans would apply it, is null and void?
The best case scenario in this situation is that the rump Republicans recognize that they have no case, that their bluff has been called, and that they must accordingly give up the present gambit and pass budget legislation to which the Senate and the President can ultimately agree. This of course is unlikely to happen, but not impossible. For the only alternative would seem to be to seek to prohibit the President’s continuing to pay obligations – legal obligations – already contractually and legislatively incurred by Congress itself. That is a posture whose political ‘optics’ would be as suicidal as its sought legal ‘relief’ – the first US default in history – would be dead in any court’s water.
It’s of course also possible that the rump Republicans howl in protest and stage yet more show-trial ‘hearings’ and ceremonial votes on the budget in the House, taking us right to the brink of June 1st before legislatively addressing the debt ceiling itself. But it’s hard to see this availing them anything other than a spectacle of impotent rage, further cementing their public image as ridiculous. That is especially so if the Senate and the President together formally repudiate the debt ceiling now or this month rather than waiting till June.
But suppose the rump Republicans take the Senate and the President to court nonetheless, what then? Well, to begin with, assuming the courts didn’t refuse to hear the case thanks to the ‘Political Question’ or any other ‘justiciability’ doctrine, the challenge would likely receive expedited review in view of the magnitude of the stakes. It would thus make its way to the Supreme Court quite quickly. During the brief interval over which the issue was being litigated, we would see the beginnings of some of the ‘nightmare’ scenarios sketched above.
But we would see only the beginnings. For the interval would be brief, the Senate’s and President’s multiple arguments would be ‘knock-down’ compelling, and the markets in any case already are pricing-in future worries of this sort. What is more, the prospect of a final end at long last to the too-often threatened ‘fiscal terrorism’ that is debt ceiling gamesmanship, which is at best an overlooked artifact of the pre-1974 ‘Liberty Bond’ era, will surely be more welcome to the markets than would be continued hostage-taking and associated uncertainty of the kind that rump Republicans now regularly impose on the nation.
Meanwhile, however ‘radical’ some of the Supreme Court’s more rightwing Justices might be, even they understand that ‘the Constitution isn’t a suicide pact.’ Even less so, they’ll see, is the 1917 Liberty Bond Act, which has long since been superseded by a new Congressional budget process that has determined its own ‘ceiling’ – and floor – through budgeting itself since 1974, and was of doubtful 14th Amendment conformity, at least as now interpreted by Republicans, ab initio in 1917.
Most of our Court’s Justices are seasoned and pragmatic people on economic questions even when not on ‘social’ questions. All but two of the Republican appointees rest squarely in the more ‘mainstream’ mold. It is very difficult, therefore, to imagine Chief Justice Roberts (who famously upheld ‘Obamacare’ in 2012 and after) or Justices Gorsuch or Kavanaugh, let alone the Court’s Democratic appointees, demanding default – especially if the aforementioned financial tremors have already begun (as is now increasingly reported).
Justices Alito and Coney Barrett are somewhat harder to call, but it is likely that at least Alito would refrain from demanding default – particularly given his record of sensibly moderate decisions on issues of financial law.
All but Justice Thomas and perhaps Coney Barrett, then, look fairly likely to strike the debt ceiling, at least ‘as [it would be] applied’ by Republicans, should the latter try to sue the Senate and President out of paying our already-contracted, already-legislated obligations this June. A thicker-than-razor-thin decision for the President, for Alexander Hamilton, and for the nation’s good standing in global credit markets thus seems in reach, even if obviously not guaranteed.
Conclusion: ‘Not a Thing,’ Not a ‘Crisis’
I’ll close on a hopeful jurisprudential note. In a still mainly common law system like ours, in which the corpus of law slowly evolves to meet new contingencies as they emerge over time, it is bound to occur now and then that older provisions come to be superseded by newer ones without anyone’s immediately noticing the incompatibility. The latent contradiction might accordingly lie dormant until some unforeseen attempt at misusing the older provision – in this case a subversive attempt like that repeated by tiny minorities of neo-Confederate members of the House of Representatives like Newt Gingrich (R-GA) in 1995, Eric Cantor (R-VA) in 2011, or Marjorie Taylor Greene (R-GA) in 2023 – renders it no longer mistakable.
In a constitutional republic whose citizens do not always have the logical Ubersicht of a Kurt Gödel, who is said by Oskar Morgenstern to have discovered a dictatorship-enabling contradiction within our own Constitution on the day of his naturalization, the common law process applicable even to legislative interpretation must include means of self-cleansing, means of sidelining vestigial legal provisions clearly excluded by large numbers of more recent provisions particularly “as applied” by those seeking the destruction of our democracy.
In our system, one such means is the set of interpretive canons, several noted above, that judges routinely deploy in avoiding constitutional and statutory conflict and incoherence. Another is the time-honored distinction between legal provisions “as written” and “as applied” – one reason I’ve used the word ‘application’ repeatedly here.
In the end, however, the utility of these self-cleansing tools rides on the statesmanship of our republic’s custodians – its legislators, its executive, its courts, and its citizenry. At this perilous moment of crisis, those stewards are clearly ourselves – and with them our agents the President, the Senate, and all but a few neo-secessionist, neo-Confederate white supremacists, one of them now under federal criminal indictment, in our House of Representatives. Unless we and they act now and act well, the final act of stewardship will have to be taken by our courts.
Assuming we do end up having this time to argue in court, will declaring the ‘debt ceiling’ null and void bring on a ‘constitutional crisis,’ as Secretary Yellen recently suggested? That doesn’t seem likely. For one thing, as noted above, there are multiple grounds upon which rump Republican hostage-taking on the ‘debt ceiling’ is contrary to law, and not all of them implicate the constitution – indeed one of them is prompted precisely by wishes to avoid constitutional litigation. For another – and in my view yet more important – thing, the present issue is not really one pitting the President against Congress at all.
The current debt ceiling insanity is, rather, a case of one tiny rump faction of Congress’s being pitted against … Congress itself. For again, our legally contracted debt is Congressionally legislated debt before it is Presidentially approved (through signature) debt, such that refusal to pay on this debt is one tiny faction of Congress’s demanding that the Senate and President refuse to pay what Congress itself has mandated that we pay. Against that backdrop, is it any wonder that one of the bases given above for questioning the debt ceiling’s legality is the ‘absurd result’ canon, or that Alexander Hamilton regularly denounced such chicanery as ‘imbecility, then’?
Let us now end this absurdity and imbecility once and for all, then. Let us bury the Liberty Bond era ‘debt ceiling’ now and forever. It’s ‘not a thing,’ and setting it at long last aside is accordingly not a ‘crisis.’
