Now that it’s clear we’ve survived the debt crisis, the next step is to prevent it from happening again. Ever.
How could we do that? Some commentators have urged Congress to take the debt ceiling off the table by spending less or taxing more. Another possibility: Bring back a parliamentary rule in the House, known as the Gephardt rule, which provided that when the House approved the budget, the debt ceiling automatically increased to the extent necessary to fund the budget. Or Congress could simply repeal the debt ceiling statute and agree never to re-enact it.
The problem with these fixes is that they can last only as long as a majority in Congress want them to last. A better solution is a constitutional amendment. Section 4 of the 14th Amendment already provides that the “validity of the public debt … shall not be questioned.” But Section 5 gives Congress, not the president, the power to enforce this provision, and, against the background of Article 1, Section 8, which gives Congress alone the power to borrow money, the 14th Amendment cannot be interpreted to give the president such power, much as some people might like. Indeed, President Obama disclaimed any authority to borrow money under this theory.
But it would be easy enough to propose a constitutional amendment providing that “the president shall have the power to enforce Section 4 of the 14th Amendment.” If such a constitutional rule had been in place, President Obama could have announced that he would borrow as necessary to pay interest on the debt. This would have eliminated the risk that the United States would have inadvertently defaulted because Treasury could not quickly enough reallocate funds from expenditures to paying off the debt.
My proposed amendment is narrow. It would not permit a president to borrow money to make Social Security and Medicare payments or to pay the troops. Thus, it would not eliminate Congress’ leverage or its control over the budget. Indeed, Congress would continue to have the power to spend as much or as little as it wants. Government shutdowns would continue from time to time, when the parties share power in Washington and cannot reach agreement. Only the apocalyptic scenario of debt default would go away.
Amending the Constitution is extremely difficult. An amendment can be proposed either by two-thirds of the House and Senate, or by a constitutional convention called by two-thirds of the legislatures of the states. Then the proposed amendment must be ratified by three-quarters of the states. The constitutional-convention route has never been used. And it may seem obvious that if a majority in the House can’t agree to raise the debt ceiling without first driving the country to the brink of disaster, then two-thirds will not agree to a constitutional amendment removing the debt ceiling forever.
And yet! Tea Party politicians regard the threat of a debt default as a short-term tactic to thwart the Affordable Care Act or reduce the size of government. They do not see default as a policy goal that is desirable in itself. The underlying idea of my proposed amendment is simply that the U.S. government should never default on its debt—and this principle ought to appeal to nearly everyone, including both people who fear the impact of default on the financial system and those who believe that one should honor one’s promises. Disagreements about the size of government can proceed apace, and conservatives still can prevail if they obtain majorities for cutting spending. Meanwhile, the financial health of the country is not put at risk. Once tempers cool and people move on to other issues, the amendment process—which will probably take many years—can begin.
One objection to my amendment is that it gives the president additional power at a time that many people believe he already has too much. But I’m proposing to give the president the power to do only one thing—pay the debt, and in this way honor Congress’ earlier judgments about taxes and expenditures. If that is not enough to address such concerns, the amendment could be narrowed to a “power to borrow where necessary to prevent default on the debt”—to make clear that the president could not (for example) unilaterally raise taxes or sell Yellowstone National Park in order to pay interest on the debt.
Another alternative: Amending the Constitution to provide that any time Congress passes a budget, it automatically raises the debt limit to whatever level necessary to fund that budget, as under the Gephardt rule. Yet another variation would echo the McConnell rule, which during its short lifespan in 2011 provided that the president may unilaterally raise the debt limit but Congress can issue a resolution of disapproval—which the president could veto subject to the two-thirds congressional override. This rule would give Congress the power to constrain a president who tried to abuse his power to raise the debt limit.
I have previously argued that the president has emergency powers that would enable him to raise the debt ceiling if the markets teeter as default threatens catastrophe. So why is it necessary to amend the Constitution? The emergency-powers argument is a last resort. Most presidents, out of prudence, would not resort to it until the last minute. A constitutional amendment would provide greater assurance to the markets by clearly authorizing the president to honor the U.S. debt even before emergency conditions begin to wreak havoc.
The major advantage of my amendment is that it would help fix America’s damaged reputation in financial markets. The fact that U.S. debt has been considered super safe is enormously beneficial to the American economy. Now creditors may be wondering whether America’s uniquely dysfunctional political system should throw this rock-solid history into doubt. Simply by starting the amendment process, the country would make it clear that we won’t let this keep happening.