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Breaking: The President Has Options to Raise the Debt Limit

Just a gentle reminder that the President doesn’t actually have to wait around for the political mess on Capitol Hill to sort itself out before he ensures an increase in the debt limit. The first thing he could do is demand a clean bill. The politics of the debt limit are such at this point that asking for a clean bill isn’t as fanciful as it was before:

This would be no small threat. If I were a betting person I would hazard a very large sum that if the president stands up and says, “ENOUGH” — that he has tried and tried and tried to work out a compromise acceptable to the two major parties, but he hasn’t been able to and neither have they, that he is now demanding what he should have received in the first place, a bill unencumbered with Republican economic policy — he will be cheered throughout the land. Of course, a segment of Republicans would object. But that would just play into the president’s strategy of isolating the Republicans, of showing that they are far from the mainstream, are obstructionists and unreasonable.

The president’s sitting with the Republican and Democratic leaders day after day, even tolerating walk-outs by House Speaker John Boehner (R-Ohio) and the Majority Leader Eric Cantor (R-Va.) had been a display of patience that has both admirable and also threatening to turn him into a schlub.

The president reportedly remarked to the House leaders, “Eisenhower wouldn’t have sat here like this.” That’s precisely the point. There comes a moment when his sitting there while the Republican leaders bicker and talk their talking points turns into an outright offense to the Office of the President. It’s up to Obama to set things right.

The fact that conservative Republicans like Joe Walsh (R-IL) are hearing an earful from constituents about the consequences of default suggests that the worm has turned, and Republicans would be in a very difficult position to reject a clean bill.

Failing that, the President could, as we’ve said before, invoke the 14th Amendment, Section 4:

The provision in question, Section 4 of the amendment, was meant to ensure the payment of Union debts after the Civil War and to disavow Confederate ones. But it was written in broader terms.

“The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion,” the critical sentence says, “shall not be questioned.”

The Supreme Court has said in passing that those words have outlived the historical moment that gave rise to them.

“While this provision was undoubtedly inspired by the desire to put beyond question the obligations of the government issued during the Civil War,” Chief Justice Charles Evans Hughes wrote for the court in 1935, “its language indicates a broader connotation.

Obama rejected this at a town hall meeting on Friday, saying, “I have talked to my lawyers, they are not persuaded that that is a winning argument.” That doesn’t necessarily mean that it won’t be used if all the other available arguments are losers, too.

Finally, as two conservative law professors conclude in a New York Times op-ed today, the President could just choose to have the country avoid default:

Where would Mr. Obama get his constitutional authority to raise the debt ceiling?

Our argument is not based on some obscure provision of the 14th amendment, but on the necessities of state, and on the president’s role as the ultimate guardian of the constitutional order, charged with taking care that the laws be faithfully executed.

When Abraham Lincoln suspended habeas corpus during the Civil War, he said that it was necessary to violate one law, lest all the laws but one fall into ruin. So too here: the president may need to violate the debt ceiling to prevent a catastrophe — whether a default on the debt or an enormous reduction in federal spending, which would throw the country back into recession.

A deadlocked Congress has become incapable of acting consistently; it commits to entitlements it will not reduce, appropriates funds it does not have, borrows money it cannot repay and then imposes a debt ceiling it will not raise. One of those things must give; in reality, that means that the conflicting laws will have to be reconciled by the only actor who combines the power to act with a willingness to shoulder responsibility — the president.

That’s right, two conservative law professors wrote that. And they invoked Lincoln, Obama’s favorite President.

And there are more options, like having the Treasury mint a trillion-dollar platinum coin, or having the Federal Reserve destroy the $1.6 trillion in US Treasury debt it holds. The point is that there are ways, both political and Constitutional, for the debt limit to be increased in a clean way. If the President actually wanted that to happen.

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David Dayen

David Dayen