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Monday, October 26, 2015

Multiplying Loaves and Fishes: Why Congressional Debt-Ceiling Brinkmanship May Plunge Us into Economic Depression and How President Obama Can Save Us from Going Back to the Breadlines

The following post is by Jessica Berch and Chad DeVeaux (both of Concordia). They will be guest-blogging in December. But the timing of the new debt-ceiling debate made an early post appropriate.

The Gospels tell us that Jesus multiplied “five loaves and two fishes,” providing a bounty sufficient to feed 5,000 hungry souls. Apparently, House Republicans expect President Obama to perform a similar miracle. On November 3, the Treasury will exhaust its funds. If Congress does not raise the debt ceiling by that date, authorizing the Government to borrow money, the nation may face an unprecedented economic cataclysm. 

As New York Magazine’s Jonathan Chait has observed, only “the most ideologically hardened or borderline sociopath” would “weaponize the debt ceiling”; to do so, one “must be willing to inflict harm on millions of innocent people.” Bloomberg Business explained that a federal default would be orders of magnitude worse than the Great Recession of 2008: “The $12 trillion of outstanding Government debt is 23 times the $517 billion Lehman owed when it filed for bankruptcy on Sept. 15, 2008.”

Following up on earlier work, The Fourth Zone of Presidential Power, (Conn. L. Rev.), we are writing an article entitled Once More unto the (Fiscal) Breach, addressing the president’s options in this latest crisis. 



Federal statutes command the president to implement a myriad of programs and projects. Other laws instruct him to obtain the revenue necessary to subsidize these endeavors by collecting taxes and borrowing funds. The debt-ceiling statute caps the amount of money the Government can borrow at any particular time. Based on the level of revenue the Government is permitted to collect through taxation, basic arithmetic dictates that the president will need to borrow funds exceeding the debt limit to comply with Congress’s appropriation mandates.

If Congress does not raise the debt-ceiling by November 3, the president will face a no-win scenario that Professors Neil Buchanan and Michael Dorf have coined the “trilemma.” He will be forced to choose among three options. He may: (1) ignore the appropriations statutes and cancel spending programs; (2) employ the so-called “nuclear option”—disregard the debt ceiling and borrow sufficient funds to pay for Congress’s appropriations; or (3) unilaterally raise tax rates to produce sufficient revenue to fund Congress’s appropriations. Each of these choices violates an express statutory command.

And each of these choices is also implicitly authorized by the other commands. The power “to execute” a law “impl[ies] many subordinate and auxiliary powers,” including “all authorities essential to its due exercise.” Hamdan v. Rumsfeld, 548 U.S. 557, 591 (2006).

Professors Buchanan and Dorf argue that any choice the president makes will violate the Constitution “because he will have failed to execute at least one duly enacted law of the United States.”  As Professor Buchanan recently noted, “He has nothing but unconstitutional choices.”

We disagree.

The true test of the president’s options in the trilemma lies within the labyrinth of Justice Jackson’s seminal opinion in the Youngstown Steel Seizure Case. As the Supreme Court reaffirmed last June, “in considering claims of Presidential power this Court refers to Justice Jackson’s familiar tripartite framework . . . .” Zivotofsky v. Kerry, 135 S. Ct. 2076, 2083 (2015). Evaluation of the president’s options in the impending standoff constitutes a paradigmatic question of the scope of presidential power.

In Youngstown, Justice Jackson asserted that “presidential powers are not fixed but fluctuate, depending upon their disjunction or conjunction with those of Congress.” He offered his famous three-zone template to evaluate the scope of executive power.

In the first zone, “the president acts pursuant to . . . express or implied” congressional authorization. Endowed with such legislative approval, the president’s power “is at its maximum, for it includes all that he possesses in his own right plus all that Congress can delegate.” In the second zone, “the president acts in absence of either a congressional grant or denial of authority.”  In this “zone of twilight,” Congress and the president possess authority that is either “concurrent” or “its distribution is uncertain.” Zone three involves situations where “the president takes measures incompatible with the express or implied will of Congress.” Here, “his power is at its lowest ebb, for . . . he can rely only upon his own constitutional powers minus any constitutional powers of Congress over the matter.”

At first blush, each of the president’s three options appears to fall into the third zone of Justice Jackson’s taxonomy. Short of multiplying loaves and fishes, every conceivable alternative—unilaterally cancelling federal programs, increasing taxation, or borrowing more money—stands in direct conflict with an express congressional command. Article I bestows the powers to “tax,” “spend,” and “borrow” exclusively upon Congress. Thus, such authority is far removed from those plenary powers that the president may wield irrespective of congressional will.  

Professor Lawrence Tribe echoed this reasoning, noting that “the president’s power drops . . . to its ‘lowest ebb’ when exercised against the express will of Congress.” So, “if the president could usurp the congressional power to borrow, what would stop him from taking over all [of Congress’s] other powers, as well?”

Again, we disagree. On closer examination, the standoffs do not fit within any of the zones identified by Justice Jackson.

Professors Tribe, Buchanan, and Dorf analyze each of the president’s options and Congress’s corresponding legislative commands in isolation. But this view ignores the more nuanced conception of presidential power implicit in Justice Jackson’s framework. As Jackson observed, “the actual art of governing under our Constitution does not and cannot conform to judicial definitions of the power of any of its branches based on isolated clauses or even single Articles torn from context.” For this reason, the Court unanimously recognized in Dames & Moore v. Regan, that in applying Youngstown’s principles, when multiple statutes bear upon the president’s powers, the scope of his authority cannot be gleaned by looking at any single law in isolation, but from careful consideration of “the general tenor” of all of Congress’s commands viewed collectively.

Justice Jackson’s three zones contemplate coherent legislative action falling within “a spectrum running from explicit congressional authorization to explicit congressional prohibition.” Congress may sanction presidential action, it may be silent on the subject, or it may prohibit it. Congressional acts in conformity with any of these three coherent choices will affect the president’s powers accordingly. But in the impending trilemma, Congress’s acts—viewed collectively—present the president with a paradox. Congress has directed the president to take specified action and simultaneously forbade him from taking that very same action. Such contradictory legislative instructions cannot find a home anywhere within Youngstown’s existing taxonomy. As such, the present standoff requires the expansion of Youngstown’s spectrum to accommodate a previously uncontemplated fourth zone of presidential power. 

So what principles should apply in this new fourth zone of power?

Dames & Moore recognized that congressional action “evinc[ing] legislative intent to accord the president broad discretion may be considered to ‘invite’ ‘measures on independent presidential responsibility.’” In cases falling within the traditional three-zone scheme, such legislative conduct is only considered “pertinent when the president’s action falls within the second [zone]—that is, when he ‘acts in absence of either a congressional grant or denial of authority.’” Medellín v. Texas, 552 U.S. 491, 528 (2008). This is so because when Congress commands the president to undertake (or refrain from undertaking) a particular action, the Constitution normally affords him no discretion. He “must confine himself to his executive duties—to obey and execute, not make the laws.”

But when Congress gives the president contradictory commands, the president cannot simply “obey and execute” Congress’s instructions; obeying one command necessarily requires disobeying another. For this reason, zone two’s invitation principle should be applied in the fourth zone of the Youngstown scheme. Contradictory legislative instructions, by their nature, implicitly “accord the president broad discretion.”

The president’s plenary power “to execute” a law promulgated by Congress “impl[ies] many subordinate and auxiliary powers,” including “all authorities essential to its due exercise.” And “it is a flawed and unreasonable construction” to read the Acts of Congress “in a manner that demands the impossible.” Thus, when Congress commands the president to complete a particular task but expressly denies him those powers “essential to its due exercise,” the only way to construe these conflicting legislative instructions in a manner that does not “demand[] the impossible” is to infer a congressional intent to “accord the president broad discretion”—to entrust him to make tradeoffs to best accommodate the conflicting mandates.

In the trilemma, the interaction between the debt-ceiling statute and the relevant taxing and spending laws render compliance with all three statutory mandates impossible. Congress commanded the president to complete a task—implement specified programs—but denied him the “authorities essential to its due exercise”—the power to acquire sufficient revenue to pay for the mandated expenditures.

Because statutes are not interpreted “in a manner that demands the impossible,” “the general tenor” of Congress’s commands, read collectively, inherently “‘invite’ ‘measures on independent presidential responsibility.’”

Since the president cannot fully comply with all of Congress’s commands, the statutory impasse invests the president with discretion to implement any of the three options addressed above. He may cancel federal programs to reduce spending, direct the Treasury to borrow funds in excess of the debt ceiling, or even order modest tax increases to satisfy the Government’s fiscal obligations. But he should not stand idly by and allow Congress to plunge us into a Global Economic Depression.

Posted by Howard Wasserman on October 26, 2015 at 11:01 AM in Constitutional thoughts, Current Affairs, Law and Politics | Permalink

Comments

Fair enough. Thanks for the responses.

Posted by: brad | Oct 27, 2015 12:01:24 AM

Thanks. See there was help on both sides.

Posted by: Joe | Oct 26, 2015 10:06:25 PM

Joe,

We’ve discussed our views with Professors Buchanan and Dorf. They’ve been very helpful. Here’s the response that Professor Buchanan posted in Dorf on Law. http://www.dorfonlaw.org/2014/11/the-debt-ceiling-after-midterms.html

Posted by: Jessica and Chad | Oct 26, 2015 7:44:06 PM

Brad,

We agree that if the statute empowers the Treasury to actually mint a multi-trillion dollar coin, the trilemma disappears because we have one option in zone 1 (mint the coin) with all other options falling into zone 3 (raising taxes, borrowing more money, or canceling programs). But we still don’t “buy” the argument. We just don’t think that the platinum-coin provision, when read in context with the statute as a whole, actually authorizes such an act. The challengers’ reading of the ACA’s authorization of “exchanges established by the State” in King v. Burwell was much more plausible than the trillion-dollar coin option—and their reading lost. The platinum-coin statute is intended to authorize commemorative coins. Such coins are sold at a price above face value to raise proceeds. Here, would the Treasury issue a $5 trillion coin and sell it for $10 trillion—then use the proceeds to save us from the proverbial (or maybe literal) breadlines? Who would be in the market for such a coin? Because, in our view, the statute does not authorize issuing such a coin, the president has no first-zone options, thus thrusting him back into the trilemma.

Posted by: Jessica and Chad | Oct 26, 2015 7:40:29 PM

Did you pose this argument to Professors Neil Buchanan and Michael Dorf?

I continue to think this is an intriguing thought experiment as applied to the debt ceiling issue but appreciate your analysis. The coin idea always seemed silly to me. This isn't quite determinative but let's say it is to me a strong rebuttable presumption. The fact that doing the work would show it is not reasonable doesn't surprise me.

Posted by: Joe | Oct 26, 2015 7:23:49 PM

First an apology, because of a hasty reading I attributed Buchanan & Dorf's position on the "coin" (on page 45 of their paper) to you.

To the meat of your response: I certainly don't think it is a great option practically or legally. But it would hardly be the first time this administration (and other administrations) stretched a statute. The Libya War Powers Act argument was quite weak, as was the Al-Akawi 'imminent means ongoing' argument.

I guess the relevant question are: are we really in the posited fourth zone if there is a facially plausible (if weak) alternative that would reconcile the conflicting laws? And if not, what role do practical consequences play in whether or not this alternative must be chosen?

Posted by: Brad | Oct 26, 2015 4:44:40 PM

Brad,

Thank you for your provocative comment. We didn’t address the “trillion-dollar coin” option because of space restrictions. We think this theory is based on a flawed reading of the statute.

The platinum coin argument turns on 31 U.S.C. § 5112(k). Admittedly, read in isolation, this provision seems to literally empower the Treasury to mint platinum coins of any denomination. But this reading ignores the Supreme Court’s recent admonitions that “a fair reading of legislation demands a fair understating of the legislative plan” and that a construction of a statutory provision that “seems plain when viewed in isolation” must be rejected if the reading in question “turns out to be untenable in light of the statute taken as a whole.” King v. Burwell, 135 S. Ct. 2480, 2495-96 (2015).

The provision in question was enacted as part of a bill “to reform the commemorative coin programs of the United States Mint.” www.gpo.gov/fdsys/pkg/BILLS-104hr2614rfs/pdf/BILLS-104hr2614rfs.pdf. “Congress authorizes commemorative coins that celebrate and honor American people, places, events, and institutions.” http://www.usmint.gov/mint_programs/?action=commemoratives. They “are not minted for general circulation,” but rather sold at a price exceeding their nominal face value in order to fund “organizations and projects that benefit the community,” such as the “new visitor center under the U.S. Capitol’s East Plaza.” Id.

What piece of Americana would this $13 trillion coin “commemorate”—the seven-year anniversary of the Great Recession?

While the trillion-dollar-coin theory facially appears to be “a fair reading of” 31 U.S.C. § 5112(k) when read in isolation, it fails because this construction “turns out to be untenable in light of the statute taken as a whole.”

Posted by: Jessica and Chad | Oct 26, 2015 4:08:43 PM

I'm unconvinced by their dismissal of the "mint the coin option". More so because I find their positive claims that it would be disastrous (as compared to other options) than because I find their threshold constitutionality argument unpersuasive.

Posted by: Brad | Oct 26, 2015 2:15:43 PM

This seems right to me.

Posted by: Jack | Oct 26, 2015 12:54:12 PM

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