Thursday, July 7, 2011

The 14th Amendment Trumps Congressional Insanity!

The 14th Amendment Trumps Congressional Insanity!

WASHINGTON -- Sen. Chuck Grassley (R-Iowa) said on Thursday that the Constitution may trump the debt ceiling, allowing the administration a way out of the default impasse.

Negotiators are considering gutting the social safety net in exchange for a vote to lift the debt ceiling. Grassley, in a conference call with local reporters, said that there may be another way out.

"There’s one thing that hasn’t been talked about yet, and I haven't checked on the constitutionality of it -- and I read the Constitution, but I don’t remember reading this -- but in the 14th amendment, there’s something that says something about the debt of the United States government shall be honored," Grassley said, according to a recording of the call. "The 14th Amendment includes a public debt clause that insists the obligations of the government 'shall not be questioned.'"

"So people are looking at the fact that maybe the debt ceiling bill that Congress presumably has to pass for the government to borrow more maybe is contrary to that constitutional provision, and that the administration may take out [loans] on their own -- just to borrow money -- and say that they can ignore the law," he said.

Grassley said that he was personally supportive of the debt ceiling, because it focuses attention on spending, but that if its existence was unconstitutional, there was nothing he or his colleagues could do. "I think it's a discipline that Congress uses effectively from time to time, maybe not to cut down on the amount of spending but to have a refresher course," he said. "It's a good discipline, so it bothers me if the Constitution provision would trump it, but that would be up to the courts to say. But who's going to argue against the Constitution? It's the basis of our government; it's the law of our land, and everybody has to abide by it."

"The Constitution trumps the law, obviously," he said.

Some House Republicans, meanwhile, are threatening to impeach the president if he goes the 14th Amendment 
Tea Party Sen. Mike Lee (R-Utah) argued Thursday that the 14th Amendment does forbid default, but merely requires the Treasury Secretary to pay debt service obligations, not all debts.

"Treasury Secretary Timothy Geithner is mistaken," Lee said. "Instead of saying what Mr. Geithner has insisted that it says, what it actually says is that the secretary of the Treasury lacks the authority -- the executive branch lacks the authority -- to disregard outstanding financial obligations, such that a default would be unconstitutional ... That would mean that under Section 4 of the 14th Amendment, the Treasury Secretary has to make sure that the debts are paid first. He lacks the discretion, under Section 4, to withhold those funds and send them elsewhere because he has to honor the debt obligations of the United States."

The Treasury Department has repeatedly said such a solution is unworkable and that there won't be enough money coming in to cover the debts. And picking and choosing which debts to pay would be similar to implementing a line-item veto, which has itself been ruled unconstitutional.

Earlier Thursday, Bruce Bartlett, a former adviser to Presidents Ronald Reagan and George H.W. Bush, was an invited guest at a Democratic hearing called to discuss the debt ceiling. Bartlett has been an outspoken proponent of invoking the Constitution to end the impasse.

In a testy exchange with Rep. Barney Frank (D-Mass.), Bartlett and the former Financial Services Committee chairman tangled over whether President Obama could choose to simply ignore the debt ceiling.

Frank said that he could not, arguing, "I think that for the president to announce that the government has to ignore the debt limit would be a terrible mistake and it would cause a great crisis in our democracy."

Moreover, he said, were Obama to invoke the 14th Amendment, the Tea Party Republicans who are refusing to vote to raise the debt limit would not face any consequences for their obstruction. Those lawmakers, Frank said, are behaving with "total irresponsibility."

Barlett, in response, said that no course of action post-default would be a good, legally sound option.

"The language says 'the debt of the United States shall not be questioned' -- that is a much broader statement [than others imply it is]," Bartlett said. "You have a situation where the president must violate the law; the question is which law?"

The administration would be acting illegally if it were forced to choose what obligations to pay, Barlett explained, because the treasury does not have the option to prioritize between debts and various appropriations that Congress has already approved. Yet to invoke the 14th Amendment would violate the law of the debt ceiling.

Frank maintained that the latter move would have drastic political consequences, although he pointed out that it would likely placate the "anti-debt people."

"The anger in the country, the political bitterness and the vitriol, would be amplified enormously and you'd let people off the hook for their irresponsibility," Frank said.

Bartlett, who advised both Reagan and Bush on economic policy, said he no longer identified with the Republican Party, which he said was struggling in the grip of the increasingly powerful Tea Party.

"I honestly think the Republicans have [been gripped] by insanity, and the people who have known this, have kept their mouths shut for years," Bartlett said, adding that he doubted there were any "leaders" left in Congress who could articulate "traditional, sensible, conservative Republican policy."

Bartlett also knocked down the Tea Party-supported idea of a balanced budget amendment, saying that would put the no-tax hike pledge backed by Grover Norquist into law and take important economic tools away from the government.

Toward the end of the hearing, Barlett said that should Congress fail to reach an agreement by Aug. 2, the president would have to revisit the idea of invoking the 14th Amendment, arguing that since so much of the nation's debt is owed to other countries, the debt limit would become a national security issue.

"I certainly would not advise the president to act until the last possible moment," Bartlett said.

Obama, Democrats Not Ready To Play 14th Amendment Card With Debt Ceiling

14th Amendment explained

Advocates of this approach cite the 14th Amendment of the Constitution, which states that the “validity of the public debt of the United States . . . shall not be questioned.”
On Wednesday at a White House question-and-answer session held via the Web service Twitter, Obama said the debate over raising the $14.3 trillion debt ceiling shouldn’t become a constitutional question.
“I don’t think we should even get to the constitutional issue. Congress has a responsibility to make sure we pay our bills. We’ve always paid them in the past,” Obama said. “The notion that the U.S. is going to default on its debt is just irresponsible.”
But many Republicans have said they will not vote to raise the debt ceiling, and Obama is struggling to strike a deal with Congress that would get enough Republican and Democratic votes to raise the limit.
Obama’s team has warned that it needs to get an agreement done by July 22 so Congress has time to pass legislation by Aug. 2. If the debt ceiling isn’t raised by then, Treasury Secretary Timothy F. Geithner has warned that the U.S.government will default on its debt. That, he says, would have severe consequences for the economy.
The constitutional provision at issue — Section 4 of the 14th Amendment — is a post-Civil War invention. The North had borrowed heavily to finance the Civil War, and it wanted to make sure that the Southern states reintegrating into the Union wouldn’t try to shed responsibility for the nation’s debt.
“The purpose of that clause was to prevent the political branches from using default or repudiation as a political threat,” said Jack Balkin, a constitutional law professor at Yale Law School. “It was designed to prevent this kind of gamesmanship.”
Geithner underscored the Constitution’s requirement that the government meet its obligations at a question-and-answer session in late May. He pulled out a pocket copy of the Constitution and read the relevant passage, though he did not use it to suggest that the president should bypass Congress.
Nobody in the White House has since suggested that Obama is considering invoking the constitutional argument if Congress fails to raise the debt ceiling. And White House spokeswoman Amy Brundage said Wednesday night, “Despite suggestions to the contrary, the 14th Amendment is not a fail-safe that would allow the government to avoid defaulting on its obligations.”
But that hasn’t stopped commentators — and even a few Democratic senators — from raising the possibility.
Many law professors say that Obama would have to do a few things before he tried to declare the debt ceiling unconstitutional. For starters, he’d have to use the government’s available resources to cover obligations for as long as possible. That might include using existing tax revenues and selling the nation’s gold.
There’s also a question of what constitutes a debt under the Constitution — for example, whether it includes Social Security and Medicare payments or government contracts.
But if all measures to meet the nation’s obligations were exhausted, Obama would be “entitled to take whatever measures are necessary to pay . . . our debt at all times,” saidGerard N. Maglioc­ca, a law professor at Indiana University.
That might require instituting new taxes or issuing more debt, regardless of what Congress says, according to Magliocca, who noted this is a little-researched aspect of constitutional law.
Larry Rosenthal, a professor at Chapman University School of Law, said he doubts the argument that Obama could declare the debt limit unconstitutional. The debt ceiling, according to Rosenthal, limits the president’s ability to issue more debt. It doesn’t say that the existing debt is invalid. So if the president runs out of borrowing authority, he must find other ways — including suspending government programs — to pay the debt.
“What the government can’t do under the 14th Amendment is repudiate a debt that’s been authorized by law. It can’t say, ‘I’m not going to pay,’ ” Rosenthal said.
Rosenthal said a more persuasive argument is that the agreement in April to fund the government through the remainder of the 2011 fiscal year implicitly increased the debt ceiling. By passing that agreement, Congress essentially instructed Obama to spend money in the coming months. To pay for programs Congress authorized, the government will have to borrow money.
“It’s basically an order to the executive — pay this money,” Rosenthal said. Even if the debt ceiling would block him from doing so, “when two laws are in conflict, the more recent law is understood to supercede the first law.”

“Senate Democrats on Wednesday embraced a budget proposal that is significantly to the left of President Obama’s plan on raising new tax revenues,” The Hill writes. “The prospects of the blueprint passing the Senate are bleak, but its emergence after months of negotiation is aimed at countering GOP criticisms that Democrats haven’t passed a budget in two years. The budget plan would reduce the deficit by $4 trillion over 10 years, according to the baseline used by its author, Senate Budget Committee Chairman Kent Conrad (D-N.D.). Using the benchmark assumptions of Obama’s fiscal commission, Conrad said his budget would reduce the deficit by nearly $5 trillion.”

Roll Call: “A flat-rate spending-cut plan advocated by tea partyers is gaining fans in Washington, D.C. The One Cent Solution requires Congress to reduce federal spending by 1 percent — one cent per dollar — of gross domestic product annually until 2018. That would take it from 25 percent of GDP to 18 percent, where it would be capped to balance the budget. … The 1 percent cut would be about $150 billion based on last year's GDP.”

“If President Obama should invoke a clause in the 14th Amendment in order to bypass Congress and borrow beyond the debt limit, at least one conservative Republican lawmaker would consider that an act worthy of impeachment,” The Hill writes. “Speaking at a Tea Party event in a suburb of Charleston, S.C., Rep. Tim Scott (R-S.C.) said it would be an ‘impeachable act’ for the president to find a way around Congressional authority to raise the debt ceiling.”

NPR had a good segment yesterday breaking down the 14th Amendment with George Washington University law professor Jeffrey Rosen. They looked at why it was crafted and the one Supreme Court case that deals with it at all: “There's just one Supreme Court case that seems to cast light on this question. It was called Perry versus United States,” Rosen said. “It was decided in 1935. And in that case, the Supreme Court seems to argue that this debt clause should be interpreted broadly rather than narrowly. And supporters are seizing on that language to say we should not construe the debt clause strictly, but instead, construe it expansively.”

He concludes: “We shouldn't for a moment dismiss the possibility that serious constitutional arguments about clauses that haven't thought of for a long time can transform political debates. In Bush v. Gore, in the healthcare argument, these are all cases where the constitutional arguments were made up on the fly.

But that doesn't mean that they're not plausible. The truth is that the situation today is similar, although not identical to the one that confronted the nation right after the Civil War.

And the arguments on both sides are strong, plausible and deserved to be debated in the public arena.”

The Public Debt Clause says “The validity of the public debt of the United States, authorized by law … shall not be questioned.” That 1868 provision was intended primarily to prevent repudiation of Civil War debts. But the Supreme Court in Perry v. United States (1935) held that all federal debt is covered: The constitutional text “indicates a broader connotation. … [It] applies as well to the government bonds in question, and to others duly authorized by the Congress.” Still, that leaves several unanswered questions: First, what constitutes “public debt … authorized by law”? Second, is default comparable to repudiation in its effect on the debt’s “validity”? Third, even if default is unconstitutional, does that mean a debt ceiling is also unconstitutional?

“In Perry v. United States (1935), the Supreme Court ruled that under Section 4 voiding a United States government bond "went beyond the congressio­­nal power".

In that decision, the Supreme Court held that "Congress cannot use its power to regulate the value of money so as to invalidate the obligation­­s which the Government has theretofor­­e issued in the exercise of the power to borrow money on the credit of the United States".

Further, the Court held that "By virtue of the power to borrow money "on the credit of the United States," Congress is authorized to pledge that credit as assurance of payment as stipulated -- as the highest assurance the Government can give -- its plighted faith.

To say that Congress may withdraw or ignore that pledge is to assume that the Constituti­­on contemplat­­es a vain promise, a pledge having no other sanction than the pleasure and convenienc­­e of the pledgor".

Seems to me that this is pretty clear. The National Debt consists of bills that the Congress of the United States passed and that were signed into law.

When Congress passed these spending bills they did so pledging the" full faith and credit" of the United States that the bills would be paid when they came do.

Future Congresses cannot, as the Supreme Court held in Perry, withdraw    or ignore that pledge.”

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