There are reports that the Senate is about to reach a deal that would extend the debt ceiling until February 15 and reopen the government until January 15, both to give time for a bipartisan committee to agree on deficit reduction strategies. It is worth noting that on the policy side this is actually a clear victory for the Republicans. Those spending cuts that were supposed to be a poison pill to prevent default are now being treated as permanent; the only thing the Democrats are arguing about is how to rearrange them so some things are cut more and other things are cut less. And whatever comes out of that bipartisan committee, you can be sure it will be long on cuts and short on revenue measures.
But none of that matters if the deal does not go through. That means that Cruz and Lee have to refrain from filibustering in the Senate, and then that the agreement has to be approved in the House. The House changed its standing rules not long ago (H. Res 368 -- check out this exchange on the floor) so that only John Boehner or his designee could even bring such a bill to a vote. And Boehner is not going to get nearly enough Republican votes to pass such a measure, he's going to need Democrats. In other words, unless John Boehner is willing to cut the Tea Party caucus loose at the risk of his position as Speaker, we're headed for default. A couple of weeks ago I wrote that I expected Boehner to step up and do the right thing in that situation... I'm a lot less confident this morning.
Nobody really knows exactly what will happen if the debt ceiling is not raised. A Treasury Department report says that the consequences would be at least as bad as the global financial crisis of 2008, and they may be right. Some Republican congressmen seem to think that the consequences would be minimal (or perhaps they secretly welcome massive upheaval in the bond market). But the willingness to risk the consequences of default is frankly incredible: we're in "let's light a match in the powder magazine and see what happens" territory, here. I don't believe the Tea Party representatives actually want to see massive economic devastation. But they're willing to risk it.
The economic consequences are only part of the story. There are already widespread reports from foreign capitals of allies and others rethinking their relationship with an increasingly unreliable United States as we compete with China and Russia for influence. During the debate over whether to take action in Syria there was discussion of the credibility of American threats: we are currently witnessing the decline in the credibility of American commitments of any kind. A failure to raise the debt ceiling could dramatically decrease American ability to assert interests around the world for years, starting with pushing our trading partners to look for alternatives to U.S. Treasury bonds as a safe haven for investments and the U.S. dollar as the global currency of choice -- something China has been proposing since 2009.
As for the damage to the American political system, enough ink has been spilled on that topic already. Suffice it to say that if we cross this line it will be time to rethink our system of national government. In 1786 George Washington wrote to Col. David Humphreys regarding the government's weakness in responding to Shay's Rebellion, "I am mortified beyond expression that in the moment of our acknowledged independence we should by our conduct verify the predictions of our transatlantic foe, and render ourselves ridiculous and contemptible in the eyes of all Europe." A lot has changed since 1786, but it remains the case that the United States cannot afford to be perceived as a failed state, no matter how big our military. Perhaps especially because of the size of our military.
Confronted by this reality, President Obama has a few choices. In the event House Republicans will not bend, he can allow the nation to default. He can allow the Tea Party wing of the Republican party to dictate the terms of the national policy making process. Or he can unilaterally order the Treasury Department to issue new bonds. All three are unattractive options, but the last is the one the president has to choose.
There are at least three potential legal justifications for unilateral presidential action on the debt ceiling. First, the president is required by the Constitution to "faithfully execute the laws" enacted by Congress, including that body's prior commitments to spend money on programs already authorized (it is important to recognize that what is being debated is the commitment to pay existing obligations for prior commitments, not new spending). Second, section 4 of the 14th Amendment says "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," which arguably provides an independent constitutional mandate for authorizing the payment of existing obligations. And third, there is a long-standing theory -- recently espoused by the Bush administration in a different context -- that the president has "inherent authority" to take actions necessary to the well-being of the United States.
President Obama has indicated that he is not interested in acting unilaterally. There are good reasons for him to take this position. All of these legal theories are contentious, and potential purchasers of Treasury bonds might be scared off by the possibility of a subsequent legal challenge to their validity. Too, taking such action would lay bare the extent to which the current impasse threatens the system of checks and balances: the House of Representatives has pushed its authority to the limit in a way that wrecks the balance of powers among the branches by turning a checking role into absolute power over national policy. The President would be responding in kind by pushing his power to its limit to undercut the House's power over the purse, a further fraying of the constitutional fabric.
Nonetheless, the president has no choice. In the event that the House of Representatives fails to act, President Obama should unilaterally order the Treasury Department to issue new bonds. He should then send a letter to House Speaker John Boehner requesting impeachment proceedings, so that this constitutional crisis can be publicly and formally debated in the Senate. This is what impeachment is for: it is a political, not a legal check, that provides a demand for accountability when the normal processes of government have failed. We are at such a moment of failure, and this time it is the president who should demand such an accounting of Congress.
For a president to override Congress' power of the purse is a dangerous precedent. But President Obama is exactly right to say that he is not willing to negotiate policy questions with a gun to his head, and future presidents should not be confronted by the same kind of extortion. This is not a partisan issue. If this tactic of holding America's credit hostage to achieve a failed legislative goal is permitted, I can easily imagine a future Democratic House doing the same thing to a Republican president, perhaps in order to secure what they perceive to be a planet-saving measure to reduce global warming, or to get rid of assault weapons in American cities. This is the key point for our system of government, and it should not be allowed to pass unnoticed whether in the euphoria of a congressional "success" or the relief that would follow the president taking necessary unilateral action. What is at stake is not this presidency, Obamacare, or spending cuts. What is at stake is the future of American democratic government. With that future at risk, the president has no choice but to act -- and having acted to demand an accounting.