Moody's Investors Service recently announced that if the U.S. government does not make progress in raising the debt ceiling by mid-July it might be forced to downgrade the U. S. government's current AAA credit rating.
Matthew E. Zames, chairman of the Treasury Borrowing Advisory Committee, notes, "Any delay in making an interest or principal payment by Treasury even for a very short period of time would put the U.S. Treasury and overall financial markets in uncharted territory, and could trigger another catastrophic financial crisis."
A virtual unanimous chorus of economists likewise warns that a failure to raise the debt ceiling could precipitate a double-dip recession, while some more pessimistic voices prophesy a cataclysmic global depression.
While almost all financial experts agree that serious deficit reduction is needed, there also is a growing level of concern in financial circles that political ideology may trump common sense, resulting in at least a temporary default.
What makes the present political and economic situation so perilous is that other than citing a provision in the 14th amendment, there appears to be no other constitutionally acceptable options to possible congressional inaction or an eventual stalemate between the president and Congress.
There is, however, another alternative.
In recent decades, presidents have relied on a series of unilateral powers such as executive orders, executive agreements and presidential signing statements. The development of unilateral presidential power has been controversial.
In my own research, I have expressed serious concerns about the accretion of presidential power at the expense of the legislative branch.
Presidential use of unilateral power often violates the basic precepts of our precious system of checks and balances and separation of power.
Still, while unilateral power can be unwarranted, there are times when it is appropriate for presidents to use these powers to promote the interests of the American people. President Abraham Lincoln employed such emergency executive powers during the Civil War, for example.
The inherent risks of the present financial crisis are so potentially catastrophic, that unilateral power is both justifiable and warranted to prevent irreparable harm to our nation's economy and its people. The problem is that existing unilateral powers do not appear to be legally justifiable under the present circumstances.
A new form of unilateral power, what I call an emergency order, is, however, constitutionally defensible.
An emergency order combines the powers of an executive order, which has the standing of law, with the president's authority as commander in chief. It also is premised on an idea quite familiar to the founders — a prerogative by which a president can act unilaterally in the best interest of our country in an emergency situation.
The president is then held accountable by the specter of subsequent congressional oversight and, in the most egregious of cases, by the penalty of impeachment.
As with an executive order, an emergency order also would be subject to contravention by the legislative process.
How would President+++ Barack Obama issue an emergency order to suspend the debt limit? The president would have to:
■ Specify that a state of emergency exists or will exist without immediate remedial action.
■ Explain how national security would be affected by inaction.
■ Clearly define the action to be taken.
■ Explain why inaction would result in irreparable harm to the nation.
■ Provide a remedial action limited to ameliorating the present crisis.
All five conditions must be met. Does the present situation meet these criteria? Most economists and many business leaders believe that an inability to raise the debt ceiling would have damaging and potentially catastrophic economic consequences.
Certainly, an already vulnerable American public would suffer, with increased interest rates, delays in payment for military personnel and the elderly, as well as a suspension of a variety of other vital services.
Since our nation is currently at war in both Iraq and Afghanistan, there also is a serious risk to our nation's troops overseas and to our strategic international interests. The case therefore is strong that our nation would suffer immediate and quite likely irreparable harm if the debt ceiling is not raised.
Consequently, the current economic situation satisfies the criteria for issuing an emergency order so long as that action is limited to ameliorating the present crisis — simply eliminating or lifting the debt ceiling.
A strong case therefore can be made that the president would be acting in the best interests of the nation to ameliorate a potentially catastrophic national emergency.
If Obama and Congress are unable to reach an agreement, the only winners of the subsequent and inevitable blame game will be whichever set of politicians can persuade the public they are not to blame.
Given the high potential for continuing political stalemate and the potentially disastrous costs of inaction, if Congress is unwilling or unable to pass legislation, I urge Obama to issue an emergency order suspending the national debt.
We cannot leave America's future in the hands of the usual game of politics.