In an effort to slow down the severe recession as well as the persistently high unemployment rate following the 2007-08 Financial Crisis, the government increased federal spending. As a result, the federal debt reached its limit on multiple occasions from 2008 to 2011 which led to a series of increases of the debt limit. In 2011, the Treasury asked for its borrowing capacity to be extended. The 2011 U.S. Debt Ceiling Crisis led to a contentious debate in Congress occurring in July 2011 regarding the maximum amount of debt the federal government should be allowed. Congress resolved the debt ceiling crisis by passing the Budget Control Act of 2011, which became law on August 2, 2011. The following article was written in 2011 when the issue of
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In an effort to slow down the severe recession as well as the persistently high unemployment rate following the 2007-08 Financial Crisis, the government increased federal spending. As a result, the federal debt reached its limit on multiple occasions from 2008 to 2011 which led to a series of increases of the debt limit. In 2011, the Treasury asked for its borrowing capacity to be extended.
The 2011 U.S. Debt Ceiling Crisis led to a contentious debate in Congress occurring in July 2011 regarding the maximum amount of debt the federal government should be allowed. Congress resolved the debt ceiling crisis by passing the Budget Control Act of 2011, which became law on August 2, 2011.
The following article was written in 2011 when the issue of raising the debt level was being discussed also. The article is taken from the LA times as an Opinion Piece.
“The Constitution, Obama and raising the debt ceiling,” Los Angeles Times, Erwin Chemerinsky, July 2011.
Lately, everywhere I go, people ask the same question: Isn’t there some mechanism for the president to act unilaterally to raise the debt ceiling and avoid financial disaster?
Hopes are usually pinned on an obscure constitutional provision, Section 4 of the 14th Amendment, which says: ‘The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.’
Unfortunately, there is no plausible way to read this provision as providing the president the ability to increase the debt ceiling without congressional action.
Article I, Section 8 of the Constitution says that it is Congress that has the power ‘to borrow money on the credit of the United States.’ The Constitution thus could not be clearer that borrowing money requires congressional action. Nothing in Section 4 of the 14th Amendment takes this power away from Congress or assigns it to the president. Section 4 of the 14th Amendment says only that the debt of the United States shall not be questioned; it says nothing about who gets to determine the size of the debt or in any way shifts this power from the legislature to the executive.
The power of the purse — including the authority to tax, spend and borrow — is quintessentially legislative. Not even a dire financial emergency would allow the president to take this over. The Constitution, thankfully, has no provision allowing for its suspension even in times of crisis.
Moreover, the debt ceiling is set by statute. Unless this law is unconstitutional, which it obviously isn’t, the president cannot unilaterally repeal it and replace it with another law setting a higher debt ceiling.
Historical practice also matters in interpreting the Constitution.
On many occasions, the Supreme Court has said that a long, unbroken tradition is given great weight in determining the Constitution’s meaning. As the court often has said, ‘History has placed a gloss on the Constitution.’ Throughout American history, the debt ceiling always has been set and raised by statute, not executive decision-making.
Unilateral presidential action to raise the debt ceiling also would not solve the financial mess caused by congressional inaction. If the president acted on his own to increase the debt ceiling, the bonds that would then be issued would certainly be questioned and challenged in court. During this time, it is unlikely that this questionable borrowing would satisfy credit markets or rating agencies. It is estimated that decreasing the credit rating of the United States from AAA to AA would cost the federal treasury $100 billion a year in additional interest payments, to say nothing of the higher interest rates everyone in the country would pay on loans. It is highly doubtful that unilateral presidential action would provide sufficient confidence to rating agencies to avoid this dire consequence.
I wish it were otherwise and that the president could simply increase the debt ceiling and make this issue go away. It is a financial crisis that could easily be avoided, as it always has been in the past, by Congress routinely increasing the debt ceiling. But there is no reasonable way to interpret the Constitution that allows the president to do this on his own.
This whole mess is so silly and so unnecessary that it almost makes one despair of democracy as a form of government. But as Winston Churchill said:
‘No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.’
We must hope that our democratically elected government will act in the next few days and avoid financial disaster. But under any interpretation of the law, that will take congressional action.
I took the opportunity to follow up with Erwin Chemerinsky. His reply reflects what hesaid in the 2011 article in the LA Times.
I did take the liberty of following up with Erwin on his 2011 article.
My email: “The 14th Amendment has raised its head again. In this instance, it is with regard to Section 4 and the rather arbitrary debt limit. Economically, I can see nothing which would forestall an increase in debt and printing money other than inflation which a platinum coin or copper one would not stop.“
His response; “I want to be wrong, but I think it is tough to see how the president could do this unilaterally.”
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