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Newsletter | Revolving Door Project Newsletter | May 3, 2023

On the Debt, Biden Has No Choice But To Make One

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This edition of the Revolving Door Project newsletter was originally published on Substack. Read and subscribe here.

On Monday, Treasury Secretary Janet Yellen shortened the estimate of when the U.S. could default on its debt to as soon as June 1. We’re less than a month out from the so-called X-date: the day that the federal government runs out of cash. President Biden has invited House and Senate leadership to the White House to talk debt this coming Tuesday, with highly uncertain results. 

In another flare-up of the mainstream media’s both-sides-ism affliction, some stories have framed this brinkmanship as a game of chicken, with each party daring the other to capitulate to the other’s demands before a first-ever U.S. default precipitates a financial crisis. But doing so obscures the fact that this is an unnecessary and artificial crisis manufactured by Republicans in Congress. They are willing to take anything—legislation they passed; even the stability of the domestic and global economy—hostage, if it advances their obstructionist political agenda. 

Meeting Republicans halfway on this is not an acceptable option. President Biden and leadership at the Justice Department and Treasury must reject the indefensible position that the debt ceiling is more legitimate than the fiscal year 2023 appropriations passed into law by Congress. That will mean overcoming what we’ve seen as some of Biden and Attorney General Merrick Garland’s worst instincts towards compromise and appeasement. 

Having to choose the least illegal course of action is a disquieting task, to be sure, but that’s the absurd position Congressional Republicans are forcing the administration into—in hopes that Democrats will cave, and agree to sacrifice government resources and climate spending to avoid a default. 

Biden and Garland must put aside their reluctance to take unorthodox actions, and recognize that if Congress can’t pass a clean debt limit increase by the end of the month, the administration will have no choice but to do something unprecedented. As I’ll get into later on, there are clearly better and worse unprecedented options. 

We’ve Been Here Before, Sort Of

So far the Biden administration has publicly taken the right tactic, refusing to make raising the debt ceiling subject to negotiation. 

“America is not a deadbeat nation… We pay our bills,” Biden said Monday. “And we should do so without reckless hostage-taking from some of the MAGA Republicans in Congress.” Flawed bit of class analysis aside, this was one of those history-rhyming moments, as Obama used that same line about the U.S. not being a “deadbeat nation” a decade ago, the last time that Republicans toyed with defaulting on the debt. It didn’t work out well for them then—public regard for the Republican party plummeted—but it also didn’t work out well for the American people. 

The 2011 and 2013 debt ceiling showdowns weakened trust in government and the quality of government services. The Budget Control Act, whose passage averted a default in 2011, implemented a decade-long regime of spending caps which eroded capacity at many important federal agencies, from the Environmental Protection Agency to the Labor Department. Now Republicans are rebooting the same dangerous tactics they tried in the wake of the Affordable Care Act’s passage, this time seeking to unravel the Inflation Reduction Act and undermine the post-Trump recovery of federal agencies. In the latter effort to destroy the administrative state, they now have the extremist Supreme Court as an ally.

House Democrats, to their credit, are actually advancing a viable if challenging strategy to pass a debt ceiling increase through Congress. (Of course, they wouldn’t have had to resort to such schemes if they’d just taken this threat seriously while they held both chambers!) The New York Times reported yesterday on House Democrats’ “secret weapon,” which involves a “broad and eclectic” bill quietly introduced and referred months ago to 20 different House committees, where it has sat idle, awaiting possible use as a legislative vehicle for a future debt ceiling measure. An emergency rule introduced yesterday began the process for forcing consideration of the bill on an expedited timeline. 

If the House Democrats’ strategy fails, though, there are strong legal arguments that the Biden administration can use to justify a wholesale refusal to indulge Republicans’ wildly irresponsible scheme. In 20122013 and 2014, law professors Neil Buchanan and Michael Dorf laid out in a series of Columbia Law Review papers the legal case for “the least unconstitutional option” in a debt ceiling crisis being ignoring the debt ceiling altogether. 

For those interested in their arguments but looking for a shorter read, Dorf and Buchanan summarized their points in a 2013 op-ed in Verdict, which remains (unfortunately) evergreen today. Considered in tandem with a 2013 Reuters op-ed from Cornell professors Daniel Alpert and Robert Hockett, which Hockett revisited and elaborated upon in Forbes a couple of months ago, it’s clear that there are several longstanding legal doctrines that would support the administration treating spending mandated by the FY2023 budget—passed into law by Congress!—as overriding the debt limit (passed earlier and with far fewer specifics). 

In the case of a congressional stalemate and looming default, Dorf and Buchanan argue that the administration exceeding the debt limit is the least unconstitutional choice, because it involves by far the least amount of presidential discretion. Government spending (as well as taxation) has already been determined by Congress for the fiscal year; the president unilaterally choosing how to cut that spending would be a major violation of the separation of powers. In contrast, issuing more debt does not require the president to exercise discretion about government priorities. 

“If Congress decides that the debt is too high, then it can make it a priority, in its next budget, to bring that level of debt back down,” Dorf and Buchanan wrote. “It would do so, importantly, by exercising its constitutional authority to decide what budget lines to cut, and by how much. It would do so, in other words, by acting like a legislature. This is what the President should not do.”

Constitutional Grounds

According to The New York Times yesterday, Biden administration officials are weighing an option that the Obama administration once “deemed unthinkable”: challenging the debt limit on constitutional grounds. 

Back in January, New York Times opinion columnist Jamelle Bouie argued that the administration should do just that: “Biden should make the case that the debt limit, because of the threat it poses to the validity of the nation’s debt, is unconstitutional under the 14th Amendment.” The 14th Amendment states that “the validity of the public debt of the United States…shall not be questioned.”

Robert Hockett wrote in Forbes that the Republican interpretation of the debt ceiling statute raises other Constitutional issues, too. It may violate the Take Care Clause, which requires that the president takes care that the laws (including specific appropriations) be faithfully executed, and the Separation of Powers doctrine, by which Congress, not the president, determines levels of taxation and spending. “Any interpretation of the debt ceiling regime that looks to threaten default, violate the Take Care Clause, or offend Article I and the Separation of Powers, then, must be rejected under the constitutional avoidance canon in view of its raising a Constitutional conflict,” Hockett wrote.

If the administration chooses to ignore the debt ceiling, and make any of these constitutional justifications for doing so, it will inevitably end up being challenged in court. As with so many other pressing issues, we would exhort the Biden administration not to view the threat of a right-wing Supreme Court radically deviating from legal canon in order to suit their ideological commitments as a reason to avoid the fight. 

The lawlessness of the Supreme Court needs to be addressed head-on. (After Tuesday’s woefully inadequate Senate hearing on Supreme Court ethics reform, with baseless claims from Senator Lindsey Graham left uncontested, it’s clear that Democrats in Congress have not yet risen to that task.) So too does the willingness of Republicans to plunge the country into a recession in order to force Democrats to walk back their legislative successes on climate. Nothing is certain about the next four weeks except that if Democrats waver, the public will lose, on many fronts at once. 

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