Is There a Poison Pill in the Debt Ceiling Bill?

The House GOP leadership introduced its 3-month debt limit increase yesterday and plans to vote on it tomorrow. As a sweetener to paper over their turnaround on the debt limit, the GOP attached a “no budget no pay” provision to H.R. 325 that could change the payment of Congressional salaries. While this looks like unconstitutional grandstanding, there is a chance that — intentionally or not — the “no budget no pay” part of the statute could function as a poison pill clause. If so, I am concerned that any challenge to the unconstitutional part could have the effect of restoring the debt ceiling while seeming to put the blame on the courts rather than Congress.

Explaining what I’m worried about is slightly convoluted, involving first the validity of a Constitutional Amendment with a strange ratification history and second the arcane rules about “severability” — what courts should do when they find part of a statue unconstitutional — so bear with me.

As you may know, the House GOP’s fig leaf for its temporary parole of the hostage it had taken (the international economy) was to say that unless the Congress passes a budget this year — instead of the various continuing resolutions and such under which we’ve operated for some time — federal legislators would not get their salaries.

This provision is (almost certainly) blatantly unconstitutional. The US Constitution provides, in the 27th Amendment (proposed 1789, ratified 1992(!)),

No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.

The reason for the “(almost certainly)” is that the 27th Amendment has an unusual history. The provision was one of the two amendments in the original bill of rights that did not get approved by a sufficient number of states. It laid largely dormant for almost two centuries until being revived due to a campaign started by U. Texas undergraduate. (He got a C on the paper proposing the campaign, by the way.)

No court has ruled on the validity of the 27th Amendment, but in light of Coleman v. Miller, 307 U.S. 433 (1939) and the subsequent acceptance of the 27th Amendment by Congress, I think it’s a very good bet that just about every judge in the land would say it was valid.

If so, we turn to figuring out whether H.R.325 violates the 27th Amendment. The structure of the bill “To ensure the complete and timely payment of the obligations of the United States Government until May 19, 2013, and for other purposes” is simple: Two sections. Section One is short, and says the debt ceiling “shall not apply for the period beginning on the date of the enactment of this Act and ending on May 18, 2013.” Section Two is much longer and purports to put congressional salaries in escrow until the end of the session if no budget is passed. I’ve put the full text of it at the end of this post. The key parts that relate to salaries are these:

[2(a)](1) IN GENERAL- If by April 15, 2013, a House of Congress has not agreed to a concurrent resolution on the budget for fiscal year 2014 pursuant to section 301 of the Congressional Budget Act of 1974, during the period described in paragraph (2) the payroll administrator of that House of Congress shall deposit in an escrow account all payments otherwise required to be made during such period for the compensation of Members of Congress who serve in that House of Congress, and shall release such payments to such Members only upon the expiration of such period.

(4) RELEASE OF AMOUNTS AT END OF THE CONGRESS- In order to ensure that this section is carried out in a manner that shall not vary the compensation of Senators or Representatives in violation of the twenty-seventh article of amendment to the Constitution of the United States, the payroll administrator of a House of Congress shall release for payments to Members of that House of Congress any amounts remaining in any escrow account under this section on the last day of the One Hundred Thirteenth Congress.

Does this comply with the 27th Amendment? I don’t think this is even a close question: in my view the escrow provision clearly does not. The prohibition on “varying the compensation” seems pretty clear to me: it means no changes in amount, and no changes in time of payment because there is a time value to money. Anyone who gets a salary would think it a very material change in the terms if the money were escrowed for more than a year and a half instead of being made available to pay the mortgage.

You might, therefore, be forgiven for dismissing the House GOP insistence on this provision as mere grandstanding — one quick lawsuit by a member of Congress wanting his pay, and the pay limit is toast.

But here, finally, is where I have a somewhat scary thought: Is it possible that the pay provision is non-severable from the debt ceiling increase? Could it be the case that if a court strikes down the pay provision — as I think it must do if asked — will the court also be forced to nullify the debt ceiling increase provision of the bill? Is this pay provision not just grandstanding but in fact, and perhaps even intent, a piece of Machiavellian scheming?

Answering those questions requires some background in the law relating to “severability”.

We are long past the point where one unconstitutional clause necessarily infects an entire statute. There is now a substantial body of doctrine about when a court should “sever” the unconstitutional piece and leave the rest. Much of that doctrine concerns statutes with a “severability clause”, an instruction from Congress about what to do if a dubious clause is struck down. As H.R. 325 does not have a severability clause, we can ignore all that and turn straight to the rules for statutes without severability clauses.

The Supreme Court recently addressed this very issue in Free Enterprise Fund v. Public Co. Accounting Oversight Board, 130 S.Ct. 3138, 3161-62 (2010), which involved the fate of the Sarbanes-Oxley Act. I’ve excised the citations in the quote that follows:

“Generally speaking, when confronting a constitutional flaw in a statute, we try to limit the solution to the problem,” severing any “problematic portions while leaving the remainder intact.” Because “[t]he unconstitutionality of a part of an Act does not necessarily defeat or affect the validity of its remaining provisions,” the “normal rule” is “that partial, rather than facial, invalidation is the required course[.]” Putting to one side petitioners’ Appointments Clause challenges (addressed below), the existence of the Board does not violate the separation of powers, but the substantive removal restrictions imposed by §§ 7211(e)(6) and 7217(d)(3) do. Under the traditional default rule, removal is incident to the power of appointment. Concluding that the removal restrictions are invalid leaves the Board removable by the Commission at will, and leaves the President separated from Board members by only a single level of good-cause tenure. The Commission is then fully responsible for the Board’s actions, which are no less subject than the Commission’s own functions to Presidential oversight.

The Sarbanes–Oxley Act remains “ ‘fully operative as a law’ ” with these tenure restrictions excised. We therefore must sustain its remaining provisions “[u]nless it is evident that the Legislature would not have enacted those provisions … independently of that which is [invalid].” Though this inquiry can sometimes be “elusive,” the answer here seems clear: The remaining provisions are not “incapable of functioning independently,” and nothing in the statute’s text or historical context makes it “evident” that Congress, faced with the limitations imposed by the Constitution, would have preferred no Board at all to a Board whose members are removable at will.

So the issue is whether (1) HR 325 remains fully operative as a law, and (2) whether in light of the statutory and historical context “it is evident that the Legislature would not have enacted those provisions … independently of that which is [invalid].”

Even assuming HR 325 passes the first test, does it pass the second? Will it be clear at passage that the bill would have passed without the Republican face-saving section on Congressional pay?

There are powerful reasons to say no, that the two parts of the statute are tightly linked. Just consider what the GOP leadership has been saying. For example, Eric Cantor and John Boehner:

“We will authorize a three-month temporary debt limit increase to give the Senate and House time to pass a budget,” House Majority Leader Eric Cantor, R-Va., said. “Furthermore, if the Senate or House fails to pass a budget in that time, members of Congress will not be paid by the American people for failing to do their job.”

In selling the idea, House Speaker John Boehner called the Senate’s failure to pass a budget over the last four years “shameful.”

Or Darrell Issa, who originally said the no pay idea was unconstitutional, but then backpeddled, said,

“I strongly support the House Republican leadership’s proposal to link the debt ceiling increase to passage of a budget by the Senate, which has gone 1360 days without passing a blueprint for federal spending.

So Congressional leaders are selling the provisions as linked. Does this mean that the two sections of H.R. 325 are too closely linked to be severable? I think the best answer is that we don’t know yet, since the vote hasn’t happened, but it is a real possibility. The answer may turn on the final vote and the debate around it. The more that Members of Congress say the only reason they are going along is the “no budget no pay” clause, the worse it will look. If the vote is close, will a judge be able to say in good conscience that H.R. 325 would have passed without the pay provisions? I’m not sure I could say that if I were a judge. On the other hand, if the vote is very lop-sided, it could be easier to argue, and to persuade oneself, that the provisions were not key to passage, and that even some Republicans voting for it might have swallowed the debt ceiling increase without the pay sop attached.

One could of course argue that all the talk about the value of the “no budget no pay” rule is just legislative camouflage, and should not be taken too seriously. That might well be true politically. But in the face of statements by both key House leaders and perhaps many of the rank and file saying “no budget no pay” matters to their vote, asking a court to in effect hold that members of a co-ordinate branch of government were dissembling might be asking lot.

Full text of HR 325

113th CONGRESS

1st Session

H. R. 325

To ensure the complete and timely payment of the obligations of the United States Government until May 19, 2013, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

January 21, 2013

Mr. CAMP (for himself and Mrs. MILLER of Michigan) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on House Administration, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To ensure the complete and timely payment of the obligations of the United States Government until May 19, 2013, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. TEMPORARY SUSPENSION OF DEBT CEILING.

(a) Suspension- Section 3101(b) of title 31, United States Code, shall not apply for the period beginning on the date of the enactment of this Act and ending on May 18, 2013.

(b) Special Rule Relating to Obligations Issued During Suspension Period- Effective May 19, 2013, the limitation in section 3101(b) of title 31, United States Code, as increased by section 3101A of such title, is increased to the extent that–

(1) the face amount of obligations issued under chapter 31 of such title and the face amount of obligations whose principal and interest are guaranteed by the United States Government (except guaranteed obligations held by the Secretary of the Treasury) outstanding on May 19, 2013, exceeds

(2) the face amount of such obligations outstanding on the date of the enactment of this Act.

An obligation shall not be taken into account under paragraph (1) unless the issuance of such obligation was necessary to fund a commitment incurred by the Federal Government that required payment before May 19, 2013.

SEC. 2. HOLDING SALARIES OF MEMBERS OF CONGRESS IN ESCROW UPON FAILURE TO AGREE TO BUDGET RESOLUTION.

(a) Holding Salaries in Escrow-

(1) IN GENERAL- If by April 15, 2013, a House of Congress has not agreed to a concurrent resolution on the budget for fiscal year 2014 pursuant to section 301 of the Congressional Budget Act of 1974, during the period described in paragraph (2) the payroll administrator of that House of Congress shall deposit in an escrow account all payments otherwise required to be made during such period for the compensation of Members of Congress who serve in that House of Congress, and shall release such payments to such Members only upon the expiration of such period.

(2) PERIOD DESCRIBED- With respect to a House of Congress, the period described in this paragraph is the period which begins on April 16, 2013, and ends on the earlier of–

(A) the day on which the House of Congress agrees to a concurrent resolution on the budget for fiscal year 2014 pursuant to section 301 of the Congressional Budget Act of 1974; or

(B) the last day of the One Hundred Thirteenth Congress.

(3) WITHHOLDING AND REMITTANCE OF AMOUNTS FROM PAYMENTS HELD IN ESCROW- The payroll administrator shall provide for the same withholding and remittance with respect to a payment deposited in an escrow account under paragraph (1) that would apply to the payment if the payment were not subject to paragraph (1).

(4) RELEASE OF AMOUNTS AT END OF THE CONGRESS- In order to ensure that this section is carried out in a manner that shall not vary the compensation of Senators or Representatives in violation of the twenty-seventh article of amendment to the Constitution of the United States, the payroll administrator of a House of Congress shall release for payments to Members of that House of Congress any amounts remaining in any escrow account under this section on the last day of the One Hundred Thirteenth Congress.

(5) ROLE OF SECRETARY OF THE TREASURY- The Secretary of the Treasury shall provide the payroll administrators of the Houses of Congress with such assistance as may be necessary to enable the payroll administrators to carry out this section.

(b) Treatment of Delegates as Members- In this section, the term `Member’ includes a Delegate or Resident Commissioner to the Congress.

(c) Payroll Administrator Defined- In this section, the `payroll administrator’ of a House of Congress means–

(1) in the case of the House of Representatives, the Chief Administrative Officer of the House of Representatives, or an employee of the Office of the Chief Administrative Officer who is designated by the Chief Administrative Officer to carry out this section; and

(2) in the case of the Senate, the Secretary of the Senate, or an employee of the Office of the Secretary of the Senate who is designated by the Secretary to carry out this section.

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9 Responses to Is There a Poison Pill in the Debt Ceiling Bill?

  1. Brad DeLong says:

    A bill that expires on May 19…

    How does a court rule before May 19 in a way that reimposes the debt ceiling before May 19?

    A member of Congress sues for their pay, and moves to enjoin the payroll administrator from empounding Congressional salaries, and a judge grants the injunction and also… forbids a bond issue?

    It is true that in the world of Bush v. Gore and NFIB v. Sibellius, a court can and will do whatever damned lawless thing it pleases without even the Warren Court’s reliance on some broad underlying conception of justice to support it, but wouldn’t that be a bridge too far for Roberts, C.J.?

  2. Sue April 15, ask for a TRO. For extra evil, be a Republican suing for a TRO and ask for a declaration that the entire bill fails.

    That takes us to the standing question. A smart district court judge might punt on the debt question on the grounds that the plaintiff did not have standing to raise it and that it wasn’t presented.

    Alternately, if she felt obligated to rule on the severability question, she could stay that part of the ruling, and the court of appeals could slow ball the whole thing for a year and a half.

    So yes, there are ways to delay it. A Bickellian would doubtlessly approve of them.

  3. Patrick (G) says:

    A friend of the court should suggest that this be handled after a sufficiently long delay for evaluation so that it actually goes into effect for this congress, as was plainly the intent of this congress, but be ruled unconstitutional for future congresses. And then let’s see how quickly this Congress reverses itself.

  4. Vic says:

    A pity that you can’t apply your time to an analysis of the Affordable Care Act, which is also clearly unconstitutional (to a whole lot of people), but was saved from being so called by SCOTUS with the addition of a poison pill to it (by Justice Roberts’ interpretation of it as a tax, without ruling on whether it was a constitutionally enacted tax).

  5. Pingback: Current Mortgage Rates for Wednesday January 23 2013 | Mortgage Rates & Trends: Mortgage Blog

  6. Daniel Schuman says:

    Let’s pretend (for a moment) that the escrow is permissible. ( I don’t see how it can be. ) Because the pay cannot be varied per the 27th Amendment, if the money is held for a period of time, then its present-day value would unlawfully diminish *unless* it also accumulates interest. What would that interest rate be? Maybe it’s the rate of inflation (thus, keeping it at present day value). Maybe it’s the amount that the money would have earned if invested. Regardless, the legislation doesn’t appear to address this issue.

    A much more practical question is one of standing. Presumably, only Members of Congress (as the injured parties) would have standing to sue. But are there any Members who would do so? And if there are, it appears that stripping the court of jurisdiction to hear such a case would be the only other route to avoid a day of reckoning, although it is unclear whether such jurisdiction could properly be removed. (My bet is that it cannot.)

  7. James Cranshow says:

    Raising the debt ceiling, only benefits private foriegn bankers and it is a poison pill for future generations.

    We will be paying interest over interest to the private banks. Most of our taxes are going there anyway! Mass media blames the problem on immigrants and Social Security. Just watch Money Masters by Bill Still.

    We will get out of this mess, when US treasury prints its own money and does not pay any interest to private bankers. US Government should be loaning money to private bankers not borrowing from them.
    That was the main reason Ben Franklin and Thomas Jefferson started US Independence! Now we are back in their pocket and we will pay up to our neck for many generations to come. Indirect taxation of people by the private bankers!

    • *Sigh* I’m afraid you are badly misinformed. 1) The majority of our debt is held domestically. 2) Our debt is paying Really Low Interest. It’s attractive to investors because it is stable and reliable — despite the best efforts of those who would keep the debt ceiling in place and risk a disastrous default! — but it sure isn’t making the investors money in real terms. In real terms they are paying us to take their money at present.

      Thus, at present, with low rates and vast under-capacity in the economy (e.g. high unemployment) high borrowing makes a lot of sense. That will be less true when circumstances (rate of unemployment, rate of interest) change.

      Failing to raise the debt ceiling would mean we create lack of trust in our debt, and the rates zoom. That would be Bad. Real Bad.

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