On August 2 of this week, the United States successfully—if you can call it that—raised its debt ceiling for the 10th time since 2000. Regardless of the merits or un-merits of the deal that was eventually reached, the negotiation process was overwhelmingly bad for the country’s fledgling economic recovery. America’s reputation globally has suffered as a result. China’s state run paper called the negotiations “dangerously irresponsible,” and many commentators thought the US was coming perilously close to a constitutional crisis.
The country may be suffering from a bit of debt ceiling fatigue at the moment, but given the harm that the past few weeks have done, the United States needs to get around to abolishing the debt ceiling before this situation repeats. It would be a good signal to markets and remove political uncertainty that’s likely to keep US interests rates up, and it’s important for the continued stability and civility of our political system.
In case you need persuading that the debt ceiling should be abolished, I recommend this article by James Surowiecki at the New Yorker or Annie Lowrey’s piece in Slate from back in May, where she referred to the debt ceiling a “historic relic” with a “horrific downside and negligible upside.” And on August 1, Bruce Bartlett, a former policy advisor to Presidents George H.W. Bush and Ronald Reagan, laid out a persuasive argument for the debt ceiling’s abolition, explaining that:
“Even if the Treasury avoids default on government debt this week, we will inevitably have to go through the same political drama the next time the debt limit runs out and every time thereafter. And sooner or later the shoe will be on the other foot, as Democrats hold the debt limit hostage against a Republican president.”
“Unfortunately, the option of just letting the debt limit expire is not available. It is permanent law and can be abolished only by repeal or by a ruling by the Supreme Court that it is unconstitutional.”
Given the fight that was just waged over raising the debt ceiling, I am rather skeptical that the Republican-controlled House is prepared to repeal the debt ceiling at the moment. Neither party, it seems to me, has the proper incentives to give up this political bludgeon willingly. As Michael Shear stated, “it may be impossible for Washington to put the debt ceiling genie back in the bottle.” Whether the debt ceiling statute is unconstitutional is another matter.
Bruce Bartlett has also written an excellent summary of the constitutional issue and has compiled some of the best arguments for and against the executive branch’s invoking the 14th Amendment to avoid hitting the ceiling. While most of these arguments focus on whether the President was empowered by the 14th Amendment to authorize the Treasury Secretary to continue issuing debt, the relevant question is whether the legislation establishing the debt ceiling is itself constitutional. Niel Buchanan at Dorf on Law has addressed exactly this issue and argued that the debt-limit statute is unconstitutional because it separates Congressional spending from the authorization to raise money to pay for those obligations.
Alternatively, it might be possible to argue that Congressional action that calls into question the United States’ debt might itself be unconstitutional. As Jack Balkin has written:
“Secretary Geithner does not believe that the President is allowed to violate the Constitution himself to stop congressional Republicans, but it does not follow that what the Republicans are doing is constitutional.
The press so far has been asking whether the debt ceiling is constitutional. The correct question they should ask is whether the Republican strategy of hostage taking violates the Constitution” (emphasis in original).
As most legal commentators have recognized, standing and the political question doctrine pose hurdles to the Supreme Court ever ruling on the issue. Given the enormous damage this game of political chicken caused and how perilously close the nation came to an unprecedented constitutional conflict, however, these questions are worth exploring in more depth—and soon.