Why Proposal to Repeal Debt Ceiling Is Unconstitutional
Senior Editor, CNBC.com
A proposal by Congressman Jerry Nadler and five fellow House Democrats to abolish the debt ceiling doesn't pass constitutional muster.
Nadler's bill would replace the current law, which sets a maximum debt level and requires Congressional approval for raising that level, with the following: "Obligations may only be issued under this chapter to fund commitments incurred by the Federal Government that require current funding."
That is, the debt limit would be transformed from a certain amount to a limit on timing. The Treasury could only borrow to meet commitments incurred that require "current funding." This means that the Treasury Department could not, for instance, borrow in excess of current needs just because interest rates are low. No slush fund for future obligations could be created.
That's better than an open-ended authorization for the President to borrow. But it still goes too far in abdicating Congressional responsibility for the debt.
Congressional responsibility for borrowing comes from Article I, Section 8 of the Constitution. Here's how that Section begins:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow money on the credit of the United States;
If it were constitutionally acceptable for Congress to abdicate its responsibility for approving specific amounts borrow, it would also be constitutionally acceptable for Congress to abdicate its responsibility for taxes. Surely proponents of repealing the debt ceiling do not believe that Congress could simply authorize the Treasury to tax at whatever level and in whatever ways the Treasury thinks are needed to meet "commitments…that require current funding."
Perhaps they do believe that a general authorization to tax to meet obligations would be appropriate. Certainly it seems very hard to distinguish why a general authorization to borrow to meet obligations would be permissible but not a general authorization to tax. Why would the almost identical language in the same part of a statute mandate specific tax provisions from Congress but not specific debt provisions. Will Nadler oppose the tax ceiling next? (Again: maybe!)
Similarly, it has always been the practice of the U.S. government that Congress does not grant blanket spending power to the President. Rather, Congress creates programs, agencies, offices of all sorts and then, separately, appropriates funds for these under different bills.
This has often resulted in instances in which the executive branch or administrative agency has complained that Congress is under-funding a mandated action. The Securities and Exchange Commission, for example, often claims that Congress is underfunding the agency.
So why do we limit the executive branch to spending appropriated by the legislative branch? Because this is is constitutionally required by Article I, Section 9's seventh clause, which reads: "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." This has always been interpreted as requiring specific appropriations.
That is to say, a Congressional mandate to the executive branch to improve the world in some way is not enough to authorize the President to spend money to carry out this mandate. Spending requires an additional action by Congress appropriating the funds. Even if a President believes that Congress has violated the Constitution by failing to provide for spending—say by short-changing the military so that it cannot provide for "the common defense"—the President cannot spend without Congressional authorization.
Under the logic of the debt opponents, shouldn't Congress be able to unburden itself from appropriations as well? The Treasury could just receive blanket authorization from Congress to appropriate funds to meet "commitments that require spending." Why don't we Nadlerize spending also?
The logic of the opponents of the debt ceiling is that Congress implicitly approves borrowing when it votes for spending and taxing laws. By this same logic the President should have the power to tax unilaterally based on spending authorizations and borrowing limits. Likewise, the President should have spending powers based on directions to federal agencies in the absence of legislative appropriations.
This isn't the logic of the Constitution's framers, who built a system in which Congressional mandates do not imply a power to spend, in which appropriations do not imply a power to tax, and in which neither mandates nor appropriations imply a power to borrow. Each requires distinct, specific Congressional authorization.
The framers built this around a revolutionary idea: that these powers, which had so often been held by kings, should be held by legislatures. Authority that still rests in the hands of the executive branches of government across much of the world is, in the United States, in the hands of legislators.
This cannot be undone with a bill. It would require a constitutional amendment. And, of course, a rejection of the framers's wisdom about who should have the power to borrow on the credit of the United States.
Follow me on Twitter @Carney