On Thursday an overflow crowd of House Democrats—Rep. Rush Holt, who's been nursing an injury, had to hobble into the room on a crutch and sit with reporters and observers—gathered in a Capitol Hill hearing room. The object of their attention was a former Republican economist's views on the Constitution.
The economist is Bruce Bartlett, who pointed out in an April 29 column in the Fiscal Timesthat the president didn't need Congress's permission to raise the debt limit. "The debt limit is statutory law, which is trumped by the Constitution which has a little known provision that relates to this issue," Bartlett wrote. "Section 4 of the 14th Amendment says, 'The validity of the public debt of the United States … shall not be questioned.' " The way he read it, if Congress wouldn't raise the debt limit, the president could start creating debt anyway. "Constitutional history is replete with examples where presidents justified extraordinary actions by extraordinary circumstances."
The idea got the usual amount of attention accorded a Fiscal Times column—we can define this as less attention than a slide show about Michele Bachmann—but some of the right people did read it. In a late-May interview with Politico, Timothy Geithner held up a pocket Constitution with one page paper-clipped. He read out Section 4 of the 14th Amendment. He hinted that Republicans, who seemed to have all the leverage in the debt fight, might have none. Threatening default was "not a credible negotiating strategy, and it's not going to happen."
It looks like a paradox. The White House has a weapon on the shelf that can avert the whole debt fight. All that Democratic griping about the entitlement cuts that will be necessary as part of a deal with Republicans? All those Republicans demanding a balanced budget amendment, which would basically prevent Congress from ever raising taxes again? If Geithner is right, they're all irrelevant. If Reuters is right, Geithner is still considering this an option. After all, President Obama has been asked about it, and he's said, "I don't think we should even get to the constitutional issue," which is not the same thing as "no."
So how would the "constitutional option" work? It's deceptively simple. The government would keep auctioning off Treasury securities, as it has been doing, as if the debt limit didn't exist. Investors would consider just how much they cared about the unprecedented constitutional run-around they'd just watch happen. And Republicans, Bartlett said Thursday, would freak out.
"You're immediately going to have talk about impeachment," he said, pointing out that freshman Rep. Tim Scott, R-S.C., has already raised that possibility. "But I think this becomes more of a constitutional crisis than an economic crisis."Asked about it on Thursday, Sen. Ron Johnson, R-Wis. speculated that "our only option at that point would probably be taking [President Obama] to court."
That's worked for Republicans in the past. In 2010, when Democrats briefly suggested that they could "deem and pass" the Affordable Care Act without holding a vote in the Senate, state attorneys general (led by Virginia's Ken Cuccinelli) threatened to sue. Congress backed down. It's just not so clear now who could sue over a debt limit runaround. Congress could pass a joint resolution and start a legal process, but the Senate's run by Democrats. The House could start impeachment hearings, but those would be doomed, too. According to Jack Balkin, a professor of constitutional law at Yale and probably the most prominent legal advocate of the "option," the only clear legal path against Obama and Geithner would be a sort of Rube Goldberg scheme.
"If the president issued new debt," said Balkin, "and somebody purchased the bond on credit, and then refused to pay on the grounds that they discovered that the bond was worthless, then the person who sold the debt might sue for payment. The purchaser might then try to defend the refusal to pay on the ground that the bond was worthless because it was illegal. That would bring the constitutional question before the courts as a defense."
That's the risk the "constitutional option" crowd likes to think about. Garrett Epps, a professor of law at the University of Baltimore, showed up at Thursday's hearing and sat behind Bartlett. He described a binary choice—watching the United States default, or watching Republicans raise hell over the 14th Amendment. Which would investors prefer?
"I'd think a constitutional crisis in which they're getting their checks affects them less than a constitutional crisis in which they're not getting their checks," he said.