THE NEW DEBT CEILING AND BALANCED BUDGET AMENDMENT: DOING THEM RIGHT, MAKING THEM REAL – Part 1

By Anthony W. Hawks

By his own admission, the President’s primary objective in the recent debt ceiling debate was to ensure that it would not be repeated until after the 2012 elections. By all appearances, he has achieved this goal. No one can know for sure, of course, how long this deal will postpone the next debt ceiling debate – another Hurricane Katrina or 9/11 attack can always bust next year’s budget – but most press accounts believe that President Obama has pushed it off until 2013.

What we do know is that under the new Budget Control Act of 2011, the previous debt ceiling of $14.294 trillion was immediately raised by another $400 billion in exchange for $917 billion in promised reductions in future spending increases over the next 10 years (aka “spending cuts”). As for more debt ceiling increases, the President can certify another $500 billion increase by December 31, 2011, and a further $1.2 trillion increase in 2012.

This last increase of $1.2 trillion can go as high as $1.5 trillion if (i) Congress approves up to $1.5 trillion in additional “spending cuts” through 2021 (in which case the debt ceiling increase and spending cut totals are supposed to match), or (ii) Congress passes a joint resolution with the words “balanced budget amendment” in its title, the precise terms of which have yet to be worked out – sort of like the baseball equivalent of a “player to be named later.” All of these debt ceiling increases, except the immediate raise of $400 billion, can be disapproved by Congress, but only if a majority in both Houses affirmatively vote to disapprove. Any tie goes to the President.

Regardless of how this budget deal is implemented, we can all be grateful for the constitutional debate it has sparked over the Public Debt Clause, particularly how it has driven opponents of the debt ceiling to seek legal justifications for having President Obama borrow money without Congressional authorization if the debt ceiling were not been raised. The President wisely refrained from doing so, which would have caused far more damage to our Constitutional system of checks and balances than would have resulted from a failure to pay every obligation that Congress has foisted on the American taxpayer. Still, the mere fact that this argument gained traction in the media and legal academy underscores the premise of this blog (see Statement of Purpose), which is that the Constitution has been amended many times outside of Article V.

If the President had claimed the power to borrow money without Congressional approval and this action had been allowed to stand, then no less than five separate provisions of the Constitution would have been effectively amended, not just the Public Debt Clause that opponents of the debt ceiling want to rewrite:

1. The Revenue Origination Clause (Article I, Section 7, Clause 1) would have been amended from “All Bills for raising Revenue shall originate in the House of Representatives” to “All Bills for raising Revenue shall originate in the House of Representatives, except for Revenue that the President raises by borrowing Money without Congressional authorization.”

2. The Borrowing Clause (Article I, Section 8, Clause 2) would have been amended from “Congress shall have the Power … To borrow Money on the credit of the United States” to “Congress and the President shall each have the Power … To borrow Money on the credit of the United States, but Congress can only borrow Money by enacting a Statute that is subject to Presidential veto, while the President can borrow Money without any Congressional authorization.”

3. The Public Debt Clause (14th Amendment, Section 4, Clause 1) would have been amended from “The validity of the public debt of the United States, authorized by law, …, shall not be questioned” to “The validity of the public debt of the United States, whether or not authorized by law, …, shall not be questioned.”

4. The Enforcement Clause of the 14th Amendment (Section 5) would have been amended from “The Congress shall have the power to enforce this article by appropriate legislation” to “The Congress shall have the power to enforce this article by appropriate legislation, while the President shall have the power to enforce the first sentence of Section 4 of this article by executive order.”

5. The Appropriations Clause (Article I, Section 9, Clause 7) would have been amended from “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law” to “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law, except for Money drawn from the Treasury that the President raised by borrowing without Congressional authorization.”

This manner in which the Appropriations Clause would be amended is particularly interesting because it would parallel the way in which the Taxing Clause (Article I, Section 8, Clause 1) was amended in 1936-1937, to what is now called the “General Welfare Clause.”

A detailed discussion of how this amendment took place outside of Article V is beyond the scope of this post and will be addressed at a later time, but the bottom line is that the Supreme Court in a series of decisions (United States v. Butler in 1936 and Helvering v. Davis in 1937) used the Taxing Clause language “to pay the Debts and provide for the common Defense and general Welfare” to convert a limitation on the taxing power into an independent spending power.

Before 1936, this language meant that Congress could only raise taxes for three general purposes: (1) paying debts of the United States; (2) promoting the common defense of the United States; and (3) promoting the general welfare of the United States, all of which had well-understood public meanings when the Constitution was first ratified. By 1937, this language had been changed to mean that Congress now had a spending power that was no longer incidental and subordinate to the principal powers enumerated in the Constitution. The problem was greatly compounded, when as part of this amendment process, the Supreme Court gave Congress the exclusive power to define “general welfare” as it wished.

The linguistic sleight of hand by which the Supreme Court amended the Taxing Clause was to assume that any tax revenue raised for the “general welfare” could also be spent for the “general welfare” (defined as broadly as Congress wishes), rather than for the far more limited purpose – imposed by the Necessary and Proper Clause (Article I, Section 8, Clause 18) – of implementing just those powers enumerated in Section 8 and elsewhere in the Constitution.

Returning now to the Appropriations Clause, opponents of the debt ceiling are making the converse argument. Whereas the amended “General Welfare Clause” enables Congress to spend whatever tax revenue it can raise, opponents of the debt ceiling now want the Appropriations Clause to mean that the President can raise whatever tax revenue Congress decides to spend. Such is what passes for constitutional debate these days.

The lead article in today’s Washington Post is all about how House Republicans, following a two-year strategy, “created a majority and gave itself a ‘leverage moment’ in the epic clash over the debt deal.” When the yet-to-be proposed balanced budget amendment is rejected later this year, and the new super-committee is deadlocked over tax and entitlement reform, I seriously doubt many of the Tea Party-inspired Republicans will feel enthusiastic over the “epic” victory they supposedly achieved last week.

If this happens, we will only have the promise of $1.2 trillion in future “spending cuts” that are supposed to be automatically enforced by the new “sequestration” rules. At that point, we may re-discover that sequestration can be also waived by Congress. Are we then left with having to wait for another debt ceiling “epic clash” in 2013? Maybe, but if so, opponents of another debt ceiling increase should start planning now.

As it turns out there is a strategy that fiscal conservatives can pursue – without waiting for the new “super-committee” – which will not only (i) make the debt ceiling a real ceiling the next time around, but also (ii) create a realistic chance for adopting a balance budget amendment that is not only enforceable, but also self-executing. This strategy will be the subject of the next post.

Copyright © 2011 Anthony W. Hawks. All rights reserved.

About Radnor Reports

Ken Feltman is past-president of the International Association of Political Consultants and the American League of Lobbyists. He is retired chairman of Radnor Inc., an international political consulting and government relations firm in Washington, D.C. Feltman founded the U.S. and European Conflict Indexes in 1988. The indexes have predicted the winner of every U.S. presidential election beginning in 1988, plus the outcome of several European elections. In May of 2010, the Conflict Index was used by university students in Egypt. The Index predicted the fall of the Mubarak government within the next year.
This entry was posted in Anthony W. Hawks, Balanced Budget amendment, Federal budget, National debt and tagged , . Bookmark the permalink.

4 Responses to THE NEW DEBT CEILING AND BALANCED BUDGET AMENDMENT: DOING THEM RIGHT, MAKING THEM REAL – Part 1

  1. M CABRAL says:

    Hello! Thanks for the RSS feed. Helps me not miss anything.

  2. F.B. says:

    You make it seem too logical. Can it be this simple?

  3. BK says:

    Your ideas seem very plausible. Why haven’t we done this before?

  4. Sarah says:

    Thanks for sharing. I was searching for some info on this.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s