TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, October 3, 2013

NY Times Debate: Can Obama Ignore the Debt Ceiling?

NY Times Room for DebateNew York Times Room for Debate:  Can Obama Ignore the Debt Ceiling?:

As the government shutdown continued on Wednesday, President Obama not only urged an end to that impasse but also asked Congressional leaders to avoid a showdown later this month on increasing the nation’s borrowing limit.

But a growing number of observers have said the president can and should ignore the debt limit, legislation that some say was never intended to inhibit borrowing.

Can President Obama unilaterally ignore the debt ceiling and issue debt after the limit has been reached to keep the government running?

  • Akhil Reed Amar (Yale Law School), GOP Stand on Debt Gives Checkbook to Obama:  "If you are trying to play the hostage game, it generally makes sense to point the gun at someone else’s head, not your own."
  • Dorothy A. Brown (Tax Prof, Emory Law School), Keep the Judges Out of It and Keep Negotiating:  "If the President acts unilaterally, it will be the last decision he will make on this issue. Courts will be calling the shots after that."
  • Elizabeth Price Foley (Florida International University Law School), Only Congress Can Raise the Debt Ceiling:  "The word "debt" in Section 4 of the 14th Amendment refers only to bonds and similar debt instruments. It does not include statutory "obligations.""
  • James K. Galbraith (University of Texas, Lyndon B. Johnson School of Public Affairs), Government Doesn't Have to Borrow to Spend:  "When the Treasury writes a check, a bank credits an account. That's money creation. Treasury bonds absorb money, but aren't needed."
  • Thomas Geoghegan (Despres, Schwartz & Geoghegan, Chicago), Creditors' Power Exceeds the Preident's:  "Bondholders, contractors and states who expect payment from Washington should sue to overturn the debt ceiling as illegal and unconstitutional."
  • Eric Posner (University of Chicago Law School), Emergency Powers Let the President Borrow:  "Hamilton and Jefferson believed the president could act unilaterally to address serious threats not anticipated by the Constitution's framers."

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An interesting angle on this is that if Obama DOES issue bonds amid this controversy, their market price will reflect the market's view of the Constitution (or at least of what the Supreme Court will do). Also, expert consultants on the law will be able to charge extremely high fees--- but only if the companies think they are genuinely giving their best estimate of what will happen rather than trying to influence what happens.

Posted by: Eric Rasmusen | Oct 3, 2013 12:57:47 PM

The synopsis in the next post re: George & Yoon: The Labor Market for New Law Professorsis nicely illustrated by this post, especially Eric Posner's contribution.

Posted by: Yo Gabba Gabba | Oct 3, 2013 1:46:04 PM

A moot point. He won't, because if he did, that would give the right-wingers the excuse they need to impeach him. Then we'd be off on that tangent--again.

Posted by: Publius Novus | Oct 4, 2013 8:32:59 AM