Theory of Inverse Impoundment

Pundits on the left have urged that President Obama has an upper hand in the debt ceiling fight because President Obama can simply raise the debt ceiling by executive order.[1]  Unfortunately for the hopeful left, Article I Section 8 of the Constitution grants Congress exclusive power to “borrow money on the credit of the United States.”[2][3]  Congress has provided authority to the Treasury to borrow money, but only to a limit, the infamous debt ceiling.[4]  Accounting gimmicks might prevent the Treasury from breaching the debt ceiling to avoid a default prohibited by the 14th Amendment,[5][6] but no authority exists for the executive to increase the debt ceiling since that would entail borrowing money without authorization of Congress.

President Obama’s options depend on what “spending” means and how “impoundment” applies to tax expenditures.[7]  If Congress allows a tax credit that pays a citizen to buy a house, has Congress spent or has Congress taxed?[8]  Is the tax credit really any different than a home mortgage deduction, which reduces taxes based on interest paid on a house?[9]   If tax expenditures are spending, can President Obama impound the tax expenditures, effectively raising taxes?  Congress has prohibited impoundment of spending by the executive.[10]  If Congress has required President Obama to spend all appropriations and tax expenditures are not “spending,” does President Obama have any choice other than “impounding” tax expenditures to avoid a default that would violate the 14th Amendment?

The Constitution’s genius lies in the conflicts of interest that it creates between three branches of government.  Rather than enumerating rules, the Constitution enumerates powers and lets the egos that migrate to the powers fight out “who decides.”  The weakest and strongest of the powers belong to the executive, who is charged to faithfully execute laws passed by Congress.[11]  If Congress overreaches by passing too many laws with too much complexity, power inures to the executive; if Congress passes no laws, the executive has virtually no power.  The tax code overreaches with its many credits and deductions that attempt to dictate how Americans lead their lives.  If a silver lining shines over the debt ceiling “crisis,” it is that a petty tyrant president will use the tax code to overreach and force Congress to simplify the tax code.

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