President Obama Should Issue an Executive Order to Raise the Debt Ceiling

Saul Jackman

As the debt ceiling deadline of October 17 approaches, President Barack Obama and the United States Congress are playing a game of chicken with the world’s economy on the line.  As both sides become increasingly entrenched in their positions, the risk of the United States defaulting on its debt, and of the economy spinning into a recession grows.  Meanwhile, President Obama has the institutional authority to put an end to this game, thus unilaterally preventing an international economic crisis. The question remains whether he will do so, and what those actions would mean for the crisis.

It is the right of any president to declare a state of emergency and to take action necessary to protect the nation.  America has a long-standing history of granting or tacitly accepting expanded presidential powers in times of crisis.  As the sole figure elected by the entire nation, he is the politician to whom we turn when faced with a national emergency, and in so doing, we often allow him leeway to act in ways that protect the nation even if we would not imbue those powers upon him in calmer times.  During the Civil War, Abraham Lincoln suspended habeas corpus.  During World War Two, Franklin Roosevelt set price controls, prevented labor strikes, and in many other ways manipulated the American economy so as to help the nation in its mission to topple the Axis Powers.  Moreover, emergencies – and presidential emergency powers – need not involve military conflict.  In the wake of Hurricane Katrina, George W. Bush declared a national emergency and went on to provide special federal aid to New Orleans.  In 1971, a state of emergency was declared in response to inflation.  Indeed, as of October 7, 2013, President Obama has issued 21 unclassified executive orders declaring a state of national emergency or modifying a previously issued executive order declaring a state of national emergency so that he can invoke extraordinary powers.

So if laws allow the president to declare a national emergency and subsequently act unilaterally (i.e., without the explicit consent of Congress) to resolve that emergency, then the next question is, what constitutes an emergency?  Judging by past actions, emergencies include wars, natural disasters, and economic catastrophes.  Would the United States defaulting on its debt qualify?  By most predictions, it would.  A Goldman-Sachs report estimates a 4.2% drop in annualized GDP as an immediate consequence of the government cutting its spending as needed to stay under the debt limit for just a single month.  Unemployment rates are likely to rise – the Great Recession saw unemployment increase from 5.0% in December 2007 to 10.0% in October 2009, and default is expected to yield similar effects.  And depending on governmental spending decisions, social security payments may be halted if the debt ceiling is not raised by November 1.  Surely, these projections constitute an emergency worthy of extraordinary measures.  An executive order to raise the debt ceiling may not completely eliminate market uncertainty, but it would greatly reduce concerns relative to possible chaos in financial markets.

True, President Obama has expressed reluctance to raise the debt ceiling unilaterally, as some have questioned whether such action would be constitutionally valid.  But such arguments fail to account for the contradiction between appropriations bills and the debt ceiling:  since Congress has both authorized spending and denied the President the means to collect the money to cover that spending, the President is technically in violation of the Constitution whether he raises the debt ceiling or not.  Put differently, the President is charged constitutionally both with executing the appropriations bills authorized by Congress as well as protecting the full faith and credit of the United States. A unilateral increase in the debt ceiling may be the only way to uphold his Constitutional duties.  As such, his primary constitutional responsibility is to implement the laws in such a way as to best protect the interests of the nation.  And the longer this crisis plays out, the clearer it will become to all involved – especially President Obama – that a state of emergency is upon us, and that the best way he can protect the interests of our nation is to unilaterally raise the debt ceiling.

More to the point, such an action would be self-enforcing once issued.  President Obama would look like a strong leader, guiding the nation out of an impending disaster.  And once the debt ceiling was raised, Congress would be put in the position of needing to assemble a majority in both the House and the Senate willing to vote on record to undo the President’s actions, and thus ensuring default.  In other words, Congress would need to take positive action to ensure an economic crisis.  Such an act would be political suicide.

Once a state of emergency is declared, the President would have multiple mechanisms through which to raise the debt ceiling – via an executive order, memorandum, or proclamation, to name a few.  The exact mechanism chosen, though, is of less importance than the action itself.  The ultimate arbitrator of the constitutionality of the President’s actions will be the Supreme Court (notably, not Congress).  Since the Constitution does not clearly state that the President cannot raise the debt ceiling in times of crisis – see the 14th Amendment argument – and the public is eager for any solution to the debt ceiling impasse, it seems likely that the courts would look favorably on presidential action to prevent an economic emergency of this magnitude.

Thus, the solution to the debt ceiling crisis lies in President Obama’s hands.  He needs to recognize this as the national emergency that it is, and issue an executive order to solve the problem.  Congress will get in line if he does.  It’s a game of chicken, but in this game, the president holds the trump card.