US Debt Ceiling Impasse is a Constitutional Crisis in the Making

By James Maynard Gelinas

For nearly a week so-called nonessential services in the US government has shut down due to a budget impasse over a House demands that link deferral of Obama’s signature legislation The Affordable Care Act (Obamacare) to a new budgetary continuing resolution. Much discussion in the media has focused on this as a partisan fight over that one issue. But that’s merely a short term rationale for this fight. The House GOP wants much more come October 17th, when if this impasse is not resolved the United States will lack funds necessary to pay interest on Treasury debt. In short, the US government will go into default, an outcome that Yalman Onaran of Business Week argued would be worse than the failure of Lehman Brothers in 2007. And that ultimately led to a worldwide financial crash and economic crisis not seen since the US Great Depression that has been ongoing for years. 

Failure by the world’s largest borrower to pay its debt — unprecedented in modern history — will devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression. Among the dozens of money managers, economists, bankers, traders and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.

But even worse, should the House succeed in this brinkmanship the long-term effect is far more serious to ongoing constitutional functioning of the US democratic-republic. For if the House succeeds in setting a precedent where threatening default on US debt is the norm in achieving nonbudgetary policy goals, then the House will have extra-constitutionally usurped authority from the Senate, Executive, and Judicial in deciding core policy beyond even mere budgetary matters. This is why the brinkmanship represents a constitutional crisis in the making.

How Not to Make Legislative Sausage

The process we all learned in high school civics would have the House of Representatives as expressly assigned the task of debating and passing an initial budget proposal. An alternative is debated and passed in the Senate, where divergences between the two are reconciled in a conference committee hearing. Which is then handed to the President for signing into law or veto as the Executive sees fit. If the legislative and executive branches are unable to resolve disputes within the yearly time frame for a lawful budget, congress may pass a continuing resolution whereby the prior budget is re-instated for a temporary duration until the impasse is resolved. That’s the the normal legislative process for all lawmaking, including the budgetary process. 

The most recent continuing resolution to fund government operations expired. In response, the House leadership has assigned as riders to a new continuing resolution budgetary bill a series of unrelated legislative initiatives. It’s more than just delaying the ACA for a year. According the The Hill, the House GOP has also tied raising the debt ceiling to additional legislative measures.
The House Republican list circulating on K Street indicates the GOP also hopes to kick-start tax reform, permit the Keystone XL oil pipeline and trim a slew of federal regulations in exchange for a borrowing boost.
The move to the debt ceiling comes as Congress moves toward a possible government shutdown on Oct. 1. Moving to the debt ceiling fight, which Republican leaders have long seen as stronger ground, could be a way to convince rank-and-file Republicans to fight their spending and healthcare battles there rather than on a government funding bill.
Their wishlist is long. The House GOP would demand approval of the Keystone Pipeline project, fundamentally alter the Consumer Protection Bureau budgetary process, change medical malpractice law, repeal certain bank regulations that provide temporary liquidity support for failing banks, and on and on and on. K Street apparently sees the debt ceiling fight as a way for the GOP to obtain policy goals that they clearly could not achieve through the normal legislative process.

Obamacareless But One Wrench Among Many Gears to Shut Down

But it’s the ACA measure in this shutdown battle that has really roiled widespread protest against these tactics. In a CNN video editorial, Fareed Zakaria does a good job explaining why in simple terms.

In short, his argument is that: Because this is settled law that has already passed through congress, already been signed by the President, and already even been confirmed as constitutional by the Supreme Court, for the House – a single legislative body – to use the threat of default to overrule agreement with the Senate and the President in prior lawmaking, is to extra-constitutionally usurp powers it does not enjoy. Essentially, the House asserts a new postfacto veto authority over prior Senate and conference committee deliberations after reconciliation and passage. Even a law agreed upon by all three branches of government, as is the case of the ACA, could – after the fact – be ‘vetoed’ by only the House of Representatives simply with the procedural move of refusing to pass a budget or continuing resolution. 

This appears unconstitutional. Article I Section VII requires that budgetary bills originate in the House, where they are debated in the Senate. Differences between House and Senate Bills are reconciled in conference committee. The final bill passed is then sent to the President for a signature or vetoed.
Article IV Section I (‘full faith and credit’) of the US Constitution demands the financial solvency of states, and provides the judiciary with the authority to resolve private financial disputes.
The Fourteenth Amendment clearly states that US Federal debt is sacrosanct and must be honored. This was affirmed in 1935 by the Supreme Court in Perry v. United States.
The Fourteenth Amendment, in its fourth section, explicitly declares: ‘The validity of the public debt of the United States, authorized by law , … shall not be questioned.’ While this provision was undoubtedly inspired by the desire to put beyond question the obligations of the government issued during the Civil War, its language indicates a broader connotation. We regard it as confirmatory of a fundamental principle which applies as well to the government bonds in question, and to others duly authorized by the Congress, as to those issued before the amendment was adopted. Nor can we perceive any reason for not considering the expression ‘the validity of the public debt’ as embracing whatever concerns the integrity of the public obligations.
We conclude that the Joint Resolution of June 5, 1933, in so far as it attempted to override the obligation created by the bond in suit, went beyond the congressional power.

There is absolutely no rational argument that either legislative body in congress has the authority to withhold fulfilling its constitutional fiduciary responsibilities for the sole purpose of exacting policy concessions otherwise unrealizable through normal legislative practice. Funding the government is explicitly their job. For one legislative body to refuse to fund government without policy concessions from either another legislative body, the Executive, or Judicial clearly expropriates authority in an extra-constitutional manner and thus violates the balance of powers our founders initially intended.

That budget disputes have led to partial government shutdowns many times over the last thirty plus years only indicates that congress has been slowly sliding down a slippery slope toward fiscal Armageddon without judicial challenge. In the 1980s these fights were strictly budgetary and resolved quickly. It was not until 1995, when a dispute between the House under Speaker Newt Gingrich and President Clinton shut down government operations twice for weeks. And even then it was over future budgetary matters and not unrelated legislation that had been previously passed into law.

This time what the House GOP demands is far more than simply winning a minor partisan budgetary fight. For should they win, from an institutional standpoint the House would gain a privilege, regardless of party control, that it has never enjoyed previously. There may have been shutdown fights in the past, but at no time has the House asserted a demand to change prior lawmaking in order to fund interest payments on Treasuries or the basic operations of government.

James Madison may have argued that congress holds the power of the purse to curtail Executive overreach. But he meant congress - all of it. Both the House and Senate acting together with a veto proof majority to constitutionally challenge the Executive. But never did he claim that one legislative body held the power to withhold its elected fiduciary duties in order to thwart duly passed law.
Thus, in this case, the House GOP does not just challenge the President they also threaten basic Senate authority to deliberate on the laws of the nation. If the House does not fulfill its constitutional obligation to pass a debt limit bill and reconcile with the Senate, they will have failed in their most primary constitutional duty. Forget which party in the House asserts this power and instead view the problem as a divisions of power matter within the branches of government and one can see immediately that they threaten a major constitutional crisis in order to expropriate authority our founders intended to be divided.

If a Conservative Dissents in the Woods Will The GOP Listen?
There are conservatives who also call this approach by the GOP downright radical. For example, Rod Dreher at The American Conservative directly challengedthe House GOP on this tactic. Quoting Russel Kirk’s Ten Cannons of Conservative Thought, he responded:

Consider one of Russell Kirk’s Ten Canons of Conservative Thought:
Fourth, conservatives are guided by their principle of prudence. Burke agrees with Plato that in the statesman, prudence is chief among virtues. Any public measure ought to be judged by its probable long-run consequences, not merely by temporary advantage or popularity. Liberals and radicals, the conservative says, are imprudent: for they dash at their objectives without giving much heed to the risk of new abuses worse than the evils they hope to sweep away. As John Randolph of Roanoke put it, Providence moves slowly, but the devil always hurries. Human society being complex, remedies cannot be simple if they are to be efficacious. The conservative declares that he acts only after sufficient reflection, having weighed the consequences. Sudden and slashing reforms are as perilous as sudden and slashing surgery. 
What are the probable long-run consequences of shutting the US Government down over Obamacare? Do the Congressional Republicans care? Do they care what kind of damage they are doing to the ability of Congress to legislate effectively on all kinds of matters? The damage they are doing to the economic stability of the United States? This kind of brinksmanship might — might — have been defensible during the Obamacare fight, but today? I can’t see it. I can’t see any good coming out of this, at least any good that stands to outweigh the bad.
Kirk’s argument is directly descended from Edmund Burke’s support of traditions in government, most eloquently stated in his Reflections on the French Revolution. In that work, Burke argued in support of the French monarchy on the grounds that short-term violation of longstanding tradition in governance would ultimately lead to bloodshed. He did not make that argument because he thought Louis XVI ran a good government (though he did like the British monarchy). But because the institutions of governance had longstanding authority to resolve disputes and once they broke down there would be no lawful and nonviolent means of resolution. And Burke was proved prescient in his prediction when the bloody Reign of Terror followed. One need not like monarchy to understand that a slow transformation to a Republic rather than the shock of revolution might have been a less violent transition.
These are foundational principles of traditional conservatism. Yet the House GOP would eschew such principles, changing the fundamental balance of power and threatening constitutional governance in a mere partisan fight over settled law across all three branches of government. This is not conservatism, it is radicalism. A term David Frum has been using to refer to the current GOP leadership for some time. Recently he repeated the termwhen discussing a debt ceiling battle he clearly believes they should lose.  
Suddenly, the line in the sand between radicals and leadership has ceased to be immigration and has become (again!) shutting down the government and defaulting on the debt. And on those issues, the leadership is overwhelmingly winning. The shutdown caucus is led by Ted Cruz, Rand Paul, and Marco Rubio: i.e., senators less interested in winning a fight in Congress than in impressing Iowa caucus voters. They are just as happy to lose on the shutdown issue—happier, since they don’t then have to take responsibility for their actions—provided they get enough publicity on the way down.
Dreher ends his American Conservative lament on the same point, that the GOP establishment has eschewed all traditional conservative values for a kind of right wing radicalism.
The Republicans cannot govern. These people aren’t conservatives. They are radicals. What on earth would Russell Kirk say if he were alive to see this?
But what neither Frum nor Dreher consider is: What if the Republicans win this fight? What if Obama or the Senate blinks and sets a precedent whereby the House is given defacto veto over any and all prior legislation? 

Constitutional Schmanstitutional, I Got Mine – Fuck You

Never mind the damage to financial markets predicted by economists throughout the world and across partisan lines. Or the consequences to Obama’s ACA and those millions of Americans who had planned to make use of this law. Or that the GOP win any of the other short-term goals they have on the plate. What happens next time? The time after that? Hell, what happens when roles are reversed and the Democrats take control of the house while the Republicans control the Senate and Executive? Is this a precedent that benefits legislative process in any way?
Further, is it even close to constitutional?
Arguably not. Especially considering that House action to create this crisis was planned months in advance and is thus taken with intent to do harm. According to The New York Times, Republican activists began planning to use a October 1st government shutdown and forthcoming debt ceiling crisis as leverage to achieve a range of policy goals shortly after President Obama had been reelected. Spearheaded by former Reagan Attorney General Edwin Meese III and funded conservative interests including the Koch brothers, the group published a plan to defund Obamacare at the nonprofit political organization Freedomworks. 
It articulated a take-no-prisoners legislative strategy that had long percolated in conservative circles: that Republicans could derail the health care overhaul if conservative lawmakers were willing to push fellow Republicans — including their cautious leaders — into cutting off financing for the entire federal government.

“We felt very strongly at the start of this year that the House needed to use the power of the purse,” said one coalition member, Michael A. Needham, who runs Heritage Action for America, the political arm of the Heritage Foundation. “At least at Heritage Action, we felt very strongly from the start that this was a fight that we were going to pick.”

Intent is crucial, for if a financial crisis were to result from mere incompetence or ineptitude by House members, there would be no clear means of showing bad faith. Since a default clearly violates the 14th Amendment and Perry v. United States, and since this move by the House intentionally thwarts traditional balance of powers in government, a constitutional crisis could be argued through the insurrection clause in Section 3.

No person shall be a Senator or Representative in Congress, or elector of President and Vice President, or hold any office, civil or military, under the United States, or under any state, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any state legislature, or as an executive or judicial officer of any state, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.

Thus, a real potential for a constitutional crisis forms if one assumes an insurrectionist movement has unconstitutionally usurped powers to thwart constitutional governance. 

Which doesn’t mean President Obama would push to see such an outcome. He’s already rejected a call to use a 14th amendment declaration of emergency powers to resolve the debt crisis. Arguing on the grounds that to invoke an emergency would create controversy over the legality of debt issued, thus diminishing debt value and affecting markets similar to a default. 

“If you start having a situation in which there’s legal controversy about the U.S. Treasury’s authority to issue debt, the damage will have been done even if that were constitutional, because people wouldn’t be sure,” Obama said in a news conference with reporters yesterday. “It’d be tied up in litigation for a long time. That’s going to make people nervous.”

President Barack Obama said, “If you start having a situation in which there’s legal controversy about the U.S. Treasury’s authority to issue debt, the damage will have been done even if that were constitutional, because people wouldn’t be sure.”
“There are no magic bullets here,” he said.

Yet, regardless of what happens with the current budgetary impasse, for the House to succeed in achieving the policy goals by these means, such a precedent would wreck Senate authority in legislative compromise in the long term for a minor short-term gain this election cycle.The crisis in debt default is overshadowed by a deeper separation of powers crisis. Obama appears to realize this by his refusal to stand-down. Yet, ironically, his refusal to seek a direct executive solution also affirms it. 

Writing about Juan Linz, a noted professor of political science from Yale, Chait referred to an essay the professor had written where he said that, “Presidential systems veered ultimately toward collapse everywhere they were tried, as legislators and executives vied for supremacy.” Arguing that the US is in just such a trap proposed by Linz, Jonathan Chait concluded that such a standoff between the executive and legislative branches would ultimately result in a constitutional crisis.

The standoff embroiling Washington represents far more than the specifics of the demands on the table, or even the prospect of economic calamity. It is an incipient constitutional crisis. Obama foolishly set the precedent in 2011 that he would let Congress jack him up for a debt-ceiling hike. He now has to crush the practice completely, lest it become ritualized. Obama not only must refuse to trade concessions for a debt-ceiling hike; he has to make it clear that he will endure default before he submits to ransom. To pay a ransom now, even a tiny one, would ensure an endless succession of debt-ceiling ransoms until, eventually, the two sides fail to agree on the correct size of the ransom and default follows.

While Chait’s argument focuses on the power division between the executive and legislative branches, this current impasse also creates a rift within the legislative between both bodies of congress. From either perspective, it follows that a constitutional crisis over failed power sharing either between the executive and legislative branches or between each chamber of the bicameral legislature is in the making.

One could easily oppose Obama’s ACA and yet still see the serious constitutional problem this creates in disrupting the balance of power within the legislative branch, as well as between the judicial and executive. This is a line in the sand moment. Not because Obamacare is really that important. Or because of predictions that if the United States defaults on its debt there will be devastating economic repercussions worldwide – which there most likely would be. But because the GOP, in their half-hearted claims of ‘defending the constitution’ to defeat Obamacare by any means possible, would themselves destroy constitutional principles of legislative process should they win.

This is a ‘destroying the village to save it’ moment. And every American should be very afraid of not just the short-term but especially the long-term consequences to constitutional balance of power issues should the House GOP succeed. 
Copyright 2013 by James Maynard Gelinas. All Rights Reserved. V 1.5