Under the U.S. Supreme Court: Obama has the power to raise debt limit?

By MICHAEL KIRKLAND, UPI Senior Legal Affairs Correspondent
President Barack Obama makes visits with furloughed federal workers while volunteering at a Martha's Table kitchen on Oct. 14 in Washington, D.C. The president called on Congress to end the budget stalemate and allow federal employees to return to work. -- UPI/T.J. Kirkpatrick/Pool
1 of 2 | President Barack Obama makes visits with furloughed federal workers while volunteering at a Martha's Table kitchen on Oct. 14 in Washington, D.C. The president called on Congress to end the budget stalemate and allow federal employees to return to work. -- UPI/T.J. Kirkpatrick/Pool | License Photo

WASHINGTON, Oct. 20 (UPI) -- Will Congress violate the Constitution if it fails to increase the U.S. debt limit in a few months, and does President Obama have the power under the 14th Amendment to raise the debt limit on his own?

Yes. No. Maybe.


Wait a minute, we're confused.

Speaking of confused, a befuddled Congress finally approved a Senate-brokered deal last week to reopen the federal government until Jan. 15 and extend the nation's debt limit deadline to Feb. 7.

But there was no guarantee the same partisan bickering that caused the latest manufactured crisis won't occur again.

Obama himself has consistently rejected the exercise of such a putative power, urged by such advocates as former President Bill Clinton. However, push hasn't quite come to shove -- though the United States has more than once danced on the edge of financial disaster.


If you're looking for guidance from the U.S. Supreme Court on Congress and defaulting on the debt, you have to go all the way back to 1935's Perry vs. U.S.

The 14th Amendment says a lot of things. It's generally understood to extend the Bill of Rights, which originally affected only the federal government, to the states. But Section 4 says: "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

In Perry vs. U.S., John M. Perry bought a $10,000 Liberty Loan Gold Bond, and when the bond matured in 1934, demanded his payment in gold coin, as promised on the security. In gold coin, that nominal $10,000 would have been worth $16,000 in the 1930s.

But President Franklin D. Roosevelt had ordered all gold to be turned over to the government at a fixed price, and Congress negated gold clauses for securities.

Chief Justice Charles Evan Hughes found the man, who apparently argued the case himself, had no standing to sue, saying he failed "to show a cause of action for actual damages." He also said the government had the power to act on gold. But Hughes eviscerated a federal government argument that Congress could "repudiate" debt.


Speaking for the court, Hughes said the federal government "argues that 'earlier Congresses could not validly restrict the 73rd Congress from exercising its constitutional powers to regulate the value of money, borrow money, or regulate foreign and interstate commerce'; and, from this premise, the government seems to deduce the proposition that when, with adequate authority, the government borrows money and pledges the credit of the United States, it is free to ignore that pledge. ...

"We do not so read the Constitution," Hughes said. "There is a clear distinction between the power of the Congress to control or interdict the contracts of private parties when they interfere with the exercise of its constitutional authority and the power of the Congress to alter or repudiate the substance of its own engagements when it has borrowed money under the authority which the Constitution confers."

"In authorizing the Congress to borrow money, the Constitution empowers the Congress to fix the amount to be borrowed and the terms of payment. By virtue of the power to borrow money 'on the credit of the United States,' the Congress is authorized to pledge that credit as an assurance of payment as stipulated, as the highest assurance the government can give, its plighted faith. To say that the 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 [pledger]. This [Supreme] Court has given no sanction to such a conception of the obligations of our government."


How a modern court would react to any putative case involving Congress and a default on the debt is anyone's guess. The justices could reject such as case as a political question not involving the courts, or jump in with both constitutional feet.

Much of the public debate on the 14th Amendment and the debt limit has focused on the president's alleged power to raise it on his own. But in a New York Times op-ed Oct. 7 contending that Obama has such power, Princeton history Professor Sean Wilentz argues Congress itself was threatening to violate the Constitution.

"The Republicans in the House of Representatives who declare that they may refuse to raise the debt limit threaten to do more than plunge the government into default," Wilentz said. "They are proposing a blatant violation of the 14th Amendment, which states that 'the validity of the public debt of the United States, authorized by law' is sacrosanct and 'shall not be questioned.'"

The right-leaning National Review argues strenuously against a president raising the debt limit on his own, and reluctantly gives Obama credit for shooting down the idea.

"On the surface this seems to buck the conventional wisdom," staff writer Charles C.W. Cooke wrote in the Oct. 7 edition. "One would expect the chief executive to be proposing this idea over the screaming opposition of Congress. But the tables are turned. 'I have talked to my lawyers,' Barack Obama said calmly in 2011, and 'they are not persuaded that that is a winning argument.'"


The article points out White House press secretary Jay Carney told reporters in December 2012 the administration "does not believe that the 14th Amendment gives the president the power to ignore the debt ceiling -- period."

Last month, National Economic Council Director Gene Sperling said the administration has "never found that there was such extraordinary authority."

"Members of Congress, meanwhile, seem to be thrilled by the idea of having their roles usurped," Cooke wrote, pointing to the past advocacy of House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and retiring Senate Finance Committee Chairman Max Baucus, D-Mont.

Cooke can't quite make himself give Obama full marks for rejecting their argument, but he tries.

"Given this president's shaky commitment to the constitutional limits on his power, it is difficult to believe that he is here demonstrating a virtuous restraint," Cooke said. "Instead, one suspects, he is playing political hardball," keeping the pressure on Congress.

If Obama tried to exercise such a power under the 14th Amendment, then "to mitigate the serious risk of the Supreme Court's simply invalidating all presidentially blessed debt, the interest rate on any extra-constitutional bonds would have to be unreasonably high, as the American Enterprise Institute's Peter Wallison has observed." Wallison also predicted the yield on all U.S. debt would rise "as investors began to doubt the sanity of those in charge at the [Department of] Treasury."


Joseph Reisert, associate professor of constitutional law at Colby College in Maine, agrees.

"As a practical matter, were the president to say well, we've clearly hit this moment of national emergency. It appears that the inaction of Congress is going to call into question our credit worthiness; therefore, I on my own authority are going to tell the treasury to keep selling bonds," Reisert told NPR's "Here & Now." "Well suppose the president does that and you're an investor? Do you really want to buy those bonds not explicitly authorized by law in the ordinary sense. You might get your money back but you might not."

Emily Bazelon, legal affairs editor for left-leaning Slate and senior research fellow at the Yale Law School, disagrees.

"The president has emergency powers he should invoke to prevent default. Also, when choosing among different mandates from Congress, i.e., spending the money they budgeted to spend, and then not raising the default ceiling, he can go with the first obligation," she told "Here & Now." "But before that, first and foremost, Congress has an obligation under the 14th amendment not to call the nation's debt into question. The president should be strongly making that argument. He has not been."


In his New York Times op-ed, Wilentz said if Congress does allow the United States to default, the "Constitution provides for a two-step solution. First, the president can point out the simple fact that the House Republicans are threatening to act in violation of the Constitution, which would expose the true character of their assault on the government.

"Second, he could pledge that, if worse came to worst, he would, once a default occurred, use his emergency powers to end it and save the nation and the world from catastrophe," taking whatever political heat comes his way.

"It is always possible that if the administration follows the two-step constitutional remedy, the House might lash out and try to impeach Mr. Obama," Wilentz said. "Recent history shows that an unreasonable party controlling the House can impeach presidents virtually as it pleases, even without claiming a constitutional fig leaf.

"But the president would have done his constitutional duty, saved the country and undoubtedly earned the gratitude of a relieved people. Then the people would find the opportunity to punish those who vandalized the Constitution and brought the country to the brink of ruin."

The dispute may seem backward to some -- leftists arguing to increase presidential power and rightists fighting to rein it in.


Obama's response so far to the debate: No way, Jose.

Earlier this month, the president again rejected any form of using the 14th Amendment to raise the debt limit on his own.

"There are no magic bullets here," he said, asking, "What if there's a Supreme Court case saying these [actions] aren't valid?"

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