Dear Mr. President:
I write this the day after a faction of the Republican Party shut down the government, a faction that has struck such fear into the historical Republican Party that they dare not call a straight up vote on a continuing resolution to fund the government.
The resolution would pass, but voting alongside Democrats—formerly known as “governing”---is now a ticket to a primary challenge, which is a lot of grief even if the challenge is beaten.
You, Mr. President, have taken the position that surely Congress will put the good of the country ahead of partisan squabbles. You have taken this position repeatedly, and repeatedly Congress has neglected to govern.
Their idea of horse trading is that they have a horse and you have a horse and you should give them your horse.
You are the President of the United States and so you cannot broadcast negativity. I get that. The debt ceiling, however, is a much bigger deal than shutting down the government.
The consequences of a default on US sovereign debt are dire and some are not reversible. What if China picked such a time to float the Renminbi and so the renegotiation of Bretton Woods took off with Uncle Sam standing there stark naked? The consequences of losing the dollar’s status as reserve currency are something we would suffer from for generations, contrasted with the comparatively paltry few billion the Republicans cost us by shutting down the government.
Last time the Republicans played this game, we suffered a credit downgrade, but the spike in interest rates on our paper was temporary in light of what was going on in the Eurozone. However, we didn’t actually default. We just came to the brink.
I don’t need to lecture you on the consequences of an actual default. On the light end, US paper carries higher interest…and the cascade from there affects mortgages and car loans and credit card rates. On the business side, inventories and crop loans, with or without government guarantees, become more expensive. Uncle Sam’s economy was running in New Balance shoes and suddenly it’s running in clodhopper boots from the forties.
But the worst possible outcome would be if our dear friends the Chinese decided to carpe diem. When we re-negotiate Bretton Woods---and we will—the dollar will be less significant. We can’t enter that negotiation with one arm behind our back.
Will you let that happen on your watch?
Since I intend to circulate this letter, please bear with my verbatim quotation of the Fourteenth Amendment’s Section Four:
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
You know and I know the historical context. The debt of the Union is guaranteed. The debt of the Confederacy is not. The loss of the slaves becomes what we now call in international law “odious debt,” not enforceable in court, because you should never have been allowed to own a human in the first place.
So what does Section Four mean now?
I know you doubt that it applies to the so-called debt ceiling, and so you doubt your authority to pay debts that the House has already approved twice unless it agrees a third time.
You may be right. Whether Section Four is a dead letter now that Civil War debt is retired is up to the SCOTUS, and if you try to act without a Congressional raising of the debt ceiling, you can bet the SCOTUS will have an opportunity to opine.
I think there’s a good chance they might decline, citing either “political question” or standing issues.
With all due respect, sir, it makes no difference whether you think you have the authority or whether I think so or whether any other lawyer does.
The vessel you captain will be dead in the water and about to take fire. With respect, I urge you to fight back with what you have and let the SCOTUS tell you if you overstepped your authority when you paid the nation’s debt by executive order rather than by act of Congress.
Some will call for your impeachment, but they already are. We don’t impeach public officials for being incorrect on a fuzzy area of the law.
You could even give your opponents a free pass on the standing issue and file suit yourself for a declaratory judgment. I would not do that, but I’m not the POTUS.
My bottom line is that the consequences of a default on US debt are so dire that you must exhaust every legal option to prevent it, and your personal opinion that you lack authority under the 14th Amendment is not a good reason to allow default to happen.
We don’t know what Section Four means until the SCOTUS speaks, and if you don’t make them speak, you have not done everything you could do to avoid calamity.