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Use Article I to Address Debt Ceiling

The tea party has a secret: It wants to raise your taxes. The plan is to get the government to default. Thanks to the meltdown, we now have a fiscal or federal government debt equal to the annual U.S. gross domestic product. So let’s lower our bond rating, and push up the interest on that debt by 0.5, or 1, or 1.5 percent.The Constitution is set up for the protection of creditors, the author writes. (AP Photo)

That’s a whopping cash payment to all our T-bond holders in China, Japan, Europe and Saudi Arabia. We might as well fill up the galleons with bullion to sail off to Cathay. The “tea” in tea party must stand for “all-the-tea-in-China,” because it’s on that kind of scale our taxes will go to pay the higher interest for this tea party escapade.

Is it too late?
Probably. Even if there’s a deal now, the bond rating will likely drop. But with no deal, even worse will come.

So what do we do? The courts are open today. I clutch at the hope the U.S. Chamber of Commerce might sue. At this hour, only it could save us. For perhaps the Chamber could get a court to toss out as unconstitutional any debt ceiling law at all.

Why the Chamber? In the Roberts Court era, the Chamber wins every case. And if default comes, and we first pay Social Security to widows, and then pay the bondholders in China, it’s the Chamber members – the tiny vendors who sell screwdrivers to the Army or even the big guys like Halliburton – who will take the first hit.

But is the debt ceiling law really unconstitutional? My old law professor says no. He also says no one has “standing” — an inside baseball term for the special injury a litigant must plead in order to sue. Other law professors opine that the courts will do nothing, because it is a political question.

Of course, as to whether anything is “unconstitutional,” there is no Platonic answer up there in heaven. It’s unconstitutional if a court says it is.

Virtually the entire legal debate about the debt ceiling has been focused on the 14th Amendment, section 4. It’s easy to see why. The language is on point: “The validity of the public debt of the United States, authorized by law…shall not be questioned (emphasis supplied).” That would seem to say: If Congress authorized it, Congress must pay for it.

But the far better case is that, under Article I of the Constitution, Congress has no power to welch on a debt. Article I, unlike the 14th Amendment, is a restraint on Congress. If the power is not in Article I — Congress does not have it.

Above all, this is a government of limited powers. The Supreme Court still strikes down federal laws for that reason.

By analogy, consider the limits of Article I on state legislatures. Though Article I pretty much leaves the state legislatures alone, there are some pointed exceptions. Article I, section 10, says: “No State… shall pass any… law impairing the Obligation of Contracts.”

That’s exactly what the debt ceiling does. As the co-host of a money management radio talk show said recently: “You don’t call up the credit card company and tell the bank, ‘I have to put my fiscal house in order, so I’m not going to pay my credit card debts.” Neither can Congress, under Article I. It cannot impair the obligation of contracts.

So, yes, Congress has put down the plastic — but it must still pay its debts. If Article I does not give such an Armageddon power to Congress expressly — then it is not a power Congress has.

A power to impair the obligation of contracts, to cancel the debts that a government owes its creditors, is the commercial equivalent of martial law. It is not an express Article I power of the Congress – and Article I treats such impairment by the states as a constitutional abomination.

Back around the Ides of March, I wrote a piece for Politico to lay out all the reasons why Article I precludes the idea that Congress can renege on its Visa type spending “authorizations” any more than you and I can. If you’re still in doubt how to resolve this no brainer, flip to the 14th Amendment for clarification.

So it’s a pretty powerful argument that Congress cannot impair the obligation of contracts.

Alas, some law professors would shoo us away. And speaking of professors, let’s begin with President Barack Obama, a law professor himself. The president said that his lawyers told him the constitutional question was doubtful. Why he gave away this bargaining chip, I have no idea. He would have been far better off saying nothing, and letting his enemies guess.

But are his lawyers wrong? I would never second-guess a White House lawyer. And I would agree with them if they said the following: “Mr. President, if you claim it’s unconstitutional, and just keep paying the bills, we can’t say what will happen.”

That’s perfectly true. But months ago, why didn’t they go out to get a private litigant to bring a suit? Even better, they could have whispered something into the ear of a state attorney general: “Hey, give this suit a try.”

Suppose the president had filed a suit, alleging this restrains him in his Office of President in executing the laws. Sure, if the president is the plaintiff, the law professors would be right. Any court would run for cover: “You two branches battle it out.”

But while a suit by the president would raise a “political question” — it’s altogether different for business. I mean any business – let’s say it’s Ace Hardware, and it wants Treasury Secretary Timothy Geithner to pay $5 for that screwdriver.

That’s no political question. It’s a bread-and-butter legal question: Where’s my five bucks?

The debt ceiling is, in effect, a suspension of the rule of law – for the biggest paying customer the private sector has. It gives rise to the most primal constitutional claim — one for equitable or injunctive relief for which there will never be a legal remedy.

Indeed, by definition, the debt ceiling removes the legal obligation on which a claim for money damages would be based.

Surely any affected business – or an association of them – should be entitled to sue, has the right to sue. There have been dozens, I dare say hundreds, of cases in which businesses succeeded in claiming that Congress has done some damn thing or another to trample on their private contractual rights.

Some of these have been big cases. But there was no “political question” bar. Consider the Supreme Court’s 1935 Schecter Poultry decision, which threw out the National Industrial Recovery Act, the signature law of FDR’s New Deal. The unanimous court did not consider that a “political question,” though it outlawed the principal program for ending the Great Depression. Why was that not a political question? Well, for one thing, it was a business that sued.

Even the Dred Scott decision passed the “political question” hurdle. Again, a businessman wanted the return of his property – which happened to be a human slave. Throughout U.S. history, property owners and creditors have an impressive win record in attacking unconstitutional laws.

Similarly, they have “standing.” When it comes to “standing” in federal courts, creditors often do far better than even members of Congress. The Constitution is very friendly to creditors — and always has been.

Sure, standing and political question can be troubling in big metaphysical type constitutional claims – say, a draftee who wants to challenge a war as unconstitutional. But the odds are far better when it’s a businessman who wants to get the five bucks for his screwdriver.

Am I sure of all this? No. No one can be. But at the very least it is a jump ball, and victory may well go to the party who seems – well, just taller to the court.

Maybe that’s a better way to think of “standing.” This is not warmed over legal realism. For better or worse, the real world is not as real as the legal realists like to think.

But it does matter who files the suit. If the litigant is the U.S. Chamber of Commerce — or a party with equal heft — the court will have to take it seriously. For even idealistic judges, the passionate ones on right or left, tend to burn with a gem-like flame when a powerful litigant fans the fire.

During the 1960s, for example, the most powerful plaintiff that could give cover to an activist judge was the Justice Department. That’s how we desegregated the South. Now, according to every win-loss record, it’s the U.S. Chamber of Commerce.

The Constitution was set up for the protection of creditors. That’s what the document is about. Now, we need these creditors to step forward to protect the Constitution.

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