Debt Ceiling Hostage Taking: Section 4 Of The 14th Amendment Was Designed To Stop John Boehner
Kevin Drum is skeptical that the Obama administration would really be within its rights to ignore the debt ceiling:
Maybe I’m missing something here, but it strikes me that this doesn’t come close to implying that the debt ceiling is unconstitutional. What it really suggests is merely that the public debt is the only untouchable part of the federal budget.
Jack Balkin delves into the legislative history and shows why the 14th Amendment has a provision guaranteeing the debt in the first place. The sponsor of the provision, Benjamin Wade, wrote at the time:
[The proposed amendment] puts the debt incurred in the civil war on our part under the guardianship of the Constitution of the United States, so that a Congress cannot repudiate it. I believe that to do this wil give great confidence to capitalists and will be of incalculable pecuniary benefit to the United States, for I have no doubt that every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.
Balkin explains:
If Wade’s speech offers the central rationale for Section Four, the goal was to remove threats of default on federal debts from partisan struggle. Reconstruction Republicans feared that Democrats, once admitted to Congress would use their majorities to default on obligations they disliked politically. More generally, as Wade explained, “every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.”
Like most inquiries into original understanding, this one does not resolve many of the most interesting questions. What it does suggest is an important structural principle. The threat of defaulting on government obligations is a powerful weapon, especially in a complex, interconnected world economy. Devoted partisans can use it to disrupt government, to roil ordinary politics, to undermine policies they do not like, even to seek political revenge. Section Four was placed in the Constitution to remove this weapon from ordinary politics.
In other words, it’s in the 14th Amendment to guard against exactly what Congressional Republicans are doing right now.
Balkin does not suggest, nor do I, that the legal merits are open and shut. It’s certainly risky to take a flyer in the middle of a debt crisis. But if we do reach h-hour, we’re probably better off if the Treasury simply announces it’s going to continue to pay the bills and dares Republicans to take them to court than repudiating the debt, right?
Matt Steinglass argues that the Supreme Court would likely side with the Treasury:
If there’s one thing we’ve learned in the past 11 years, it is that the Supreme Court’s decisions on critical issues are very strongly influenced by political pressure. In a situation where the entire weight of world bond markets was bearing down on Anthony Kennedy’s head, would he really vote to crash the economy and destroy the credit rating of the United States? Would any individual do that? I don’t think even Eric Cantor would, if he were solely and publicly responsible for the decision. The ability of the GOP to push the government to the brink of default, and possibly ultimately over it, depends on the diffusion of responsibility: Republicans can only do it because they can hold Democrats to blame. It’s also driven by political vulnerability: Republicans have gotten themselves into a spiraling tea-party-driven political dynamic where they seem, on issue after issue, to be incapable of voting for any proposals that a Democrat might be able to accept, for fear of the consequences from their base. Anthony Kennedy does not have to fear a primary challenge, and if the United States’ ability to pay its debts comes down to his single vote, he’ll have no excuse. Maybe I have no idea how these things work. But I can’t see a Republican Supreme Court going toe to toe with the entire massed forces of Wall Street and not blinking.
A point that I think is worth drawing out here is that it’s not even clear the GOP leadership wants the power to take the credit of the Treasury hostage, or — more likely — if it’s simply been forced into this position by a financially uneducated base. Republicans in Congress might be relieved to have a deux ex machina absolve them of the need to walk a fine line between the demands of the base and the demands of their business constituency.
By: Jonathan Chait, The New Republic, July 1, 2011
Why The Debt Ceiling Debate Matters Now
If Congress doesn’t act soon, interest rates could spike–maybe for a long time. Then you’ll care.
The White House and Republican congressional leaders insist the debt ceiling will be raised well before the United States has to default, which would cause massive economic disruption. But a resolution seems less than assured. In the last few days, Republican presidential candidates Michele Bachmann and Tim Pawlentyhave joined a growing conservative chorus loudly denouncing a deal, and antagonism among the various parties appears to be growing, not diminishing.
Still, nobody in Washington or on Wall Street seems very alarmed. The Treasury says it can hold out until Aug. 2. But a look at the current politics and the recent history of debt-ceiling showdowns suggests that alarm might soon become warranted.
There are two reasons why. The first has to do with how difficult it will be to settle on something that can get through Congress in time to stave off any damage. This struggle has been largely misportrayed and crudely simplified as a tug-of-war between Republicans set on spending cuts and Democrats who want tax increases to accompany them. It’s actually a three-way struggle, because Republicans themselves don’t agree on their ransom demands to permit a larger debt.
House Republicans want to cut $2 trillion without raising any taxes or closing any loopholes. They’re focused strictly on spending. But Mitch McConnell, the Republican Senate leader, wants any deal to include Medicare reform. He’s focused on politics. McConnell worries that the House Republican budget passed in April, which takes the deeply unpopular step of privatizing Medicare, presents a mortal threat to Republican candidates in next fall’s elections. A debt-limit deal on Medicare that drew the support of President Obama and Democrats would inoculate the GOP against this danger.
The trouble is, House Republicans don’t share McConnell’s concern, so an agreement among Republicans seems nearly as remote as one between Republicans and Democrats.
That gets to the second reason for alarm: the United States need not default on its debt in order to incur costly and potentially lasting damage. A February report by the Government Accountability Officeexamining the recent history of “debt-ceiling events” — none nearly so serious as the current one — showed that government borrowing costs began to rise well in advance of default. Call it a taxpayer premium for congressional squabbling: the disruption of Treasury auctions and the threatened loss of liquidity among Treasury notes and bills caused billions in additional borrowing costs in the form of higher interest rates.
One reason why the debt showdown isn’t causing more alarm is that interest rates have been falling. But that’s due mostly to declining economic forecasts in the United States and fear of a Greek default — currently more powerful influences, but also ones that would mask worries about a US default.
At some point, perhaps as soon as in a few weeks, the fight in Congress could eclipse those factors and drive interest rates higher. That’s been the historical pattern, and it is already causing worry about what might trigger such a rise. “The nervousness on our end is that the markets will misperceive what’s going on,” an aide to a conservative House Republican told me. “If something fails on the House floor, people might react as if all life is about to end — just like they did when the TARP vote failed.”
That could cost taxpayers dearly, even if a default is ultimately avoided. One reason why US borrowing costs are so low is the universal belief that the government will always make good on its debts in a timely manner. But if that faith is shaken — and a good scare could do the trick — investors might decide that government debt is a riskier investment than they had imagined and demand a better return.
That will hurt. The Office of Management and Budget determined that a mere 1 percent rise in interest rates would cost taxpayers $973 billion over the next decade [pdf, pg. 23]. So a fight purportedly about cutting the deficit could actually cause it to grow much larger. That’s worth worrying about now — especially as Republicans threaten a default and claim there’s no cause for alarm.
By: Joshua Green, Senior Editor, The Atlantic, June 30, 2011
“That’s Why They’re Called Leaders”: Congressional Republicans Need To Do Their Job
One of the more common Republican criticisms of President Obama, at least in the context of the debt-reduction talks, is that he hasn’t shown enough “leadership.” Senate Minority Leader Mitch McConnell (R-Ky.) took to the floor late last week to cry, “Where in the world has the president been for the last month? … He’s the one in charge.”
One of the parts of Obama’s press conference this morning that I especially liked was the president’s pushback against the notion that he’s been a passive observer in this process.
“I’ve got to say, I’m very amused when I start hearing comments about, ‘Well, the president needs to show more leadership on this.’ Let me tell you something. Right after we finished dealing with the government shutdown, averting a government shutdown, I called the leaders here together. I said we’ve got to get this done. I put Vice President Biden in charge of a process — that, by the way, has made real progress — but these guys have met, worked through all of these issues. I met with every single caucus for an hour to an hour and a half each — Republican senators, Democratic senators; Republican House, Democratic House. I’ve met with the leaders multiple times. At a certain point, they need to do their job.
“And so, this thing, which is just not on the level, where we have meetings and discussions, and we’re working through process, and when they decide they’re not happy with the fact that at some point you’ve got to make a choice, they just all step back and say, ‘Well, you know, the president needs to get this done.’ They need to do their job.
“Now is the time to go ahead and make the tough choices. That’s why they’re called leaders…. They’re in one week, they’re out one week. And then they’re saying, ‘Obama has got to step in.’ You need to be here. I’ve been here. I’ve been doing Afghanistan and bin Laden and the Greek crisis. You stay here. Let’s get it done.”
I’m glad the president pressed this, not just because he sounded a bit like Truman slamming the do-nothing Congress, but because many in the media have bought into the notion that lawmakers have dug in on this, and the president hasn’t. That’s nonsense.
Congressional Republicans haven’t been slaving away, trying to strike a credible deal. They’ve been making threats, drawing lines in the sand, and barking orders about what is and is not allowed to be on the negotiating table.
“They need to do their job.” Part of those responsibilities includes working in good faith to find an equitable compromise with a Democratic Senate and a Democratic White House, and then doing what they must do, but what the president cannot do: passing the damn debt-ceiling increase.
Tick tock.
By: Steve Benen, Contributing Writer, Political Animal, The Washington Monthly, June 29, 2011
A Break For Wisconsin Democrats In Recall Fight
At first glance, this will seem deep in the weeds, but this just in from the Milwaukee Journal Sentinal constitutes a real break for Wisconsin Dems in their quest to take back the state senate in the recall wars:
State elections officials Monday took a Republican Assembly lawmaker off the ballot in a recall election against a Democratic senator.
The state Government Accountability Board voted unanimously to leave Rep. John Nygren (R-Marinette) off the ballot in the July 19 recall election for Sen. Dave Hansen (D-Green Bay) in the 30th Senate District. The board found that Nygren fell just short of collecting the 400 valid nominating signatures needed to qualify for the ballot, finding he collected only 398 valid signatures.
The accountability board had initially found that Nygren had submitted 424 qualifying signatures from voters. But after a number of signatures were challenged by Democrats, the accountability board found that 26 of those were invalid.
In a nutshell, what happened here is that one of the Dem state senators that Dems and labor thought was genuinely vulnerable to a recall challenge — Dave Hansen — will now no longer face his toughest challenger. Once it has been established through signature gathering that a recall election will be held against a sitting official, a potential challenger only requires 400 signatures to get on the ballot in the recall elections. Hansen’s leading challenger, John Nygren, fell short and was disqualified.
Hansen is now all but certain to face a challenge from a far weaker candidate — David VanderLeest. According to Journal Sentinel columnist David Bice, this latest challenger has a court record that includes disorderly conduct.
Kelly Steele, a spokesman for the labor-backed We Are Wisconsin, was thrilled about the new development, claiming that VanderLeest’s “rap sheet reads like a directory of the Wisconsin state criminal code.”
Here’s why this is important. In order to take back the state senate, Dems need to net three recall wins. Six Republicans face recall battles; while only three Dems do. But now one of the three Dems may be far safer than previously thought, which means Dems may have an easier time netting three wins — and that Wisconsin GOPers may have a tougher time hanging onto the state senate.
By: Greg Sargent, The Washington Post Plum Line, June 27, 2011
Tea-pocrisy Is Not Particularly Complicated
Michele Bachmann, at her announcement speech today, offering an extended paean to the Tea Party:
I am here in Waterloo, Iowa to announce today: We can win in 2012, and we will. Our voice has been growing louder and stronger. And it is made up of Americans from all walks of life like a three-legged stool. It’s the peace through strength Republicans, and I’m one of them. It’s fiscal conservatives, and I’m one of them, and it’s social conservatives, and I’m one of them. It’s the Tea Party movement, and I’m one of them.
The liberals, and to be clear I’m NOT one of them, want you to think the Tea Party is the Right Wing of the Republican Party. But it’s not. It’s made up of disaffected Democrats, independents, people who’ve never been political a day in their life, libertarians, Republicans. We’re people who simply want America back on the right track again.
The Los Angeles Times yesterday, revealing some very un-Tea-Party-like behavior from the Bachmann family:
Rep. Michele Bachmann has been propelled into the 2012 presidential contest in part by her insistent calls to reduce federal spending, a pitch in tune with the big-government antipathy gripping many conservatives.
But the Minnesota Republican and her family have benefited personally from government aid, an examination of her record and finances shows. A counseling clinic run by her husband has received nearly $30,000 from the state of Minnesota in the last five years, money that in part came from the federal government. A family farm in Wisconsin, in which the congresswoman is a partner, received nearly $260,000 in federal farm subsidies.
And she has sought to keep federal money flowing to her constituents. After publicly criticizing the Obama administration’s stimulus program, Bachmann requested stimulus funds to support projects in her district.
Bachmann yesterday defended herself by describing the clinic funding and “one time training money” for employees that didn’t financially benefit Bachmann’s husband. But presumably the clinic itself benefitted from having government money train its workers. Otherwise it’s hard to see why Bachmann’s husband’s clinic wanted the funding. And of course, there’s all that stimulus money Bachmann wants for her district.
I don’t really know if these revelations will damage Bachmann’s status as the Tea Party’s leading warrior queen (yes, you have been dethroned, Sarah Palin). That’s because this sort of hypocrisy is widespread among Tea Partyers themselves — let’s call it “Tea-pocrisy.”
As Steve Benen has been documenting — see here and here — there’s no shortage of officials and political activists who embrace the Tea Party even as they benefit directly or indirectly from government generosity themselves. Some House GOP freshmen have even been the direct recipient of farm subsidies. And now the relevations about Tea Party chieftain Bachmann herself.
The point, as always, is that Tea Partyers are frequently for government spending as long as it’s benefitting the right people. Tea-pocrisy is not particularly complicated.
By: Greg Sargent, The Washington Post Plum Line, June 27, 2011
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