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Is the Debt Cap Unconstitutional? A "Thought Experiment" from 1998

Recent discussions of whether the Fourteenth Amendment’s Public Debt Clause would allow the president to ignore the debt limit reminded me of a paper on the topic that a former student of mine, Michael Abramowicz, wrote under my supervision almost fifteen years ago. Michael has since become a prolific scholar on other topics, and this year he had the rare distinction of publishing articles in both the Harvard Law Review (here) and the Yale Law Journal (here). Meanwhile, he and I have recently coauthored twice, on randomizing law (also with my colleague Yair Listokin) and on using bonds as commitment devices. I tried to find Michael’s old article with Google and couldn’t, so I wrote to him asking about it. With his permission, I include here his reply:

The article is not publicly available online, though it is available on Westlaw or on Hein Online for those with access. Your question has inspired me to get the penultimate version of the article up on SSRN, and it is now available. The article mostly speaks for itself, but I’ll add a few points to put it into the context of the current debate:
(1) The Public Debt Clause was poorly drafted, and because Section 4 was the least important part of the Fourteenth Amendment, there is not a lot of legislative history to guide us. Particularly frustrating was the Framers’ use of the passive voice: “The validity of the public debt … shall not be questioned.” What counts as a questioning of the debt? There is room for debate. To my ear, the word “questioned” is broad, referring not just to direct repudiation of the debt, but at least also to default on the debt. My article defended a broad interpretation that would count as a questioning of any statute that ultimately would lead to a default, if Congress hypothetically never passed any other statutes.
(2) If that broad interpretation is correct, however, it makes constitutionally suspect not just the debt limit statute itself, but the entire statutory fiscal scheme. As I understand it, Medicare alone, if untouched, would eventually become such a burden that a default would follow. Of course, that won’t happen; trends that can’t continue won’t. But my paper emphasizes that the argument for finding the debt limit unconstitutional is the same as the argument for finding an unsustainable fiscal policy unconstitutional. Each puts the nation on a path to default that can be averted only by congressional action.
(3) Until this month, no one joined the argument or cared much about my article, but now Garrett Epps has taken a position similar to mine, and Michael Stern has written some thoughtful posts on the other side (here, here, here, and here). One argument that Michael makes that is particularly intriguing is that, if I am correct that a default would violate the Public Debt Clause, who is to say that the appropriate remedy is for the President to ignore the debt limit? After all, it is the combination of the debt limit and our taxation and spending policies that would lead to default. Could the President not unilaterally cut spending or raise taxes instead?
(4) These considerations make me think that a modest approach for the President to take would be not to conclude that the debt limit is facially unconstitutional, but rather that it would be unconstitutional as applied, to the extent that it would prevent payment of interest on the debt. If the President took that position, the Administration would in effect continue to raise the debt limit as necessary to make payments on the debt. But when other bills came due, if there were insufficient funds to pay them, that would not justify the issuance of additional debt. The consequences of such nonpayment are sufficiently severe that the President and Congress could continue to play their game of chicken, but the worst case scenario would be a government shutdown, rather than a default. Perhaps the President can accomplish this even without invoking the Public Debt Clause, simply by prioritizing payments on the debt over other payments that come due, but his ability to do that depends in part on the timing of revenues and expenditures, and an announcement that the President will make payments on the debt despite the debt limit statute no matter what would calm the markets. Perhaps the Office of Legal Counsel will issue an opinion helping the President to do this, but if not, President Obama has shown a willingness to seek out other legal opinions to allow him to reach the ends he seeks.
(5) The President may not be willing to do this, though, because of the political cost. Many readers found my argument that the debt limit may make the debt limit unconstitutional counterintuitive simply because the statute had been around so long, and the President also might believe that a crisis would ultimately help him politically. In that case, it will be interesting to see whether a bondholder files a preemptive lawsuit, and whether the courts would find such a suit justiciable, an issue I consider preliminarily in the article.