Vanden Heuvel: A weapon against default

Katrina vanden Heuvel is editor and publisher of The Nation magazine. This is from The Washington Post.

On its current course, the United States is four weeks from defaulting on its debt. If that happens, businesses and financial institutions will fail. Home values will decline. Mortgage rates will skyrocket. Spending and investment will all but disappear. Social Security checks will stop being mailed.

Everything from military pay to food inspection will be compromised, if not cut off. The millions of Americans who are unemployed or underemployed will be joined by millions more.

This unthinkable outcome could be avoided by reasonable politicians making reasonable concessions. But Republicans have been negotiating in bad faith, unwilling to compromise even an inch on their extremist and absolutist positions.

Against that backdrop, President Barack Obama has summoned congressional leaders from both parties to the White House today to try to end the standoff. If that doesn't work, Obama may find that there is only one course left to avoid a global economic calamity: Invoke Section 4 of the 14th Amendment, which says that "the validity of the public debt of the United States . . . shall not be questioned."

This constitutional option is one that the president alone may exercise.

If no deal has been made by the White House's deadline (ahead of the Aug. 2 date set by Treasury), Obama could use a plain reading of that text to conclude -- statutory debt ceiling or not -- that he is constitutionally required to order the Treasury to continue paying America's bills. In that sense, this is not just a constitutional option, it is a constitutional obligation.

But such a solution is less than ideal for many reasons. There ought to be some concern about executive overreach; the very idea of the president deciding which laws are and are not constitutional has disturbing ramifications.

To the extent that the goal is to prevent market panic, it is unclear whether such a move would succeed. But market panic would surely follow default; and the consequences of inaction are too severe and long-lasting to take this option off the table.

If Obama does choose to move forward, he would do so on strong legal footing. In Freytag v. Commissioner (1991), the Supreme Court held that the president has "the power to veto encroaching laws . . . or to disregard them when they are unconstitutional." The final word still may lie with the Supreme Court, but the president need not wait for its opinion.

"As a simple matter of constitutional logic, the president can refuse to enforce a statute he believes violates the Constitution," says Barry Friedman, a professor at New York University Law School and author of "The Will of the People: How Public Opinion Has Influenced the Supreme Court and Shaped the Meaning of the Constitution."

It is also unlikely that the action would be successfully challenged in court. Only Congress would have standing to sue, but doing so would require a joint resolution, something a Democratic-controlled Senate would almost certainly block.

Obama said in his Twitter-conference yesterday that "we shouldn't even get to" this option. But he should commit to exercising it as a last resort.

Doing so would give him the leverage he lacks in the debt-ceiling negotiations. Right now, Republicans' willingness to let the economy default -- consequences be damned -- gives them enormous leverage. But in the absence of a deal, if the president is forced to exercise his constitutional obligation, Republicans would presumably get nothing -- not the trillion dollars in cuts already agreed to or the additional trillion in cuts they are seeking. The threat of invoking the 14th Amendment defuses the bomb Republicans have strapped to the hostage.

Taking such a step would be out of character for a president who has avoided this brand of confrontation. But great leaders adapt to adverse circumstances. The president has not just political and legal obligations here but a moral one, too. A default would be wrenching for the poor and middle class, stripping families of their jobs, their homes and programs they depend on. And a debt deal negotiated entirely on Republican terms could be devastating for everyone who isn't a hedge fund manager or private-jet owner.

That leaves the president with two choices: He can give in to unthinkable Republican demands or he can choose to exercise his constitutional authority, end the debt-ceiling standoff and craft a new budget deal, defined, finally, by shared sacrifice.