The power of sin is to accuse, condemn, sting, sadden, disquiet the heart, show a wrathful God, hell, and the like. This power of sin is done away with through free mercy, and yet there remain true remnants of this poison. Therefore both statements are true: “No Christian has sin”; and “Every Christian has sin.” From this there arises the distinction that with Christians there are two kinds of sin, the sin that is forgiven and the sin that remains, which must still be destroyed and washed away. This latter kind of sin is forgiven; it has been crushed by trust in mercy so that it no longer condemns or accuses. Yet because of this flesh it still sprouts and struggles within our flesh to bring forth fruits like the old fruits, to make us smug, thankless, and ignorant of God, as we used to be. These are the efforts of the remnants of sin in us, which even the saints feel, but through the Holy Spirit they do not give in to them.
Once a Christian is righteous by faith and has accepted the forgiveness of sins, he should not be so smug, as though he were pure of all sins. For only then does he face the constant battle with the remnants of sin, from which the prophet here wants to be cleansed [Psalm 51:2]. He is righteous and holy by an alien or foreign holiness … that is, he is righteous by the mercy and grace of God. This mercy and grace is not something human; it is not some sort of disposition or quality in the heart. It is a divine blessing, given us through the true knowledge of the Gospel, when we know or believe that our sin has been forgiven us through the grace and merit of Christ and when we hope for steadfast love and abundant mercy for Christ’s sake, as the prophet says here. Is not this righteousness an alien righteousness? It consists completely in the indulgence of another and is a pure gift of God, who shows mercy and favor for Christ’s sake.
This becomes clear through an analogy. If someone has earned capital punishment in the court of some prince and if the prince remits this out of grace, would you not say that this guilt was forgiven him by the gracious blessing of the kind prince, not by his own merit? He merited nothing but execution. But for such a man it is not enough to forgive the guilt he has committed. His bonds must be loosed, he must be clothed, something must be put into his hands to live by. The same thing happens to us in the transaction of our justification. When by mercy we are free of guilt, then we still need the gift of the Holy Spirit to clean out the remnants of sin in us, or at least to help us lest we succumb to sin and to the lusts of the flesh. As Paul says (Rom. 8:13) that by the Spirit we “put to death the deeds of the body.” … the flesh still remains and that the task of the Spirit is to war against the flesh, lest the flesh accomplish that for which it lusts.
Martin Luther commenting on Psalm 51:2
Luther’s Works v. 12: Selection from the Psalms 328-329