Wise Legal Advice Biden May Not Be Getting and Possibly Good News About Russia

As is often the case, there is a golden mean between paying no attention to politics and paying too much. Since I don’t have President’s Biden ear, I’m guilty of the latter (I’m pretty sure the messages I’ve sent him didn’t made it to his desk).

Nevertheless, here is some brief discussion of the debt ceiling I read today that I want to share:

From Josh Marshall of Talking Points Memo:

Even though this won’t come as new news to many of you, the following is still a clarifying prism. A negotiation is usually two sides haggling to get things they want. Leverage is often unequal…. But in this negotiation, Republicans are getting various policy priorities and Democrats are “getting” Republican agreement not to create a global financial crisis. That’s extortion, not negotiation. A government can’t operate in any consistent or sustainable way when policy deliverables go to the party willing to credibly threaten the most damage to the country.

And from two law professors with fancy titles who work at respected universities:

Our advice has always amounted to a version of the now-overused mantra: “Keep calm and carry on.” The best thing to do in a debt ceiling crisis is to continue to raise the money necessary to pay the government’s bills. If Republicans block action on the debt ceiling, the President would indeed break the law by issuing new debt. But among his options at that point, all of which would be bad, that would be the closest thing to a plain-vanilla response. We would not see the government stiff its creditors.

Instead, the Treasury Department would do what it always does: go into the financial markets and raise funds from willing lenders. Those lenders would almost certainly demand higher interest payments than otherwise, which would offer the irony that the Republicans’ vows to “do something about the debt” will result in more debt, not less. But in a world of their making, borrowing money as it is needed, in as close to the normal way as possible, will be President Biden’s best (and least unconstitutional) option.

Elsewhere, there’s evidence that some Russian soldiers are switching sides and actually taking back territory from the Russian army. It isn’t a surprise that some of the troops don’t care for Putin at all. This is a good sign, combined with the fact that Ukraine is offering special treatment for soldiers who surrender, including care overseen by the Red Cross and no requirement to ever return to Russia. We used to think high-level officials might be the ones to do something about Putin. Maybe the uprising will start in the lower ranks. After all, the Russian Revolution began with mutiny in the army.

These Are Not Roosevelt’s “Four Freedoms”

This might be the best political comment ever left on a blog:

Conservatism consists of exactly one proposition, to wit: There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.

Jamelle Bouie of The New York Times (one of their columnists who is actually worth reading) offers evidence for that proposition in “The Four Freedoms, According to Republicans”:

On Tuesday, Republicans in North Carolina overrode Gov. Roy Cooper’s veto to pass a strict limit on bodily autonomy in the form of a 12-week abortion ban…. North Carolina Republicans are obviously not the only ones fighting to ban, limit or restrict the right to bodily autonomy, whether abortion or gender-affirming health care for transgender people. All across the country, Republicans have passed laws to do exactly that wherever they have the power to do so, regardless of public opinion in their states or anywhere else. The war on bodily autonomy is a critical project for nearly the entire Republican Party, pursued with dedication by [everybody] from the lowliest state legislator to the party’s powerful functionaries on the Supreme Court.

You might even say that in the absence of a national leader with a coherent ideology and agenda, the actions of Republican-led states and legislatures provide the best guide to what the Republican Party wants to do and the best insight into the society it hopes to build.

[Their] attack on bodily autonomy [is] part of a larger effort to restore traditional hierarchies of gender and sexuality. What else is on the Republican Party’s agenda, if we use those states as our guide to the party’s priorities?

There is the push to free business from the suffocating grasp of child labor laws. Republican lawmakers in Arkansas, Iowa, Missouri and Ohio have advanced legislation to make it easier for children as young as 14 to work more hours, work without a permit and be subjected to more dangerous working conditions. The reason to loosen child labor laws — as a group of Wisconsin Republicans explained in a memo in support of a bill that would allow minors to serve alcohol at restaurants — is to deal with a shortage of low-wage workers in those states.

There are other ways to solve this problem — you could raise wages, for one — but in addition to making life easier for the midsize-capitalist class that is the material backbone of Republican politics, freeing businesses to hire underage workers for otherwise adult jobs would undermine organized labor and public education, two bêtes noires of the conservative movement.

Elsewhere in the country, Republican-led legislatures are placing harsh limits on what teachers and other educators can say in the classroom about American history or the existence of L.G.B.T.Q. people….Nationwide, Republicans in at least 18 states have passed laws or imposed bans designed to keep discussion of racial discrimination, structural inequality and other divisive concepts out of classrooms and far away from students.

Last but certainly not least is the Republican effort to make civil society a shooting gallery. Since 2003, Republicans in 25 states have introduced and passed so-called constitutional carry laws, which allow residents to have concealed weapons in public without a permit. In most of those states, according to the Giffords Law Center to Prevent Gun Violence, it is also legal to openly carry a firearm in public without a permit.

Republicans have also moved aggressively to expand the scope of “stand your ground” laws, which erode the longstanding duty to retreat in favor of a right to use deadly force in the face of perceived danger…. It should be said as well that some Republicans want to protect gun manufacturers and dealers from lawsuits. Gov. Bill Lee of Tennessee did just that this month — after a shooting in Nashville killed six people, including three children, in March — signing a bill that gives additional protections to the gun industry.

What should we make of all this? In his 1941 State of the Union address, Franklin Roosevelt said there was “nothing mysterious about the foundations of a healthy and strong democracy” and that he, along with the nation, looked forward to “a world founded upon four essential human freedoms.” Famously, those freedoms were the “freedom of speech and expression,” the “freedom of every person to worship God in his own way,” the “freedom from want” and the “freedom from fear.” Those freedoms were the guiding lights of his New Deal, and they remained the guiding lights of his administration through the trials of World War II.

There are, I think, four freedoms we can glean from the Republican program.

There is the freedom to control — to restrict the bodily autonomy of women and repress the existence of anyone who does not conform to traditional gender roles.

There is the freedom to exploit — to allow the owners of business and capital to weaken labor and take advantage of workers as they see fit.

There is the freedom to censor — to suppress ideas that challenge and threaten the ideologies of the ruling class.

And there is the freedom to menace — to carry weapons wherever you please, to brandish them in public, to turn the right of self-defense into a right to threaten other people.

Roosevelt’s four freedoms were the building blocks of a humane society — a social democratic aspiration for egalitarians then and now. These Republican freedoms are also building blocks, not of a humane society but of a rigid and hierarchical one, in which you can either dominate or be dominated.

Six Legal Reasons the President Should Ignore the Debt Ceiling

Republicans threatening to cause a financial crisis by refusing to raise the debt ceiling unless their agenda is enacted are practicing extortion, plain and simple (“extortion”: the act or practice of wresting anything from a person [or persons] by force, by threats, or by any undue exercise of power). It is not negotiation.

Any advisors or other members of his administration who are telling the president that he shouldn’t issue an executive order for the Secretary of the Treasury to ignore the debt ceiling and keep paying the government’s bills (if that becomes necessary) are deeply mistaken.

Concerns that the Supreme Court would somehow intervene and create a financial crisis are overblown. The President doesn’t need the court’s permission. If it becomes necessary, he should demonstrate leadership and present the court with a fair accompli.

Concerns that the President taking unilateral action to avoid a financial crisis would somehow create a comparable financial crisis are simply stupid.

Robert Hockett, is the Edward Cornell Professor of Law and a Professor of Public Policy at Cornell University; Senior Counsel at Westwood Capital, a socially responsible investment bank; and a Fellow of the Century Foundation think tank. He has worked at the International Monetary Fund and the Federal Reserve Bank of New York and serves in a consultative capacity for a number of U.S. federal, state, and local legislators and regulators.

Writing for Forbes magazine, he provides six legal reasons why adhering to the federal budget takes precedence over the debt ceiling law. You might not care to read so much on this subject. I just wish the damn president, his new chief of staff, the Secretary of the Treasury and the Attorney General would:

Writing in outrage for over a decade about the illegality of the putative ‘debt ceiling as I, along with several distinguished colleagues, have been doing, I am not a little relieved to see some of our longstanding arguments gaining traction. I am a little bit troubled, however, by how attention has centered almost solely upon the 14th Amendment to the U.S. Constitution.

The 14th Amendment is, to be sure, one of the grounds upon which the ‘debt ceiling’ must be declared null and void – for reasons even beyond those we’re hearing right now, as I’ll indicate. But there are at least five additional such grounds. It might then be helpful to elaborate them, along with their mutual complementarities, in summary fashion.

Let’s start with the constitutional and legislative backdrop …

Articles I and II of the Constitution vest both Congress and the President with budgetary roles. All spending and revenue-raising must be legislated, and valid legislation must be passed by both chambers of Congress and signed into law by the President. Final budgets, such as they are, are accordingly joint Congressional and Presidential products – save in such rare circumstances as those in which Congress overrides a Presidential veto with a supermajority vote.

The Constitutional provisions that I have just channeled are broadly worded and prescribe very little as to the details of federal budget processes. These are determined, instead, by more legislation. In 1921, through the Budget & Accounting Act, Congress vested primary budget formulation responsibility with the President, establishing both detailed timetables and the predecessor of today’s Office of Management and Budget (OMB) to help shepherd the process along.

The ‘debt ceiling’ is rooted in this era, during which Congress relinquished its previous role as legislator of every distinct federal bond-issuance. Congress did this to afford the President – by their own law our primary budget-formulator – more flexibility in determining revenue sources for funding the growing variety of legislated programs. That’s right, the original ‘ceiling’ was about affording the President more discretion, not less.

It is no accident that the Liberty Bond Act of 1917 (original source of the ‘ceiling’), the 1913 vintage 16th Amendment to the Constitution authorizing the federal income tax, the thereby enabled Revenue Act of 1913, the Federal Reserve Act of 1913, and the aforementioned Budget & Accounting Act of 1921 all came in rapid succession. In effect, these enactments, all passed by Congress and signed into law by the President, constituted one coherent federal budget regime.

All of this changed, however, in 1974. The ‘crisis’ that occasioned the change was brought on, like so many others of the era, by President Richard Nixon. Nixon had an unfortunate tendency to think himself more ‘imperial’ than the Constitution allowed, and took it upon himself to decide with unprecedented frequency what Congressionally legislated and funded programs, even though he had signed them into law in the first place, were worthy of actual execution and funding.

The practice in which he manifested this proclivity was known as ‘impoundment.’ The idea was that instead of spending what Congress had instructed him to spend and what he had agreed, by signing their legislation, to spend, Nixon was routinely spending only what he wished to spend, while ‘impounding’ the rest – in effect, holding it hostage.

Congress put an end to this chicanery by passing the Congressional Budget and Impoundment Control Act of 1974, pursuant to which both Congress and the President go through detailed procedural steps in formulating their own budgets, which budgets are then ‘reconciled’ and collated before being legislated into law piecemeal through sundry program authorization and appropriations acts passed by Congress and signed by the President. (The Supreme Court closed all plausible loopholes in the Act in Train v. City of New York one year later.)

This is also the origin of the Congressional Budget Office (CBO), designed as a counterpart to the President’s OMB. In effect, then, what we have had for the past 50 years is an altogether new budget regime superseding the regime put in place 50 years before then. The earlier regime, in other words – including its ‘debt ceiling’ component – was implicitly repealed by the later regime.

You can see this by noting the logic – or shall we say the arithmetic – of the post-1974 regime. Pursuant to that regime the duly legislated federal budget first determines both revenue and spending, then assigns the President and his Treasury Department the task of filling any gaps between the former and the latter through debt issuance. And, since the President is prohibited under this regime from not spending what the budget mandates he spend, the regime effectively mandates that he borrow any time mandated spending exceeds mandated revenue.

We are now situated to see why the 1917 ‘debt ceiling’ as presently wielded like an AR-15 by a rump faction of the House Republican Caucus is actually no more than a leaky water pistol. For there is literally no way for the President to comply with the putative ‘ceiling’ … that does not entail his violating the federal budget itself — as formulated pursuant to the 1974 regime that superseded the early 20th century regime. Here are the six reasons why…

Reason 1. The ‘Take Care’ Clause: Article II, Section 3 of our Constitution requires that the President ‘take care that the Laws be faithfully executed.’ President Nixon effectively violated this provision by not spending as Congress, through that law which is the federal budget, mandated that he spend. President Biden would be doing the same were he not to spend as the last federal budget requires that he spend, and were he not to borrow in so doing as that budget arithmetically mandates that he borrow.

Reason 2. The ‘Presentment’ Clause, a.k.a. ‘Line-Item-Veto’ prohibition: Article I, Section 7 of our Constitution requires that bills passed by both chambers of Congress be ‘presented’ as wholes to the President, which the latter then signs into law or vetoes. In Clinton v. City of New York (1998), our Supreme Court held that the Line Item Veto Act of 1996 violated this clause by purporting to permit the President to ‘cherry-pick’ which budget items would become law and which ones would be left on the cutting room floor.

Were President Biden to ‘prioritize’ payments mandated by the current federal budget as the aforementioned rump faction of the House Republican Caucus suggests, he would be doing precisely what the Court held that President Clinton couldn’t do and that Congress could not authorize.

Reason 3. The 14th Amendment: Article XIV, Section 4 of our Constitution provides that ‘[t]he validity of the public debt of the United States, authorized by law… shall not be questioned.’ The framers’ intention in enacting this Constitutional provision is of particular interest right now. The self-styled ‘Confederate States of America,’ controlled by slave owners, had pulled their members from Congress and endeavored to destroy our federal union ‘from without’ by launching military attacks … in 1861. President Lincoln and Congress incurred unprecedented federal debt (multiplying it 80-fold, from a bit over 64 million to 5.2 billion), in the form of Treasury securities sold to millions of Americans, in financing the successful effort to end that rebellion.

As the nation began healing at the Civil War’s end, concerns grew that Southern legislators readmitted to Congress would continue their effort to destroy our federal union, save now from within, by repudiating the war-occasioned federal debt that American statespersons since Alexander Hamilton had recognized as the essential financial binding agent holding our union together. Indeed, Southern legislators were quite open about their intentions on this score, which is precisely what occasioned the requirement that Southern states ratify the 14th Amendment as a condition of rejoining the Union rather than remaining militarily occupied conquered territories.

The applicability of the 14th Amendment to the present ‘debt ceiling’ insanity grows quite clear when we recall this history. It is a striking fact both that the aforementioned rump faction of the House Republican Caucus nearly all hail from former Confederate or Confederate-border states, and that many of them have called for a ‘national divorce’ …. It is equally striking that most of these … Republicans have been transparent about their aims … to sow chaos and thereby pave the way for a Weimar style anti-constitutional putsch by their criminal ringleader and serial bankrupt in Mar-a-Lago, Florida – who has himself now explicitly called for default on the national debt.

Reason 4. The ‘Later in Time’ Rule: It is a well established judicial canon of statutory construction that when an old law appears to conflict with a newer law or treaty, the older law must either be interpreted in a manner that does not conflict with the newer law, or be treated as having been implicitly repealed by the newer law. There are two ways in which this canon is applicable to our present ‘debt ceiling’ imbroglio.

First, the 1974 budget regime clearly displaces the earlier regime, including its ‘debt ceiling.’ This is made dramatically clear in the 1974 regime’s requiring both that the President execute the budget in full (no impoundments), and that s/he issue debt in so doing to fill any gap between spending and revenue. And second, any current budget enacted later in time than the last ‘debt ceiling’ hike of course supersedes the latter.

It is for this reason that I’ve often written that ‘the budget is its own “debt ceiling.”’ Indeed, in light of the anti-impoundment content of the 1974 Act, it is clear that the budget is both its own floor and its own ceiling. It is self-contained. It is the be all and end all of federal budgeting. It is the entirety of the law governing spending, taxing, and borrowing, with no role left to be played by the old 1917 Liberty Bond Act ‘ceiling.’

Reason 5. The ‘Absurd Result’ Canon: It is also a well established canon of statutory construction that, when a legal provision – either as written or as it would be applied – can be construed in more than one way and one such way would yield a result so absurd that the legislature cannot plausibly be taken to have intended it, the interpretation yielding that result must be considered mistaken.

In the present context, it is clear that the interpretation of the ‘debt ceiling’ proffered by the aforementioned rump faction of the Republican House Caucus would yield multiple absurdities of the relevant sort. It would require the President to violate contract obligations (which US borrowings assuredly are), the last-legislated federal budget of 2022, the 1974 Congressional Budget and Impoundment Control Act, and one or more of the three Constitutional provisions assayed above.

And that is to say nothing of the cataclysm that default on our national debt, which we’ve never reneged on before, would bring to the US dollar, to US debt servicing costs, to the US banking and financial sectors, to the nation’s pension and mutual fund holders, to the nation’s inflation rate and its broader economy, and indeed to the world’s capital markets and trading economy.

It is simply impossible to imagine the framers of the Liberty Bond Act of 1917 – who were seeking to facilitate the financing of the First World War effort – or indeed any member of Congress prior to the aforementioned rump faction of the House Republican Caucus, ever having intended even one of these outcomes, let alone all of them.

Reason 6. The ‘Constitutional Avoidance’ Doctrine: Finally, it is also a well established canon of statutory construction that, when a legal provision – either as written or as it would be applied – can be construed in more than one way and one such way would raise a Constitutional issue, the interpretation yielding that result should if possible be considered mistaken.

The applicability of this doctrine to the present imbroglio is, like those of the previous legal doctrines, quite clear as well. The ‘debt ceiling’ as interpreted by today’s [MAGA] Republicans would squarely conflict with the 14th Amendment as noted above. Either the interpretation, then, or the ‘ceiling’ itself must be deemed without legal force.

I hope that the point is now made. Neither the President, nor the Treasury Secretary, nor any responsible member of Congress need worry that there would be anything ‘legally questionable’ about either or both Congress’s and the President’s simply disregarding the ‘debt ceiling’ and continuing to make good on the nation’s legal obligations as always. No court would find otherwise.

There simply is no uncertainty here. Indeed, the law quite clearly, quite certainly and quite squarely requires one thing. It requires that Congress and the President alike recognize that the old 1917 relic known as the ‘debt ceiling’ as presently applied is null and void, and has been so both since its inception and especially since Congress smacked down the would-be ‘imperial’ President Nixon a half-century ago.

Government Finances Aren’t Family Finances

Economist Paul Krugman replies to confused readers:

Whenever I write about debt and deficits, I receive the same letter — OK, not exactly the same letter, but a number of letters with more or less the same gist. They read something like this: “If I borrow money from the bank, the bank expects me to pay the money back. Why isn’t the same true for the government? Why can we keep borrowing when we already owe $31 trillion?”

Just about every economist will reply that it’s misleading to make an analogy between household and government finances. But it seems to me that we often aren’t clear enough about why, perhaps because we don’t say it bluntly enough. So here’s the difference: You are going to get old and eventually die. The government isn’t.

I don’t mean that governments are immortal. Nothing is, and no doubt someday America will, as Rudyard Kipling put it, be “one with Nineveh and Tyre.” But individuals face a more or less predictable life cycle in which their earnings will eventually dwindle.

And lenders therefore demand that individual borrowers pay off their debts while they still have the income to do so.

Governments, on the other hand, normally see their revenues rise, generation after generation, as the economies they regulate and tax grow.

Governments, then, must service their debts — pay interest and repay principal when bonds come due — but they don’t necessarily have to pay them off; they can issue new bonds to pay principal on old bonds, and even borrow to pay interest as long as overall debt doesn’t rise too much faster than revenue.

In fact, when governments for one reason or another run up large debts, it is, as far as I can tell, unusual to pay those debts off.

The most famous example, albeit one that many people apparently don’t know about, is the debt America incurred to fight World War II. By the war’s end, this debt was around 100 percent of gross domestic product — roughly comparable to the debt level today. So how did we pay off that debt?

We didn’t. John F. Kennedy entered the White House with federal debt roughly the same as it was on V-J Day. [This shows the gross federal debt between 1940 and 1960 — I assume adjusted for inflation.]

krugman190523_3-jumbo

Why, then, wasn’t the 1960 election dominated by questions of how to pay off the national debt? Because while the dollar value of debt hadn’t gone down, economic growth and modest inflation meant that the ratio of debt to [Gross Domestic Product] had fallen by half. [This shows the same period, 1940 to 1960.]

krugman190523_4-jumbo

For all those whose instinct is to assume that a responsible government would, like a responsible individual, pay off its debts as soon as it can, again: Governments aren’t like people. If death and taxes are the only sure things in life, well, death isn’t an issue for governments, and taxes are an asset — a growing asset — rather than a liability.

Unquote.

Of course, it isn’t exactly true that old debts aren’t paid off. The government is constantly paying investors interest on the government bonds and notes they’ve purchased, and those bonds and notes eventually mature, making old debts disappear. But investors are buying  new bonds and notes at the same time (which will eventually be paid off as well).

Everybody Should Recognize the Stakes

The new management at CNN has decided to split the difference between truth and lies by becoming more like Fox “News”. One piece of evidence is that they invited the deplorable former president to do his act in front of an audience of likely Republican voters who’d been told it was fine to applaud and cheer their cult leader but not to boo him. It was painful for any decent person to watch. It did, however, convince the Washington Post‘s editorial board to describe the stakes in the next presidential election. What they wrote was somewhat less wishy-washy than usual:

… What will, or should, the 2024 presidential election be about? Will it be about the normal issues and concerns of most elections — topical issues such as the economy, immigration, abortion? Or should it primarily be about the existential threats posed by the reckless former president?

Voters will make their own calculations about what’s important as they weigh their choices. But after [his] performance … on Wednesday, there is no escaping that he has an agenda that is anything but normal. This includes pardoning those convicted during the Jan. 6, 2021, attack on the Capitol; reveling in attacks and mocking victims of sexual abuse; and promoting an anti-democratic view of the office of the presidency. There is no turning a blind eye to what this would mean if he were reelected.

The former president might not become the Republican Party’s nominee…. By the time the primaries take shape early next year, Republican voters could have genuine reservations about his electability in a general election… [But] he remains the party’s dominant figure and its most likely nominee.

President Biden has no serious opposition for the Democratic Party nomination….That means America could be heading for a rerun of the 2020 election, with the two nominees having traded places as incumbent and challenger.

…. A rematch between these two politicians would be an election with clear choices and enormous consequences for the future of the country that go beyond normal considerations of presidential elections.

In many ways, the election next year will look and feel like all elections… Put aside the [orange] elephant in the room and it’s just like elections always were…. The two would outline drastically different policy agendas that would move the country in opposite directions. The policy debate will be familiar and not unimportant, but it will not be the most important element of the election.

Txxxx’s [appearance] on CNN was a bright spotlight reminding everyone that this is a different era politically. He is anything but a traditional candidate, and, therefore, the stakes in these elections have been and will be unlike those that voters have had to confront….

For some Republicans, opposition to the Democrats’ priorities has been enough for them to stick with Txxxx. No doubt that is still the case. But it was perhaps easier for them to compartmentalize policy choices on the one hand vs. Txxxx’s [authoritarian]  instincts…. It’s not that Txxxx has changed; it’s that he takes every opportunity to reiterate those anti-democratic instincts, making the threats he represents more difficult for anyone to ignore.

His statements at the town hall were replete with false claims. He lied when he said the election was stolen. He still claims that those supporters who stormed the Capitol are patriots and good people. He still will not commit to accepting the outcome of the 2024 election. As he puts it, he will accept the outcome if he thinks it is fair. And he has made clear that he intends to attack the institutions of the federal government if he is reelected to the presidency.

Most Americans know where they stand on Txxxx and have for years. Close to a majority simply oppose him outright, and they have turned out in big numbers in three consecutive elections: 2018, 2020 and 2022. A portion of the electorate, the hardcore loyalists, will follow him wherever he takes them. Another portion … may still be torn.

Republican voters will render the initial judgments… Some of his rivals may attack directly. Others are likely to tiptoe around the big question about his fitness for office and the dangers another term in the White House would represent.

If he becomes the nominee, a broader electorate will judge him, and he said a number of things during the town hall that could hurt him, among them claiming credit for the overturning of Roe v. Wade. The instincts of many people will be to approach 2024 as something familiar and with choices comparable to those of the past. But [his] candidacy presents a unique challenge to the electorate, to elected officials, to strategists and operatives, to the media….  That is the [issue] of the 2024 election.

Unquote.

In other words, he’s a monster. He’d be even less restrained given another four years in office. He’d use the government to punish everybody he sees as an enemy. That means nobody should treat him like a normal candidate. And although the Post’s editorial board is too anemic to say it out loud, we should all vote for the Democratic presidential nominee no matter if it’s Biden, Vice President Harris, a random governor or senator, or the least charismatic Democrat on some town’s city council.

My hope is that voters will have a more realistic view of the parties and economy a year and a half from now and will elect more Democrats than anybody now thinks possible. That will happen if enough of us keep in mind the stakes.