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In the ongoing debate about whether or not President Biden has the power to sidestep the debt ceiling somehow, advocates of giving up have one trump card: the Supreme Court. Unilateral executive branch strategies won’t work, Ezra Klein predicts at The New York Times, because the Court “has repeatedly entertained cases that even conservative legal scholars thought farcical just a few years earlier.” Because the downsides of the justices ruling against them would be high, it’s just too risky to chance it.
During a recent press conference in Japan, Biden himself suggested that, while he believes he has the authority under the 14th Amendment to repudiate the debt ceiling statute, “the question is: Could it be done and invoked in time that it … would not be appealed and, as a consequence, pass the date in question and still default on the debt.” That implies that he believes the Court will, and indeed should, get a say on his actions, and he’d have to stand by whatever they rule.
This is a terrible position. A sensible president would not be preemptively conceding the Court’s authority in this area. They would be attacking its legitimacy, and preparing—as Franklin Roosevelt did in a similarly dire circumstance—to disobey it.
Now, Klein is certainly correct to say that whatever ruling the Court might produce would have little or nothing to do with the law as written. This reactionary majority is a de facto super-legislature that rules in favor of its own partisan policy objectives based on tendentious up-is-down reasoning or no reasoning at all. As I have previously written, the Court has been like that for almost its entire history.
But that cuts both ways. If Biden were to take action to avoid default, and someone were to bring a lawsuit challenging it, then it would be the Court’s direct responsibility for blowing up the world economy. That immense pressure would surely sway the thinking of the swing votes to some degree, especially when at the back of their minds they have the possibility of losing out on their oligarch bribes because of a global financial crisis they caused. Hurt the man in the street, sure, but a financial crisis could hurt Harlan Crow.
Speaking of which, the political context here is strengthened by the fact that the reactionary justices are currently embroiled in an unprecedented corruption scandal. As I’ve written before, Clarence Thomas, John Roberts, and Neil Gorsuch (and that’s just who we know about) are all plainly profiting from their high office. Gorsuch in particular accepted hundreds of thousands of dollars from the head of a right-wing law firm, without disclosing it, that subsequently had business before the Court on more than 20 occasions.
Then there would be practical difficulties with ruling against executive action. As Matt Bruenig points out at the People’s Policy Project, the Court would have to face the thorny question of who gets paid. On its face, upholding the debt ceiling, and therefore letting the country go over the cliff, would mean the president has to cut spending somehow. Is Biden supposed to just pick and choose what gets paid? That would give him a de facto line-item veto over the entire budget, and the Court has already ruled that a law explicitly giving him that power is unconstitutional.
The Court might tell him to prioritize certain payments, but this may not be technically possible, and also raises major legal problems. Anyone due a payment according to law who didn’t get one—say, Social Security beneficiaries or military contractors—would be entirely justified in suing. The Court might claim that paying them is violating the debt ceiling law, but not paying them is also a violation of the various spending laws. There would be tens of millions of such potential litigants.
It’s hard to describe how maddening it is hearing Biden and high-profile liberals twisting themselves into knots coming up with reasons to preemptively give up and lie down in front of the Freedom Caucus steamroller.
So let me sketch out a strategy that would be all but guaranteed to prevent default, and defuse the debt ceiling forever. The key would be to take a page out of the House Republican playbook and categorically refuse to give an inch. Tell Speaker McCarthy and the half dozen yahoos who actually run the House, buying each other’s Chapstick for $100,000 (this actually happened), to go pound sand. Then, in case the Court should prove troublesome, work out a legal defense in depth—for instance, if the debt ceiling is hit, then mint the platinum coin, and if the Court rules against that, then switch to coupon-free bonds, and if the Court rules against that, then issue an executive order declaring the debt ceiling unconstitutional under the 14th Amendment, and then do the same thing again under the Contracts Clause, and so on.
Incidentally, this is how President Trump got his Muslim ban past the Court.
All the while, raise holy hell in speeches and the press to make clear the grotesque irresponsibility of what is happening. Here’s an institution trying to cause a completely pointless national default, destroying untold jobs, businesses, and the credit rating of the country, whose elite members are all unelected, where five members of the majority were appointed by a president who took office after losing the popular vote, and one of whom occupies a blatantly stolen seat. Here’s an institution that has struck down anti-corruption laws by the bushel and is openly rolling in oligarch graft like Scrooge McDuck, while declaring itself to be immune from oversight. All that would add to the political pressure on the justices.
And—this is the key thing—be ready to simply disobey the Court, should it come to that. President Franklin Roosevelt, whom Biden once saw as a model, can be the guide, as he was prepared to do this in the Gold Clause Cases.
As James Ledbetter writes in One Nation Under Gold, before the New Deal, contracts commonly stipulated that payments could be required to be in gold or its equivalent. This worsened the Great Depression, as regular waves of bank failures prompted people to start hoarding gold, draining liquidity out of the banking system (and possibly out of the country). So after taking office, FDR and his Democrats passed laws allowing the president to confiscate all gold in private hands, and voiding all gold clauses in contracts.
That led to a number of lawsuits demanding payment in gold as originally specified, which were consolidated in one case that got to the Supreme Court in 1934. Oral arguments did not go well for the administration, so FDR directed his staff to prepare legal work-arounds, and drew up a speech explaining why he was going to disobey the ruling. (Luckily, the Court narrowly ruled in favor of the government, and the resulting opinion actually uses as precedent the 14th Amendment clause about the validity of the public debt.)
It did involve some risk to contemplate ignoring the Court. But not doing so would have been far worse. As FDR’s draft speech noted, thanks to deflation during the Depression, creditors would be able to demand gold worth about 69 percent more than it had been when the contracts were written. Every payment for a mortgage or business loan with such a clause would instantly go up by 69 percent; “This decision will automatically throw every railroad of the United States into bankruptcy,” he wrote. Moreover, there simply was not remotely enough gold on the planet to actually pay out all the $169 billion in relevant contracts. “There exists in the United States a total of about eight and one half billion dollars of gold and in all the rest of the world—Europe, Asia, Africa, Australasia and the Americas—there is not more than twelve billions of dollars of gold.”
In short, obeying a ruling upholding the gold clauses would have meant an instant return of the Depression and quite possibly a collapse of American democracy. Sometimes there are more important things than finicky legal niceties.
Now, the consequences of giving in to Republican demands would not be that bad in terms of the economics. But they would be worse in terms of America’s democratic institutions. It would establish the principle that conservatives can win big political victories by making terroristic threats to American government and society. Elections mean little when a party controlling just one house of Congress can get what it wants through extortion and threats. They’re certain to ask for more next time.
And conversely, Roosevelt’s action would have been a lot more legally dubious than any of the executive actions noted above to get around the debt ceiling. His executive order confiscating private gold, for instance, was based on a wildly strained reading of the 1917 Trading with the Enemy Act. Biden, by contrast, would be on firm grounds both practically and on the obvious plain meaning of the 14th Amendment.
There has to be some line at which Democrats wouldn’t obey the Supreme Court—suppose it simply declared Trump president, for instance? A possible decree causing national default in utter disregard of common sense and the Constitution is well over that line. At some point, Democrats are going to have to stand up to this lawless Court, or they might as well close up their entire political party and go home.
