Clearing the Air on the Debt Limit Page: 11 of 15
The following text was automatically extracted from the image on this page using optical character recognition software:
Clearing the Air on the Debt Limit
debts.55 While federal guarantees for an expansion of the franchise were viewed as a
counterweight to such shifts, an explicit guarantee of the validity of federal debts was also
Does the Public Debt Clause Give the Executive Branch Powers to
There is little doubt that Congress has an obligation to pay its debts under a variety of
constitutional provisions, including the Borrowing Clause, the Due Process Clause,8 and
theories of vested contractual rights.59 The failure of the government to pay its debts would also
appear to violate the Public Debt Clause.60 The instant question, however, is not whether the
government is legally obligated to pays its debts, but what powers are available to the President
when a default on the public debt is threatened.6' Thus, the question arises as to whether the
President could unilaterally pay for such threatened debt by, for instance, borrowing money in
excess of the debt ceiling.62 Some commentators have made the argument that the Public Debt
Clause provides the President sufficient authority to borrow money beyond the debt ceiling even
5 James (op. cit., pp. 23-27). On August 16, 1865, Treasury Secretary McCulloch wrote to Senator Sumner that
"nothing can be more damaging to our national credit than the openly-expressed opinion by leading men, that there
may arise contingencies in which the national debt will be repudiated." Quoted in James (p. 25). James (p. 185)
suggests that the prospects of repudiation were exaggerated, although several ex-Confederate states repudiated state
debts in the post-Civil War period. See William Scott, Repudiation of State Debts: A Study in the Financial History of
Mississippi, Florida, Alabama, North Carolina, South Carolina, George, Louisiana, Arkansas, Tennessee, Minnesota,
Michigan, and Virginia (Boston: Crowell, 1893). Representative John Bingham, one of the framers of the Amendment,
asserted that "Unless this Congress, charged as it is, like the first Continental Congress, with the care of the liberties of
all, shall perform the duty enjoined upon it, and send to the people the necessary constitutional provisions and
guarantees for the future safety of the Republic, I apprehend that there are men now within these walls who may learn,
when it is too late, that the ballot in the hand of the conspirator is more dangerous to the safety of the Republic than the
bayonet." Congressional Globe, January 25, 1866, pp. 428-429.
56 Some Civil War loan issues were marketed widely to the public soon after hostilities commenced in 1861. Providing
a constitutional guarantee for federal debt, therefore, may have served political as well as financial ends. See Franklin
Noll, "Repudiation! The Crisis of United States Civil War Debt, 1865-1870," working paper, Graduate Institute of
International and Development Studies, Geneva, December 2012.
5 Perry v. United States 294 U.S. 330, 349-51 (1935) (attempt by Congress to abrogate a clause in government war
bonds calling for payment in gold coin violated the Borrowing Clause, U.S. Const. art. I, 8, cl. 2, because Congress
does not have the authority to issue a debt that it does not intend to repay).
58 Lynch v. United States, 292 U.S. 571, 579-80 (1934) (statute withdrawing the consent of the United States to be sued
under contracts of war risk insurance from World War I held to violate due process).
59 United States v. Winstar Corp., 518 U.S. 839, 876 (1996) (failure by the United States to comply with the stated
terms of vested contracts can result in a breach by Congress of the vested contractual rights).
60 Perry, 294 U.S. at 354 (striking down a law abrogating a clause in government war bonds calling for payment in gold
coin as inconsistent with the Public Debt Clause).
61 According to one law review article on the Public Debt Clause, the clause might apply even before a default occurs.
See Michael Abramowicz, Beyond Balanced Budgets, Fourteenth Amendment Style, 33 TULSA L.J. 561, 589 (1997).
The article's author proposes that the provision acts as a "prohibition not only of governmental failure to make
payments on a debt, but also of government action that will ultimately lead to such failure." Id. at 590.
62 There are arguably other ways for the President to avoid a default on the public debt, such as unilaterally raising
taxes. See Neil H. Buchanan & Michael C. Dorf, supra note 6, at 19-23. No commentator to date, however, has
suggested that the executive branch has the authority under the Public Debt Clause to unilaterally raise taxes in order to
avoid default of the public debt.
Congressional Research Service
Here’s what’s next.
This report can be searched. Note: Results may vary based on the legibility of text within the document.
Tools / Downloads
Get a copy of this page or view the extracted text.
Citing and Sharing
Basic information for referencing this web page. We also provide extended guidance on usage rights, references, copying or embedding.
Reference the current page of this Report.
Austin, D. Andrew & Thomas, Kenneth R. Clearing the Air on the Debt Limit, report, November 2, 2017; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc1043199/m1/11/: accessed May 24, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.