Another Way Around the Debt Ceiling Problem?

When Michael McConnell speaks on constitutional law, people listen, as well they should. And he says that the argument that the President can unilaterally issue new debt is “bunk,” for basically the same reason that Andrew Grossman said a few days ago: only Congress has that power. That in and of itself is arguable, but let’s assume it for the sake of argument here.

Unlike Grossman, however, McConnell has an answer for what the Public Debt Clause means: if the President can’t issue new debt, how can he ensure that the government doesn’t go into default? Easy, says McConnell: he can make unilateral spending reductions in order to pay off the bondholders:

At most, it means that paying the public debts and pension obligations of the United States, as they become due, has priority over all other spending. Each month, the Treasury takes in about $175 billion in new revenues. These are more than sufficient to pay principal and interest when due, as well as pension obligations…

If we reach the debt limit, the Treasury will be compelled to reduce spending (other than payments on the public debt and pensions) to bring current expenditures in line with current receipts, just as a family has to do when it has maxed out on its credit cards.

This argument isn’t necessarily wrong, but it creates as many problems as it solves. In Clinton v. New York, the Supreme Court struck down the line-item veto, arguing that the President is not allowed to pick and choose among provisions of a duly enacted piece of budget legislation even if Congress has given him to power to do so. So what McConnell appears to be arguing is that the President can pick and choose between spending only if Congress has not authorized him to do so, and in fact, by previously passing spending measures, has instructed him to spend it. That hardly makes sense.

Undoubtedly, McConnell would argue that impounding money is different from vetoing appropriations. To my mind, this would come perilously close to failing the laugh test. A President would say, “I’m not vetoing this spending, you understand: I’m just refusing to spend it.” That’s the sort of thing that gives lawyers a bad name.

The right-wing position now appears to be that the best and least disruptive way to read the Public Debt Clause is to shut down large sections of the Government instead of maintaining the status quo. Whatever that might be, it certainly isn’t conservative.

UPDATE: Even without Clinton v. New York, McConnell’s recommendation that impoundment can cure the Public Debt Clause has constitutional problems. Richard Nixon wanted to impound money that Congress had appropriated, but was told by his OLC head that the President lacks the constitutional power to impound funds. That OLC head was famed bleeding-heart left-winger William H. Rehnquist.

Rehnquist did conclude, interestingly enough, that the President might be able to impound funds for national security and foreign affairs. So the conservative position at this point boils down to massive Defense Department cuts. Hmmm….

[Cross-posted at The Reality-Based Community]

Jonathan Zasloff

Jonathan Zasloff is a professor of law at the University of California, Los Angeles.