Section 4 of the 14th Amendment to the U.S. Constitution states that "the validity of the public debt of the United States ... shall not be questioned."
Wait, what? How then is the U.S. government, stalled in a shutdown, facing default?
What is happening in Washington D.C. today is exactly the scenario section 4 of amendment 14 seeks to prevent. After the Civil War, Congress and the States ratified the 14th Amendment to prevent reintegrated Southern politicians from seeking to block payment of debts incurred to fund the Union's war effort. The amendment, in essence, sanctifies in letter and spirit the government's promise to pay its obligations. A U.S. government promise to pay rises above the theater of day-to-day political gesturing.
Well, it does until a rogue subset of House Republicans decide it doesn't.
Tea Party Republicans are willfully and unambiguously violating the 14th Amendment to block the funding of legislation that was legitimately passed into law.
Obama's debt ceiling options?
Given this predicament, President Obama has a few options -- none of which are particularly palatable.
The best option is to find some way to work with House Majority Leader John Boehner and raise the debt ceiling. Obama has made it clear he has no intention of negotiating. In my view, that does not preclude any back office, behind-the-scenes conversation.
With mid-term elections now just a year away, the GOP is suffering massive damage to its image. This is providing Obama with the leverage to see his hard line negotiation tactics through.
A Quinniapiac poll this week showed that while American's are split about 50/50 on Obamacare itself, over 72% oppose the Tea Party's current tactics to block the law. The same poll reported that 74% of American's disapprove of the job that Congressional Republicans are doing.
Enter the nuclear option
Yes, Obama may be winning the battle of public opinion, but legally he remains stuck between a rock and a hard place.
If he does nothing, the Treasury will eventually default on a debt payment and the 14th Amendment will be violated. The problem for Obama with this outcome is that he solemnly swore to uphold the Constitution, as prescribed in Article 2.
How can the U.S. government raise the funds to make the payment and avoid default? There are two ways: via taxes or by borrowing money. The Constitution gives the right to do both to Congress, not to the Executive Branch.
To summarize, if Obama does nothing he is violating the Constitution. If he takes action and authorizes the Treasury to issue debt, he is violating the Constitution. Lose-lose situation if there ever was one.
To Columbia Law School professors Neil Buchanan and Michael Dorf, the answer is for Obama to take the "least unconstitutional" path and ignore the debt ceiling. By going nuclear, Obama would be ignoring the separation of powers between the Congress and Executive branches, and order the Treasury to issue new debt.
They summarize the conclusion by saying:
In short, while unauthorized issuance of debt would hardly be ideal, and would carry with it risks of financial and economic disruption, it would be a more rational and administrable process—to say nothing of a more limited expansion of presidential discretion—than enacting unauthorized spending cuts. For this and other reasons, it would thus be a less unconstitutional course than unilateral presidential spending cuts, because rationality and administrability are not merely practical considerations; they may bear on constitutionality. Other things being equal, a presidential course of action in an area of congressional primacy is on firmer constitutional ground where the president can follow Congress's priorities, rather than having to fashion his own in order to act coherently.
Governing when the government itself is held hostage
The consequences of going nuclear are impossible to predict. We can't know how the financial markets would react to legally unauthorized U.S. bonds (Buchanan and Dorf call them "Presidential Bonds"), and we certainly can not predict public reaction. It seems certain though that the reaction would be quite large, disruptive, and a significant distraction from much more significant issues.
Lest we forget that our economy remains stuck in first gear (and the engine is sputtering), or that we remain engaged in a global war on terrorism.
Its time for this debacle to end. We, as a nation, can not afford a nuclear option. Its time for the Tea Party to wake up to the reality of governing. The American people deserve better.
Understanding the national debt
The U.S. government has piled on more than $10 trillion of new debt since 2000. Annual deficits topped $1 trillion after the financial crisis. Millions of Americans have asked: What the heck is going on? The Motley Fool's new free report, "Everything You Need to Know About the National Debt," walks you through with step-by-step explanations about how the government spends your money, where it gets tax revenue from, the future of spending, and what a $16 trillion debt means for our future. Click here to read the full report!