Before I begin, I would like to disclaim that I am not a Constitutional lawyer nor do I pretend to be. But I am an avid reader, one who has read a lot of literature surrounding the pre-Civil War through Reconstruction period. The “mood” of the country, including its values about government, is richly portrayed in these works. I can also read the Constitution, especially the plain language parts that have not been seriously mangled by case law.
Since the end of the mid-term elections last year, the media and Tea Party have been debating this issue of the debt ceiling, mostly as a taunting device against the Tea Party debt and deficit ideology. It made for a good story line of hypocrisy. Most Americans had never heard of such a thing before this, but it sounded bad. Real bad. And for the Tea Party, it also sounded like something that could be used for political leverage.
But since few Americans have ever read the Constitution, fewer still have any idea what the issue is really about. The issue has nothing to do with debt or deficits; it has everything to do with the separation of powers. Congress needs to avoid forcing the Supreme Court to “fix” a glaring hole that House Speakers have been successful at covering over since 1787.
John Boehner knows that. So does president Obama. And by sending a letter to the Speaker in January asking for a clean debt ceiling vote, Timothy Geithner demonstrated that he also supected how the markets would react if it were ever seriously brought to their attention.
And the Tea Party has done just that. Oops. Really, really big oops.
The Constitutional issue:
Article I, Section 8 gives Congress the “Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts” and “To borrow Money on the credit of the United States.” In short, it gives Congress and Congress alone the power to tax, pay debts and borrow. Despite what the Republicans would like all of us to believe, the president has no taxation, spending or borrowing power. Zip, nada, nothing.
Article 1, Section 9 says specifically, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” That means that not even one dollar can be spent that is not appropriated by Congress. The president may have a discretionary budget for the various executive branches, but all of them exist and get paid for through the laws Congress passes.
The US Treasury is responsible for managing the money and cutting the checks, but it can only do so under the authority of the Congress. Blaming the president for spending is like beating up the newspaper boy for bringing me a paper with bad news in it. It is dumb and misdirected. But, since he is right there, he’s smaller than me, and there is only one of him, not 535, it is easier to focus my rage. The bottom line is the president has no legal authority to spend money the Treasury does not have.
Or does he?
The Constitution makes no mention of what to do if the Federal Government has run up bills because of laws enacted by Congress for which there is no money to pay. The Constitution says that only Congress can borrow money, but it does not obligate them to make sure money is there.
But then along came the Fourteenth Amendment that cemented the obligation of the United States to pay its bills for laws enacted by Congress. “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” Still, it does not spell out specifically what to do if the United States Treasury runs out of money.
That, specifically, is the glaring hole raising the debt ceiling covers over and has for a very long time. Neither the Congress nor the President really wants the Supreme Court to decide how to fix this Constitutional issue. For each branch, it would be ceding power to the third branch; something that is even more loathsome to Republican legislatures (actually, all of them regardless of their party) than taxes.
More than likely, the Supreme Court would rule to compel Congress to act by either raising taxes or borrowing money to cover the shortage. And the debt ceiling approval from Congress would be lost forever as leverage. The House does not want to risk that.
But the Supreme Court could also rule that the Treasury Department can continue cutting checks without the approval of Congress, adopting the Gephardt Rule that had long been in place as law. Basically, the Gephardt Rule says by default, Congress is authorizing an increase in the debt ceiling when it enacts a new law. (More complicated than that, but you get the general notion. Google has more info.) That would put the president in the undesirable position of being responsible for increasing the debt and deficit of the United States of America. No more blame game. It would also destabilize the “borrow” powers, much like “declare war” and “wage war” is right now. Congress does not want to risk that.
The effect of pledges
I always found it somewhat perplexing that George W. Bush did not advocate to raise taxes after 9/11 to fund the War in Afghanistan when he clearly had the political capital to do so. Instead, Congress opted to borrow the money, mostly by selling US Treasuries to China. As it turns out, since most Representatives and Senators signed Grover Norquist‘s Taxpayer Protection Pledge, raising taxes was not politically possible. But borrowing money was. The pledge allowed for drunken spending by incurring unsustainable debt, but not increased taxes.
That was the first major step in plunging the United States into the debt it now finds itself. Add another unfunded war, Iraq and Medicare Part D on borrowed funds coupled with revenue reductions that Bush tax cuts created , the largely unregulated banking and mortgage industries and in short order, you clearly have a growing debt issue that is not easy to hide.
Follow the money
The first Secretary of the Treasury, Alexander Hamilton understood the United States of America was only as powerful as its ability to pay its debts. As a new country, the States could bluster all they wanted about life, liberty, pursuit of happiness, blah, blah, blah, but if it could not pay its debts, none of that mattered. The policy has held up well throughout history. We are after all, a market-driven race, sprinkled here and there with altruism. Sparingly.
But times have changed. The stock markets have gotten more global. There is no patriotism in corporations, only profit. The goal is to make money, whether you bet on or against the US Government. From what we have learned with the collapse in 2008, a lot of people can make a lot of money betting against the United States.
What has held and made Congress blink first in years past when the debt ceiling card was played with the threat of the Constitutional hole being exposed and the ability of the president to be able to clearly articulate the issue to the American people. Newt Gingrich tried it and quickly learned how skilled Bill Clinton was in talking plain language with ordinary folk. George Bush was never really challenged on raising the debt ceiling as he operated mostly with a GOP Congress, bound by the Norquist pledge.
But Barack Obama was something new. The GOP leadership — while apprehensive about going to the mat on the the debt ceiling issue — gambled that Obama would not be able to articulate the issue clearly enough to get the American people on his side. And they are kinda right. But what the “mature” GOP leadership did not understand fully is how cancerous and ideological the Tea Party would be.
I’m not sure if the legislators the Tea Party got elected are oblivious on the Constitution, are singularly focused on debt, deficit and taxes to the exclusion of their other responsibilities or are just stooges for the greater monied bosses that got them elected. I don’t believe in conspiracy theory, but I do believe in the power of mobs and the infectious contagion of simple ideology in favor of nuanced, reasoned thought. We are, after all, the country of fast food, the sound byte, CNN Headline News, Twitter and Snooki.
But the markets have become spooked, whether by sheer stupidity brought on by ignorance of the Tea Party-backed legislators or a long-formulated master plan I don’t know. And since we have ceded power of our credit over to the world-wide credit rating agencies (and kinda pissed them off with things like Dodd Frank) the great power of the United States of America is no longer really in charge of its own destiny.
What I do know is to follow the money and to ask who is likely to profit exponentially from the credit downgrading of the United States of America. I’m sure that is where we will eventually find our answer to what is really motivating the Tea Party, whether they are complicit or not.