ppnl asks, Also what if the president takes congress to court to have their refusal to raise the debt ceiling declared unconstitutional? Then the courts could order congress to either borrow the money or stop spending.
Or more likely, since there is no clear-cut undeniable constitutional violation, the Court calls it a political question and keeps their head low. There are at least two arguments to support the Court refusing to get involved.
The Issue is the Politics of Avoiding Default, not Whether to Default
First, neither side is defending default but just arguing over how to avoid it–that means the Court could moot the case by arguing there’s no real case or controversy, just a political debate over how to avoid default. Congress is neither requiring nor demanding the executive branch not pay the debt–the President can avoid default by accepting Congress’s demands. I don’t think that issue has been stressed enough. The President’s hands are not tied on this; he just has to accept what is to him a politically unpalatable policy. I’m not defending the Republican proposal or arguing that the President should accept it. I’m very much on President Obama’s side on this issue. But as long as he has a political option, no matter how unlovely, the constitutional question is entirely avoidable, and if default does come into play, his constitutional responsibility for that will be equal to Congress’s, even if his political responsibility is not.
The Government May Constitutionally Be Able to Temporarily Default
Second, the Constitution does not actually say the government can’t temporarily default. The only clear meaning of the 14th Amendment’s public debt clause is that the debt cannot be abrogated. If the government fails to pay in a timely manner, but fully intends to ultimately honor its debt, it’s not clear to me that they have violated the Constitution. The validity of the debt has not been questioned.
Constitutional interpretation on this issue might revolve around the length of the default period. To consider the extreme alternatives, I can’t see the Court saying a payment that posts to someone’s bank account one day later than legally required due to Congress coming to agreement a day late or the President not signing in a timely manner reaches the level of a constitutional violation, but I can see the Court saying that a statute delaying payment of a currently due debt payment for the succeeding 100 years is a constitutional violation. (The issue of whether interest continues to accrue may be relevant to an actual ruling, but that’s more detail than I want to consider here).
That doesn’t mean debt-holders are screwed in the case of temporary default. The government has a legal obligation to them, and debt holders would be harmed (in the legal sense) by delayed payment, so they would have standing to sue to be made whole. I would be surprised if they didn’t win such a lawsuit.
In summary, I think we have an exceptionally serious political crisis, but I am not persuaded that we’re dealing with a serious constitutional question.