America Shuts Down!

[edorr]

How the Supreme Court can resolve the debt ceiling crisis

By Adam H. Rosenzweig | National Constitution Center

Adam H. Rosenzweig from the Washington University School of Law proposes a different approach to ending the debt ceiling crisis: Let the Supreme Court resolve it as a Constitutional matter.

Some scholars have argued that there are no Constitutional options if the debt ceiling is not raised, meaning the president would be forced to choose the least unconstitutional option. Others have argued that the president has the power under Article 4 of the 14th Amendment to issue debt in contravention of the debt ceiling. Others still have argued that the president has inherent emergency powers under Article II of the Constitution to do so.

As most American schoolchildren learned in civics class, the United States government is composed of three branches: the legislative, the executive, and the judicial. If the legislative and executive cannot—or will not—comply with their Constitutional obligations, should the judiciary step in? In other words, what is the proper role of the Supreme Court in remedying Constitutional violations arising from fiscal policy showdowns, such as the debt ceiling standoff, between Congress and the president?
The Supreme Court engages with Constitutional issues arising from the coordinate federal branches all the time. When Congress enacts a law that violates the Constitution, the Supreme Court can strike down the law as unconstitutional. When the Executive violates the Constitution, the Supreme Court can order the Executive to fulfill its Constitutional obligations.

In the case of the debt ceiling, however, neither would suffice. Even if it wanted to, the Supreme Court couldn’t order the president to spend money that wasn’t in the Treasury nor could it order Congress to pass a statute authorizing new debt or cutting spending.
So in limited circumstances, such as those of the debt ceiling crisis, the sole remaining option would be for the federal courts, and the Supreme Court in particular, to impose taxes or borrow money to remedy the Constitutional violation.

While at first glance this may seem like an odd, or even outrageous, proposition, in fact the Supreme Court recognized the power of federal courts to do something strikingly similar over 20 years ago. In the case of Missouri v. Jenkins, the district court ordered the school district of Kansas City, Missouri, to undertake certain spending to comply with Brown v. Board of Education.

The school district attempted to pass a new tax to comply with the court’s order, but the state of Missouri adopted a state constitutional amendment banning the district from doing so. The district court found the state’s actions unconstitutional and therefore struck down the ban. Unfortunately, this was not sufficient to raise the money because the school district had never authorized a tax levy in the first place. So the court was forced to impose taxes and issue bonds directly. On appeal, although the details get somewhat complicated because of the state and local nature of school districts, the Supreme Court effectively held that such an order would be within the inherent power of the courts to remedy Constitutional violations.

This power of federal courts to raise and spend money is not unique in the history of the United States, nor is it limited to school desegregation. For example, courts have the inherent power to impose and collect fines from people held in contempt. But nothing in Article III of the Constitution, which vests the judicial power of the United States in the Supreme Court and the other federal courts created by Congress, says anything about a contempt power or a power to impose and collect fines. Yet it is well-accepted that such a power must exist or else the courts would not be able to fully exercise the judicial power.

Similarly, if a federal officer violates a citizen’s Constitutional rights, that citizen has the right to sue the officer for damages in a so-called Bivens action. The Supreme Court has made clear that, if the government loses a Bivens action, the fact that the government does not have enough money to pay cannot be a defense. Thus, by ordering the government to pay money damages that were not budgeted by Congress, the courts are effectively ordering the government to raise taxes or borrow money.
So in the debt ceiling crisis why not let the Supreme Court resolve it? If failure to raise the debt ceiling really would violate the Constitution and no other, more limited, remedies are available, the Supreme Court could invoke its inherent Article III fiscal powers to solve the problem.
Of course, some technical and procedural hurdles would need to be overcome for a debt ceiling case to reach the Supreme Court. But none of these should prevent such a case from making it to the Court.

At a minimum, the Social Security Trust Fund, one of the largest holders of federal debt, could sue for payment if the government threatened to default on that debt. Ordering payment on a debt is something the courts are particularly good at and, if failing to do so would result in the Fund permanently losing a portion of the value of the assets it needs to pay mandatory Social Security benefits, this would seem to establish the type of “irreparable harm” that typically justifies courts stepping in and doing so immediately.

But what about separation of powers? Would the Court be overly intruding into areas reserved to Congress in exercising the Article III fiscal power? Maybe yes and maybe no.
The Supreme Court has recognized a number of situations in which the federal courts can exercise powers that look surprisingly like legislative powers. For example, the Supreme Court has upheld the power of the federal courts to impose their own Congressional districts when legislatures can’t or won’t do so in a Constitutional manner.
Similarly, courts can decide how to manage and operate prisons, including which to close, what staff to hire, and how to fund them, to prevent constitutional violations. This was made explicit recently by the Supreme Court in Brown v. Plata, the California prison case, when it stated “Courts may not allow constitutional violations to continue simply because a remedy would involve intrusion into the realm of prison administration.” Replace “prison administration” with “fiscal matters” and we have the debt ceiling crisis.

But isn’t the Court supposed to stay out of issues committed to the political branches under the so-called political question doctrine? What could be more inherently political than a political showdown between the two democratically elected branches of government over fiscal policy?
This is true, to an extent. If the matter was one of a political debate over whether to engage in a new spending program, such an argument would be persuasive. With the debt ceiling, however, the political branches have painted themselves into a proverbial corner. By issuing debt and authorizing spending, the political branches implicated Constitutional protections they need not have. But once implicated, the fact that a political fight leads to the violation of these protections should not cloak the Constitutional violation behind the veil of the political question doctrine.

In an ideal world the political branches would solve the debt ceiling crisis on their own, recognizing that honoring the federal debt is a core commitment of the country. After all, part of the founding compromise soon after the ratification of the Constitution was for the federal government to assume the debts of the states incurred during the revolution, and part of the reconciliation after the Civil War was to mandate that the public debt not be called into question in the Constitution. But if the political branches can’t, or won’t, honor these commitments, the federal courts should.
Perhaps the Article III fiscal power has not been recognized until now because scholars assumed that a debt ceiling case would never get to the Supreme Court. Or perhaps some scholars did not equate the existing inherent powers of the courts as functionally equivalent to the government’s fiscal powers.
Regardless, in the face of the current debt crisis the recognition of a robust, but limited and well-demarcated, Article III fiscal power could potentially offer a way out of the policy and political stalemate facing the country. If both Congress and the president knew that failing to raise the debt ceiling would invite five justices of the Supreme Court to choose how to fund the government, the odds of a stalemate would likely reduce dramatically.
Perhaps the mere recognition of the existence of such a power could itself force the government out of its current rut, permitting the government to properly function once again within the Constitutional framework.

Adam H. Rosenzweig is a professor of law at the Washington University School of Law in St. Louis, and he concentrates his research and teaching in the area of tax law and policy. His latest research paper, “The Article III Fiscal Power,” is available on the Social Science Research Network.

There is no doubt in my mind that Obama would unilaterally raise the ceiling rather than go into default, and let the legal chips fall where they may.....

 

[Steve Williams]

There is no doubt in my mind that Obama would unilaterally raise the ceiling rather than go into default, and let the legal chips fall where they may.....

'would' or will

 

[edorr]

'would' or will

It is a toss up at this point. I'm still leaning towards "would".

 

[Steve Williams]

A Government Default is Illegal: This is Why.......

http://www.mainstreet.com/article/moneyinvesting/credit/debt/government-default-illegal-why?page=1

 

[JackD201]

The next question will be who will want to lend the US more and for how much.

 

[mauidan]

"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure.

It is a sign that the US Government cannot pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies.

Increasing America's debt weakens us domestically and internationally. Leadership means that, 'the buck stops here.'

Instead,Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren.

America has a debt problem and a failure of leadership.

Americans deserve better."

Senator Barack H. Obama, March 2006

 

[Randy Bessinger]

Looks like (hopefully) the govt will reopen and the debt ceiling raised until at least next year...
FWIW, I read 8% of the debt is owed to the Chinese.
My opinion is that Obama's vote was more symbolic and political when he voted against raising the debt ceiling. I believe Obama is a politician but also a pragmatist. I believe the tea partiers HATE federal govt. To me they aren't generally libertarian though as they kind of love that social intervention the fed can bring to their lives...like abortion, drug enforcement, etc. It appears that the tea party is not going to get their way, however, they probably should be grateful. When social security checks started being delayed the **** would have hit the fan and even it the tea party districts. Almost everyone except the very rich have relatives, patients, friends etc that would have been impacted not to mention the stock market would have really tanked. The market was smart enough to know that there are still some sane people in the govt.

 

[Randy Bessinger]

"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure.

It is a sign that the US Government cannot pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies.

Increasing America's debt weakens us domestically and internationally. Leadership means that, 'the buck stops here.'

Instead,Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren.

America has a debt problem and a failure of leadership.

Americans deserve better."

Senator Barack H. Obama, March 2006

But, but I thought he was a socialist

 

[Gregadd]

The government is open and the debt ceiling has been raised

 

[mauidan]

But, but I thought he was a socialist

He is, but he's also a great liar.

Read Edward Klein's book, The Amateur

 

[JackD201]

This exchange got me in trouble when I was in your equivalent of 9th grade.

Teacher: Why, in this day and age are there so many rightists in government?

Me: They start out on the left, win, then go right.

My teacher wasn't amused. Fortunately, the Principal thought it was funny!

 

[Phelonious Ponk]

Looks like (hopefully) the govt will reopen and the debt ceiling raised until at least next year...
FWIW, I read 8% of the debt is owed to the Chinese.
My opinion is that Obama's vote was more symbolic and political when he voted against raising the debt ceiling. I believe Obama is a politician but also a pragmatist. I believe the tea partiers HATE federal govt. To me they aren't generally libertarian though as they kind of love that social intervention the fed can bring to their lives...like abortion, drug enforcement, etc. It appears that the tea party is not going to get their way, however, they probably should be grateful. When social security checks started being delayed the **** would have hit the fan and even it the tea party districts. Almost everyone except the very rich have relatives, patients, friends etc that would have been impacted not to mention the stock market would have really tanked. The market was smart enough to know that there are still some sane people in the govt.

I think the tea party is not of one voice, and some of them are libertarians, some are social conservatives, etc... And I think this loss is the best thing that could have happened to them in this scenario. Continued shut down, default, would have ended them as a significant influence and may have taken the GOP with them. As it stands, they're badly discredited, but will probably survive this.

Tim

 

[edorr]

I think the tea party is not of one voice, and some of them are libertarians, some are social conservatives, etc... And I think this loss is the best thing that could have happened to them in this scenario. Continued shut down, default, would have ended them as a significant influence and may have taken the GOP with them. As it stands, they're badly discredited, but will probably survive this.

Tim

Libertarianism and religiously inspired social conservatism are logically incoherent political positions, making the Tea Party an essentially schizophrenic movement. At a bigger scale, this incongruence is making the GOP a non long term viable political outfit. In Europe, they would split into a religious party and an libertarian party and govern through coalitions.

 

[FrantzM]

Libertarianism and religiously inspired social conservatism are logically incoherent political positions, making the Tea Party an essentially schizophrenic movement. At a bigger scale, this incongruence is making the GOP a non long term viable political outfit. In Europe, they would split into a religious party and an libertarian party and govern through coalitions.

THis could well happen here too. They are taking their distance from each other. The problem being that they need each other , else they would be essentially toothless paper tigers.

 

[asiufy]

This exchange got me in trouble when I was in your equivalent of 9th grade.

Teacher: Why, in this day and age are there so many rightists in government?

Me: They start out on the left, win, then go right.

My teacher wasn't amused. Fortunately, the Principal thought it was funny!

So, so true.



alexandre

 

[rblnr]

THis could well happen here too. They are taking their distance from each other. The problem being that they need each other , else they would be essentially toothless paper tigers.

They're not toothless until the money stops flowing to them, and they've done a lot of damage. Until we get checks on spending, and by that I mean campaign finance/lobbying spending, these things will continue.

 

[edorr]

THis could well happen here too. They are taking their distance from each other. The problem being that they need each other , else they would be essentially toothless paper tigers.

I am surprised some ambitious billionaire (think Bloomberg type) has not stepped in yet to create a well funded centrists party, completely distancing himself from the religious faction of the GOP, and catering to the centrists in the democratic party alienated by Obama's (perceived or real) push to turn America in a European style social democracy. I know a lot of people that would sign on in a heartbeat. What better way to create a lasting legacy that saving America from itself and dysfunctional polarized politics.

 

[Gregadd]

Ultimately the speaker had to form an alliance with the democrats to reopen the government. The Tea Party never came to its senses.

 

[andromedaaudio]

Well europe is not a democracy anymore, its now ruled by non elected bureaucrats in brussel cashing in big salaries and virtually paying no taxes.
Norway and switzerland are good democratic examples, Norway has a major account surpluss no debt problems , the eu banks are zombie banks having enourmus amounts of greek spanish portugese bonds, if they had to take the losses today and write them off they are bankrupt

 

[Gregadd]

Europe is not a country