The NY Times reprises three possibile ploys for Obama to sidestep a debt ceiling crisis. Mercifully, they do not include the Magic Platinum Coin; weirdly, they also do not include the IOU plan pioneered by California and endorsed, at the Federal level, by a Times guest contributer last January.
The three notions are that the President can simply order the Treasury to issue more debt under (1) his emergency powers; (2) the 14th Amendment, which says that "The validity of the public debt... shall not be questioned"; or (3) the Conflicting Legislation, Waddya Gonna Do approach:
The third alternative, the subject of a 2012 article in The Columbia Law Review, focuses on what the article’s authors call the irreconcilable instructions Congress will have provided to Mr. Obama if it fails to act. Having been told to spend, but not to raise taxes or issue debt, “the president has to decide which of Congress’s orders to follow,” said Neil H. Buchanan, a law professor at George Washington University, who wrote the article with Michael C. Dorf, a law professor at Cornell. The president must, in the article’s words, “choose the least unconstitutional option.”
That option, the authors concluded, is issuing more debt.
“Anything you do that’s remotely realistic is going to be unconstitutional,” Professor Dorf said. “But the president should still try to minimize the constitutional violation.”
Hmm. The Times offers some legal pushback before finally tackling the bigger problem - what knucklehead would buy this debt of such dubious legality?
However one interprets the Constitution, there remains the practical question of whether the nation’s creditors would continue to lend to the United States if the president did take unilateral action.
“I don’t think anyone in their right minds would buy those bonds,” Michael W. McConnell, a law professor at Stanford, said of debt issued without Congressional authorization.
No kidding. The notion that these would trade as equal substitutes for conventional (i.e., duly authorized, legal) Treasury debt is absurd.
However, doling out IOUs to government suppliers in lieu of cash might very well be legal, and the IOUs could well be marketable. The fellow pushing it last January was