WASHINGTON — In the event of a debt limit breach, President Obama would be forced to do one of three things, each one of them illegal and perhaps even unconstitutional, legal scholars say.
He could borrow money unilaterally, in defiance of the $18.1 trillion debt limit set by Congress. He could raise revenue by instituting new taxes, which would encroach on the taxing power of Congress and deprive people of property without due process. Or he could cut spending, which would renege on entitlement programs and violate the Congressional Budget and Impoundment Act of 1974, which requires the president to spend the money that Congress approves.
If Congress fails to raise the debt ceiling before the Treasury runs out of borrowed money in early November, the White House may have to decide which of those three options is the least unconstitutional.
So which option would President Obama choose? The White House won't say.
"This is a thought-provoking exercise, and probably makes for a good op-ed that I think I would read. But at this point, I wouldn't speculate on what is a hypothetical situation, primarily because the expectation that we have is that Congress will do the right thing, and they will increase the debt limit," White House Press Secretary Josh Earnest told USA TODAY Thursday. "The scenario that you just laid out is one that should be avoided at all costs."
That scenario is quickly approaching. Treasury Secretary Jack Lew told Congress Thursday that the projected date of default is now Nov. 3, two days earlier than expected. And that deadline looms under markedly different political conditions than the last two debt limit crises, with the Republican House leadership in question and no accompanying spending bill to tack a debt limit increase on to. Congress has appropriated enough money to run the government through Dec. 12 — but only if there's money to spend.
Since the 2011 debt crisis, the White House has maintained that there are no plans to invoke what legal scholars call the "14th Amendment solution." Section four of that amendment was intended to assure that debt issued by the Union during the Civil War would be honored. "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."
The 14th Amendment solution is "off the table" and "not a viable option," Earnest reiterated Thursday.
The Treasury Department says it's also unable to prioritize some payments over others, and so would have to stop spending entirely once it ran out of cash. But it's also illegal for the president not to spend money appropriated by Congress. The 1974 Impoundment Act was a response to President Nixon's refusal to spend $12 billion in spending he viewed as wasteful.
"There's no option. The president is going to be between a rock and a hard place if the debt limit isn’t increased," said Neil Buchanan, a George Washington University law professor who first put forward his "trilemma" argument in 2012 with Cornell University's Michael Dorf. "He has nothing but unconstitutional choices. Once you’re there, you have to make a choice. Not making a choice is a choice."
And the least unconstitutional of those choices, Buchanan argues, is to borrow just enough money to pay the current obligations already mandated by Congress.
But conservative lawyers reject that analysis, saying it's the spending obligations that have to give.
"For the government to spend money, two things have to happen. There has to be an appropriation, and there has to be money in the treasury to draw from,” said David Rivkin Jr., a partner at the law firm of Baker & Hostetler.
If the government runs out of borrowing authority, there’s no money to spend. “The government makes all sorts of promises. Many of these, particularly entitlement benefits, are not binding unless there's money to honor them.”
Earnest said he's not aware of any legal analysis by the White House Counsel's office about what options the president has in the event of default.
But Rivkin, a former White House lawyer in the first Bush administration, said he suspects there have been talks. "My sense is they’ve looked at it, and informally concluded there is no constitutional way for the president to borrow money or increase taxes on his own authority. But they did not want to take any options off the table,” he said.
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