Amendment XIV, Section 4:
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.
The fourth section of the Fourteenth Amendment is rather obscure, or was until recently. It declares that “[t]he 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.” In a 1935 case, Perry v. United States, the Supreme Court held that the do-not-question provision applies to all federal debts, and bars the federal government from repudiating debts.
Barring the repayment of Confederate debt was not only a blow to southern rebels, but to their supporters worldwide. The Civil War was vastly expensive, and raised the national debt to over a billion dollars, and its financial consequences reverberated for decades afterwards. The victorious Union was especially bitter about international support for the Confederacy; in one instance, that anger nearly led to war with Britain, which refused to pay U.S. claims for damages inflicted by an English-built Confederate warship called the CSS Alabama. That dispute was only resolved in 1871 by a treaty.
In the years since, this section has rarely given rise to much debate—until the summer of 2011, when Congress began debating the Obama Administration’s request to extend the nation’s “debt ceiling.” Federal law requires Congress to authorize incurring more debt to pay for federal programs, and by last summer, when the national debt stood at more than $14 trillion, Republicans in Congress resisted allowing more red ink. They demanded concessions from the White House, and refused to agree to the tax increases demanded by the President. In mid-July, as the negotiations grew strained, some of the President’s supporters argued that Congressional refusal to allow further debt would violate the Fourteenth Amendment. South Carolina Congressman James Clyburn urged Obama to invoke Section Four and raise the debt ceiling by executive order, and Yale Law Professor Jack Balkin, Treasury Secretary Timothy Geithner, and even former President Bill Clinton (who, like Obama, was once a law professor) agreed. They argued that failing to raise the debt limit would increase the risk of a national default, which would amount to an unconstitutional “questioning” of the debt.
But Harvard Law School professor Laurence Tribe disagreed. In an article in the New York Times, Tribe explained that the Amendment does not bar Congress from making financial choices that might increase the risk of default. And even if it did, other constitutional provisions give Congress—not the President—the responsibility for borrowing money. Worse still, the government would probably lose more than it would gain from unilateral presidential action, because investors would then fear that the Administration might take other unprecedented actions undermining their investments. To his credit, President Obama showed little interest in invoking the Fourteenth Amendment, and within a month, Republicans and Democrats had reached a compromise.
Still, the debt ceiling debate revealed an important point about the Constitution. Some of its provisions seem to hibernate for years, little studied by law students, and rarely the subject of lawsuits, until a crisis draws public attention back to clauses that were written in anticipation of future problems. The Constitution is a promise, not only about how the government will operate on a daily basis, but about how we will act when the unexpected occurs. It must, as Justice George Sutherland once said, be obeyed as much when it pinches as when it comforts.
Timothy Sandefur is a principal attorney at the Pacific Legal Foundation and author of Cornerstone of Liberty: Property Rights in 21st Century America (Cato Institute, 2006) and The Right to Earn A Living: Economic Freedom And The Law (Cato Institute, 2010).
Thursday, May 3, 2012
Essay # 54