I had lunch with an old friend yesterday–a former law school dean and noted legal scholar–and our talk turned to the current impasse over the debt ceiling. He asked me whether I was familiar with a 1935 Supreme Court case titled Perry v. United States; I admitted I’d never heard of it.
Perry, it turns out, is pretty compelling precedent for the proposition that the United States cannot constitutionally be permitted to default on its obligations. The Court relied primarily on language in Article 1, Section 8 of the Constitution, although it also cited Section 4 of the 14th Amendment. My friend sent me a legal memorandum that he had co-authored on the subject. That memorandum included the following paragraph:
In short, the core holding of Perry is that the constitutional “Power” of Congress “To borrow Money on the credit of the United States” carries with it a concomitant duty to pay ― and not to default. While some members of the Court held differing views on the correct factual resolution of the Perry case, all nine justices, including four dissenters, agreed that the United States could not, within constitutional limits, default on its financial or contractual obligations.
The case has been cited with approval by the Supreme Court several times–most recently in 2005.
My friend’s legal conclusion is blunt: If default would be unconstitutional, then the Debt Ceiling Act is unconstitutional if it is read to require default. Since there are a number of federal statutes that confer power on the President and Secretary of the Treasury to borrow money–statutes that are routinely used when the debt ceiling isn’t an issue– and since an unconstitutional Act is void, those statutes would (again, according to the memo) continue to authorize the President to pay the country’s debts.
Makes sense to me, but this is definitely not an area of expertise for me.
Of course, if the President were to follow Perry and pay the nation’s debts, the Obama haters would immediately move to impeach (they would impeach him for breathing if they could).
It’s hard to envision a successful impeachment for actions taken to avoid an international economic catastrophe–but then, it used to be hard to envision a Congress as insane as this one.