Balkinization  

Friday, September 19, 2008

When does a political/economic crisis become a constitutional one?

Sandy Levinson

The lead story in tomorrow's NYTimes, "Bush Officials Urge Swift Action on Rescue Powers," begins as follows: "The Bush administration, moving to prevent an economic cataclysm, urged Congress on Friday to grant it far-reaching emergency powers to buy hundreds of billions of dollars in distressed mortgages despite many unknowns about how the plan would work." I take it that it is increasingly obvious that most members of Congress will vote on a piece of legislation they almost certainly will not have read and even fewer members will be able to understand even if their eyes have passed over the legislation. But that is not my main point. ]

The article also notes that Democrats are justifiably curious why the Bush Administration is suddenly willing to supprt a massive new governmental intervention and the expenditure of somewhere between $500 billion and $1 trillion, which will inevitably lead either to a tax increase to pay for it or a hidden tax increase called inflation, at the same time it has adamantly resisted supporting far less costly social welfare programs for, say, medical care for children. So, not surprisingly, the current plan seems to include some of these social welfare expenditures in addition to the Paulson-Bernanke bailout bill. I strongly support such add-ons and would be appalled if the Democrats acquiesce in passing a "clean bill" that speaks only to the Wall Street crisis.

Given that the Democrats almost certainly have the votes--indeed, will John McCain or someone like Susan Collins, who faces strong opposition in Maine, dare to vote against programs to aid ordinary Americans--to pass add such programs, is it thinkable that George Bush would dare to veto such legislation? If he did dare to, would that count as a "constitutional crisis," even though no one would have behaved illegally (unlike many of Bush's actions with regard to the so-called "global war on terror," which may constitute a quite different sort of "constitutional crisis")? The point is that the standard-form operation of our political institutions would, in this instance, perhaps lead to a "cataclysm," should Congress and the President decide to play a game of chicken, or have what Eric Posner and Adrian Vermeule label a "constitutional showdown" with each other. The easiest way to avoid that, presumably, is for the President to realize that he really cannot use the power that the Constitution gives him. But once we recognize that it would be criminally irresponsible for the President to use his power in this kind of instance, we might ask why we are so tolerant of policy-based presidential vetoes in so many other instances.

In any event, current events are providing a wonderful lesson in the most important aspects of the contemporary American constitutional order, and, once more, Tocqueville's oft-quoted comment that all political issues are ultimately judicialized is exposed as the preposterous nonsense it has always been. (A tip of the hat to Mark Graber for being the first to emphasize this point in his scholarship.)

Comments:

I wouldn't be too sure about the judiciary. We don't know the details of any of these proposals yet. While I suspect the judiciary will sign off on them (assuming someone even has standing to challenge), there's no guarantee of that.

As I've said before, I don't share your dislike of the veto. I see good reasons for it, though I might reduce the override to 60 votes instead of 67.

I don't think that a Bush veto of a rescue bill would create a constitutional crisis. While it might be accurate to describe Andrew Johnson's vetos as creating a constitutional crisis, I don't think that can be said of any other vetos, even Jackson's Bank veto. Even in Johnson's case, the crisis lay less with the vetos (which were all overridden) and more with the confrontation with Congress of which they were merely one aspect. There isn't enough time left for Bush for that to become an issue, and in any case the Dems in Congress today don't have the stones. Where is Thaddeus Stevens when you need him?
 

As readers will know, one of the matters seriously discussed by your Founding Fathers was whether the head of the executive should govern with the assistance of a council modelled on the UK Privy Council, emulated in many of the then North American colonies by the fact that the Governor was required to take the advice of a Council.

As readers will also know, the Privy Council still exists in the UK and has certain formal functions. One of the conventions of our constitution is that the leading politicians of all parties are sworn as members of the Privy Council with a fairly blood-curdling Oath which goes back to Tudor times:-

The Oath of a Privy Counsellor

You do swear by Almighty God to be a true and faithful Servant unto The Queen’s Majesty as one of Her Majesty’s Privy Council. You will not know or understand of any manner of thing to be attempted, done or spoken against Her Majesty’s Person, Honour, Crown or Dignity Royal, but you will lett and withstand the same to the uttermost of your power, and either cause it to be revealed to Her Majesty Herself, or to such of Her Privy Council as shall advertise Her Majesty of the same. You will in all things to be moved, treated and debated in Council, faithfully and truly declare your Mind and Opinion, according to your Heart and Conscience; and will keep secret all matters committed and revealed unto you, or that shall be treated of secretly in Council. And if any of the said Treaties or Counsels shall touch any of the Counsellors you will not reveal it unto him but will keep the same until such time as, by the consent of Her Majesty or of the Council, Publication shall be made thereof. You will to your uttermost bear Faith and Allegiance to the Queen’s Majesty; and will assist and defend all civil and temporal Jurisdictions, Pre-eminences, and Authorities, granted to Her Majesty and annexed to the Crown by Acts of Parliament, or otherwise, against all Foreign Princes, Persons, Prelates, States, or Potentates. And generally in all things you will do as a faithful and true Servant ought to do to Her Majesty. SO HELP YOU GOD

The modern utility of having the leaders of all major parties sworn of the Council is that on matters concerning the security of the state or other matters of great national moment, the government of the day can impart information to and hold discussions with the opposition on "Privy Council Terms" secure in the knowledge that those discussions will remain confidential.

I was very struck by the NY Times article Congressional Leaders Stunned by Warnings. Why, I thought, should they be "stunned"? This crisis was as predictable as hurricane Katrina - indeed, much more so.

There are officials in the Federal Reserve and the US Treasury whose job it is to monitor the global financial situation, just as there are similar officials in every other country. A very great deal of the effort of various intelligence agencies is devoted to enabling governments to stay a little ahead of the game - I say "a little ahead" because the world's first intelligence agencies were developed by bankers - having advance intelligence is how the great bankers of ancient Greece and Rome, the Siennese and Florentines, the Rothschilds and others, all got very, very rich - and the best operators today in the world's financial markets have their analysis and intelligence services too - often better ones than those of some national governments.

Everyone with any expertise knew six months ago that this was coming, the only question was when. So how come the congressional leadership was only briefed yesterday?

Was it that the present administration hoped against hope that the necessary remedial action could be postponed until after the election and then dumped in the in-tray of the incoming one?

That to me would seem to have been a dereliction of duty of the first order. Counterfeiting the currency was long considered treason - Benjamin Franklin's 1777 Philadelphia £4 notes bore the warning "To counterfeit is death".

What ought to be the consequence of unnecessarily adding between 1-2 trillion dollars to the national debt? Impeachment perhaps?
 

"What ought to be the consequence of unnecessarily adding between 1-2 trillion dollars to the national debt? Impeachment perhaps?"

Would CASTRATION be cruel and unusual?
 

Hasn't the USA been there before several times, when the national debt has neared the legislatively enacted ceiling? Admittedly this was in otherwise quiet times and the game of chicken could be played out more decorously. But the potential for disaster was always there.
 

In no serious sense was Jackson's veto of the Bank a "constitutional crisis." For starters, the Bank still had four years to go. Secondly, the veto assured that the Bank would become one of the central issues of the 1832 campaign, which Clay was confident he could win by denouncing Jackson's imperious veto. He was obviously wrong.

In this context, a veto by Bush would risk the "cataclysm" that Paulson and Bernanke are warning about. That would be an economic crisis of the first order, which would be triggered by the fact that the Constitution allows one person to countermand substantial majorities of both houses of Congress.
 

One question about the proposal and related to the judicialization:

Is not the proposed bill against Section 10 of the US Constitution ("Law impairing the Obligation of Contracts")?

Or It Does not cover "enrichment of Contracts"?

Is this an originalist issue?

I am not a US citizen, but any constitutional crisis here is related to the fact that the Constitution does not seem to cover such legislation and there has been no previous one of that type and scale.

Back to Tocqueville
 

One question about the proposal and related to the judicialization:

Is not the proposed bill against Section 10 of the US Constitution ("Law impairing the Obligation of Contracts")?

Or Does it not cover "enrichmnet of Contracts"?

Is this an originalist issue?

I am not a US citizen but any constitutional crisis here is related to the fact that the Constitution does not seem to cover such legislation and there has been no previous one of that type and scale.

Back to Tocqueville
 

It's a federal law or act, and the contract clause begins, "No state shall..."

So, no, it doesn't violate the contract clause.
 

For what it is worth, the Supreme Court during the '30's in effect decided that the Contract Clause ran against the US Government via the Due Process Clause of the Fifth Amendment. I don't remember the name of the case, alas, but I count on one of the readers of Balkinization to supply the information shortly.

If one supports the Contract Clause at all (and believes, say, that Blaisdell was wrongly decided, as our libertarian friends certainly do), then there is no good reason to refuse to apply it, at least presumptively, against the national government.
 

In no serious sense was Jackson's veto of the Bank a "constitutional crisis."

I agree. That was my point -- if that veto did not cause a constitutional crisis, then it's hard to see how a hypothetical Bush veto of a particular bailout bill could do so. It's not impossible for a veto to have that effect, but it's hard to see.
 

The proposed bill also contains the following:

“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency”.

I think it also deserves constitutional scrutiny
 

Sandy:

The reason why a conservative would take government action here as opposed to creating more entitlements is that a crash of the financial sector would substantially harm everyone and very likely reduce government revenues for years in the future far more than the purchase and then resale of these assets ever will. A new entitlement costs everyone forever and only grants benefits to a narrow portion of the citizenry.

The Dems would be exceedingly unwise to attempt to larder up this emergency bill. Hopefully, a veto threat and a revolt of the Blue Dogs will not be necessary.
 

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