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Debt limit: Now the legal morass

October 04, 2013|By Michael Hiltzik
  • The $1-trillion platinum coin -- still the weirdest solution to the debt-limit crisis.
The $1-trillion platinum coin -- still the weirdest solution to the debt-limit… (DonkeyHotey / Flickr )

No matter what President Obama does to work around Congress' refusal to raise the federal debt limit -- a real possibility given the brain freeze afflicting the House of Representatives these days -- the result will be a legal mess.

That's the argument made Friday by former Treasury Department official Mark A. Patterson, now a fellow at the Center for American Progress. In an op-ed article for Politico, Patterson reports that during earlier debt-limit standoffs while he was at Treasury (from 2009 to last May), every maneuver being contemplated now was considered and rejected. The only real choice is for Congress to raise the limit. That's easy for him to say.

Taking them one by one, the work-arounds are these:

1. Unilaterally ignoring the limit, citing the 14th Amendment, which prohibits "questioning" the validity of public debt. This is the choice I advocated in an earlier post.

2. Selling gold out of Ft. Knox to raise funds. Patterson says this would spark a panic in the gold market, plus it would only raise $350 billion, which isn't much under the circumstances.

3. Minting a $1-trillion platinum coin. This is technically legal, under an old law designed to allow the minting of commemorative platinum coins, not legal tender. This choice is favored mostly by people who like weird things.

Patterson calls option No. 1 a "nonstarter" for several reasons. It would breach the separation-of-powers clause, which leaves borrowing authority to Congress. It would depart from a century-old precedent that treated the debt limit as a real thing. And it would subject the president to litigation and maybe even impeachment, which would itself lead investors to question the validity of any debt issued above the limit.

Patterson cites legal expert Laurence H. Tribe of Harvard University as backing him up. Yet Patterson doesn't examine the rationale for unilateral action any better than Tribe did, when he engaged in a dialogue on the issue with professor Neil Buchanan of George Washington University in 2011. (Buchanan co-authored the 2012 paper I cited in my post on the debt limit.)

That paper didn't say that ignoring the debt limit would be constitutional. It said it would be the least unconstitutional of the president's realistic options, all of which are unconstitutional breaches of the separation of powers. Those options are to ignore the debt limit, unilaterally raise taxes or print money and credit it to the Treasury. 

Tribe said, essentially, that he couldn't see any reason for deciding that any option was more or less constitutional than the others. But that's a judgment call.

What all these commentators have in common is the idea that the only truly clean option is for Congress to do its job and raise the debt limit. What they don't address is the question: If Congress punts, what then?

Reach me at @hiltzikm on Twitter, Facebook, Google+ or by email.


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