I am very concerned about the potential economic consequences of failure to raise the debt ceiling — my career was almost completely derailed by one financial crisis, and I am profoundly afraid of what would happen if another struck so soon. But the constitutional implications may ultimately be more important, insofar as Congress may be essentially forcing the executive to adopt more unilateral powers in domestic policy, similar to those the executive already claims in foreign policy (see the open refusal to seek even token Congressional authorization for the Libya intervention).
The reason this is so is that Congress will be producing a situation in which the law is inherently contradictory. On the one hand, Congress has mandated that the government should spend a certain amount of money and has only allowed the government to collect a certain amount of money as tax revenue. On the other hand, Congress will also be saying in effect that the Treasury cannot issue the debt necessary to follow Congress’s own directives. If the Treasury disregards the debt ceiling and proceeds as normal, it’s breaking the law (source: spergel.ca/debt-help/bankruptcy). If the Treasury picks and chooses which bills to pay, it’s breaking the law. (And obviously if the president ordered the IRS to start witholding more money from people’s paychecks to make up the difference, that would also be against the law — but I think American political culture is such that I may be literally the first person to have thought of this hypothetical possibility.)
The fact that the Treasury needs to issue more debt to roll over its current obligations makes the situation even more problematic, but also introduces the potential escape clause of the 14th Amendment. This amendment was adopted after the Civil War and included a clause preventing any future Congress from repudiating the debt incurred in fighting that war or assuming the debt of the Confederacy; the text is as follows:
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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
Most people quoting the amendment in support of the unconstitutionality of the debt ceiling quote it as follows: “The validity of the public debt of the United States… shall not be questioned.” This obviously leaves out the historical context, as well as a potentially problematic phrase: “authorized by law.”
It seems almost absolutely certain to me that the 14th Amendment was not intended to apply to a situation like we are in danger of experiencing. The fact that it includes the phrase “authorized by law” indicates that it foresees Congressional oversight of debt issuance, given that Congress is the branch of government that writes laws. Obama and other leading Democrats are, on the factual level, probably correct to avoid making overly strong assertions about the unconstitutionality of the debt ceiling.
Nevertheless, it seems fortunate to me that this constitutional escape clause exists, because if the law limiting total government debt to a certain level (i.e., the debt ceiling) were deemed to be unconstitutional, that would remove the legal contradiction, defuse the constitutional crisis that would result from Congress essentially forcing the Executive Branch into a situation where it has to pick and choose which of Congress’s contradictory laws to enforce, and preserve the facade of basic constitutional continuity that may be the only thing standing between us and outright dictatorship.
In addition, given the fact that this option exists, I believe that if Obama chose to obey the debt ceiling and defaulted on U.S. debt, he would be wilfully causing a global financial crisis at a time when the economy is (in part due to the failures of his own policies) still extremely weak. Given the special role of U.S. debt in the global economy, it seems likely that said crisis would be the worst in the entire history of capitalism — if the collapse of one particular asset class reputed to be of AAA quality (CDOs, i.e. securitized mortgages) caused such chaos, what would happen when the gold standard of safe investments collapsed?
One thing’s for certain: the amount of human suffering that would result would be staggering, quickly shooting Obama up the list of “History’s Greatest Monsters.” In addition, he would be creating a situation in which someone like Michelle Bachmann could realistically be elected president, most likely creating a constitutional crisis of quite a different order.
I wish I knew for sure that Obama wouldn’t let that happen.
An und für sich 
Intriguing thoughts. For one, Obama is in no way responsible for this crisis or the slow recovery. His actions have been insufficient, in terms of stimulus, but he was hardly being encouraged to greater effort by the opposition. Rather, they were obstructive at every turn, seeking lower and less effective stimulus measures.
In a related vein, the debt ceiling crisis, if it comes, may also not be pinned in Obama, monster or not. He and congress are playing chicken, entirely at the behest of congress, which never uttered a whimper before at raising the debt ceiling. So just as the Gingrich congress was blamed for shutting down the government before, so would the nutbars on the right be blamed this time again.
Anyhow, your speculations are quite interesting, in that the way is opened for the executive to pick and choose which bills are actually paid, or to behave as if the debt ceiling was raised. All options seem to be open. Here in California, a commitment to not pay the salaries of the legislators worked wonders to bring in a budget on time, to take an example.
I’m glad to see you took this as an opportunity to rehearse cliched apologetics for Obama rather than to reflect seriously on the issues raised. Ha, ha, they’ll raise the debt ceiling if they don’t get their paychecks — priceless! Because it definitely wouldn’t be problematic if the executive branch could arbitrarily de-fund the legislature.
Well, some apologetics are fact-based, some are not.
Anyhow, you pointed out yourself that the executive is placed in a position where it can not observe all the laws at the same time. How are the laws to be breached prioritized? I have no idea. The executive is left with an open choice. I recall that some Republican legislators fantasized that the treasury might still pay all the interest payments to the rich, while cutting social security and other payments to the poor, etc.
Another option is to ignore the law that requires debt issuance to match government spending. My reading of economics says that this practice is an unnecessary, archaic artifact.
Perhaps the best approach is to not take this situation overly seriously, since the Republicans have already assured wall street that they will raise the debt limit in any case- they just want to have their class war first. It is entirely up to Obama to give in to their bluff or not.
Honestly, that has been my feeling as well. There is literally no way the debt ceiling doesn’t get raised, and worrying about it too much in public just gives the Republicans leverage.
Here in California, a commitment to not pay the salaries of the legislators worked wonders to bring in a budget on time, to take an example.
In the sense that the budget was still late, and also fucking terrible. Refusing to pay legislators is an awful idea, so bad it almost offsets the good side of the proposition that introduced it, which got rid of California’s supermajority requirement to pass a budget.
And now fucking Geithner says the executive doesn’t have the authority to ignore the debt ceiling — whereas he had previously said it was unconstitutional, even in a kind of cavalier way. These people are morons.
I don’t disagree and I’m constantly disappointed by Obama’s seeming inability to negotiate effectively or to comprehend that the Republicans are not operating in good faith. For me it’s a matter of keeping things in perspective. As much as Obama has painting himself into a corner here the real villains are the Tea Partiers/Republicans. Without any hyperbole at all, using clam carefully chosen words, the only accurate and objective way to describe this is that the Republicans are threatening an act of economic terrorism. That they’re probably going to be effective in blaming Obama for the results of their own actions if the debt ceiling isn’t raised doesn’t change the facts.
I’m told by reports from Obama’s time in Illinois that he is extremely shrewd and can pull the political knives out when needed. I’d like to see some evidence of that here. Honestly, I think it’s time for us to all pitch in a few dollars and enroll him in a negotiation 101 class at a D.C. community college. But his screw ups are innocent when compared to the down right ill-will of the Republicans.
The only thing worse than the awful capitulation that Obama is headed for is the alternative if the debt ceiling doesn’t get raised.
“…clam carefully chosen words…”
Ha! Not carefully chosen enough.
“Given the special role of U.S. debt in the global economy, it seems likely that said crisis would be the worst in the entire history of capitalism — if the collapse of one particular asset class reputed to be of AAA quality (CDOs, i.e. securitized mortgages) caused such chaos, what would happen when the gold standard of safe investments collapsed?”
What’s striking to me — in one sense — is that this even more terrifying aspect of the situation has received so little attention among even some of the more thoughtful and observant pundits. Sure, there have been the occasional “those Republicans would even blow up the economy” statements, but my sense is that this has mostly been uttered in the weaker sense of merely disrupting a struggling economy’s attempt to gain strength, ensuring a double-dip, etc., and not the stronger sense that you suggest. Which is simply breathtaking. The public quite literally has no idea what is at stake here!
On the other hand, perhaps it’s not a failure of imagination, but something different at work here, something approaching an unconscious terror, a weird reverence for the unutterable, resulting in an eerie silence. I don’t know.
But you are absolutely correct that there is every reason to believe that the results would be catastrophic, for the most vulnerable, and for the left in general. When Zizek wrote in his recent writings of the “misery of the left”, he no idea! He hadn’t yet seen Barack Obama! With him, we’re approaching a level of incompetence and cowardice of such slavish proportions that we’d almost have to talk of a Neville Chamberlain, perhaps in combination with some of the Weimar era liberals, to find an equivalent. But perhaps I’m wrong.