Regarding this post, Seth Barrett Tillman writes:
There is a new view that the President has authority to sell newly issued government debt, absent congressional authority (i.e., Congress’s raising the debt ceiling).
Professor Epps, Dorf, and Buchanan et al. may be right or they be wrong about the constitutional point. (Disclosure: My own view is that they are wrong.) But it does not matter if they are right or wrong. The Constitution is not the relevant body of law.
The relevant body of law is fiduciary duty law. No trustee, director, or officer of a primary dealer (the organisations which actually buy newly issued federal debt) would touch debt issued by the President absent either (1) congressional consent, or (2) Supreme Court approval of the practice. Any such purchase by a primary dealer would be clear violation of its fiduciary duty of care to its stockholders. Full stop. Ex hypothesi, Congress will not have consented: that’s why the President’s action would be unilateral. Likewise, judicial approval could only happen (long) after the Treasury sells the debt. To sell the debt, the Government would have to agree to an astronomical premium, and that would leave the government much worse off than not selling debt at all.
Epps, Dorf, Buchanan and other make an interesting theoretical point (like some which I have made!), but wholly impractical point (ditto). The President cannot sell debt on the credit of the United States absent congressional authority. It is a matter of private law, not public/constitutional law.
Very well put. And it reminds me of a further point regarding Section 4 that I intended to make yesterday. Far from supporting a unilateral presidential power to issue debt, Section 4 points the opposite direction. It says (emphasis added):Details