Debt ceiling and the 14th amdendment

[jimmy olsen]

What do Languish lawtalkers think of this argument?

https://www.rollcall.com/2021/09/20/debt-limit-options-narrowing-14th-amendment-chatter-returns/

Debt limit options narrowing, 14th Amendment chatter returns
With Republicans taking a hard line, there's no clear path to avoiding a default on U.S. obligations

By Paul M. Krawzak
Posted September 20, 2021 at 11:07am
Call it the "in case of emergency, break glass" option: The president invokes the Civil War-era 14th Amendment to the Constitution to ignore the statutory debt limit and continue to borrow if lawmakers can't agree to give the Treasury Department more borrowing room.

With lawmakers and the White House careening toward the diciest debt limit confrontation since the Obama administration-GOP battles of 2011 and 2013, the possibility is real that the U.S. government might not be able to meet its commitments in full and on time. That day could come sometime next month, Treasury says, so the sooner the debt ceiling is lifted the better in order to calm financial markets.

"There is a big difference between avoiding default by months or minutes," Treasury Secretary Janet L. Yellen wrote in The Wall Street Journal on Sunday, citing the 2011 debate that went down to the wire and led Standard & Poor's to downgrade U.S. credit.

But with Republicans taking a hard line and 60 votes likely needed to advance a debt limit measure in the evenly divided Senate, there's no clear path to avoiding what Yellen calls a "default" on U.S. obligations.

No one, least of all the White House, is talking publicly about the possibility that President Joe Biden might consider, for the first time in U.S. history, ordering Treasury to defy the $28.4 trillion debt ceiling and continue to borrow.


But Biden was there as vice president during the Obama-era fights with intransigent Republicans, and his entire agenda could be at risk if there's another extended stalemate over the full faith and credit of the United States.

Separation of powers
Setting borrowing limits has always been a power reserved for Congress, to which the Constitution grants sole authority to raise revenue, spend taxpayer dollars, "pay the debts" and "borrow money on the credit of the United States."

But some scholars argue if Congress does not raise the debt limit, the president can justify continuing to borrow money by citing the "Public Debt Clause" of the 14th Amendment, which was ratified in 1868, three years after the Civil War ended.

The 14th Amendment granted citizenship to most individuals born or naturalized in the U.S., including Black people, though the status of Native Americans wasn't clarified until 1924. The 14th Amendment also barred anyone who engaged in rebellion or treason from serving as a state or federal official.

And in Section 4, the 14th Amendment says the "validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." The section prohibited the federal government or states from paying any debt or obligation incurred to aid the insurrection "or any claim for the loss or emancipation of any slave."

Scholars say the public debt section was included in part based on fears that a future Congress dominated by formerly Confederate states would repudiate federal debt or guarantee Confederate debt.

But when the question was percolating during the Obama administration, several scholars argued the amendment allows the president to continue borrowing after the debt limit expires.

Former President Bill Clinton said in 2011 that during his 1995-96 budget standoff with Republicans, his staff researched the constitutional implications and that he would use the 14th Amendment "without hesitation, and force the courts to stop me."

However, at that time President Barack Obama said he had talked with his lawyers and they were "not persuaded that that is a winning argument."

On July 8, 2011, with less than a month to go before potentially running out of funds, Treasury general counsel George Madison wrote that Secretary Timothy F. Geithner "has never argued that the 14th Amendment to the U.S. Constitution allows the President to disregard the statutory debt limit... the Constitution explicitly places the borrowing authority with Congress, not the President."


The 2011 debt limit fight led Obama, a Democratic-controlled Senate and a Republican-controlled House, then led by Speaker John A. Boehner, R-Ohio, to reach a deal to raise the debt limit in exchange for a series of discretionary spending caps that expire at the end of the current fiscal year.

But that measure didn't clear Congress until Aug. 2, the day Treasury was expected to run out of borrowing authority, and resulted in such steep spending cuts that Democrats pledged never to negotiate over the debt ceiling again.

Obama touched on the 14th Amendment again during a fight over the debt limit in 2013. He said that even if it were constitutional, it would be "tied up in litigation for a long time" and "that's going to make people nervous."

Obama's press secretary, Jay Carney, told reporters on Sept. 30, 2013, weeks before that year's mid-October deadline, that the "president can't raise it by himself." 

"This administration does not believe that the 14th Amendment gives the power to ignore the debt ceiling," Carney said, adding that such a move wouldn't be seen as "a credible alternative" and "would not be taken seriously by the global economy and markets."

After a two-week partial government shutdown, lawmakers cleared legislation on Oct. 16, 2013, to end the shutdown and suspend the debt ceiling — with no further conditions. It was the night before Treasury told lawmakers it would run out of cash and borrowing room.

But Neil H. Buchanan, a University of Florida law professor, made the case for invoking the 14th Amendment back then and reprised it this summer. In a July 27 article in Verdict, an online legal newsletter, he urged Biden to declare the Treasury will continue to borrow and pay bills even without the debt limit being raised.

"If that time comes, he must instruct the Treasury Department to pay all the bills in full, using exactly as much borrowed money as Congress's duly enacted laws require," he wrote.

Undermining confidence
Under the 14th Amendment, Buchanan said in an interview, the government "can't do anything that undermines confidence in the validity of the public debt," such as missing required payments.

Buchanan said if the president can't borrow, he must cut spending, a violation of his constitutional duty to spend congressional appropriations. The president can't raise taxes unilaterally to continue paying those bills either. Continuing to borrow is "the least damaging choice," he said.

One prominent critic of Buchanan's arguments, Harvard legal scholar Laurence Tribe, appears to have come around.

In 2011, Tribe argued that the amendment did not give the president authority to ignore the debt limit. But in a July 25 tweet, Tribe wrote the amendment "prohibits any default on Treasury's obligations" and that "if Congress fails to raise the debt limit, Executive action to avoid default arguably violates Congress's exclusive power of the purse but is the lesser of two constitutional evils."

Other academics contend there's no basis for using the 14th Amendment to ignore the debt limit. "The 14th Amendment doesn't authorize the taking of debt," according to Ilya Shapiro, vice president and director of the Robert A. Levy Center for Constitutional Studies at the Cato Institute. "That's the bottom line."

Shapiro said the president can't ignore the debt limit any more than he can "increase taxes or cut spending unilaterally."

"There's an academic dispute," Shapiro said. "But the thing is, we're in no danger of not serving the debt." Shapiro said the Treasury would collect enough in revenue to continue paying bond holders if borrowing were halted. The government would have to temporarily halt some federal programs or reduce federal payments.

Republican lawmakers in the past argued the Treasury could prioritize debt payments while postponing other spending if the debt limit were not raised. Transcripts of meetings between Treasury and Federal Reserve officials during the 2011 and 2013 standoffs show debt prioritization was indeed under consideration.

But according to a Goldman Sachs estimate, some 40 percent of other federal payments would be at risk, ranging from Social Security benefits to military salaries.

Biden's shown a willingness to push the legal envelope in his first year, including his extension of a federal eviction moratorium and reversal of the Trump administration's policy forcing asylum-seekers to wait in Mexico while their applications are processed. The Supreme Court blocked both moves.

But if Biden cited the 14th Amendment to continue borrowing, it's unclear what recourse opponents would have in court, or how long such litigation would take to resolve.

"The standing issue is a hard one," Shapiro said. "Who is hurt by unauthorized borrowing? Would it be Congress as an institution?"

Buchanan suspects Republicans might have standing to challenge the action even though they are a minority in both chambers. Yet Buchanan also says it's possible the Supreme Court "might just decide that this is one of those political questions that Congress and the president have to work out" without a ruling.

[Sheilbh]

It strikes me as irrelevant - but I could be wrong.

Surely from a market perspective if US debt repayments/not defaulting relies on clever, constitutional legal disputes, that's not necessarily much better than just missing a payment.

[jimmy olsen]

It strikes me as irrelevant - but I could be wrong.

Surely from a market perspective if US debt repayments/not defaulting relies on clever, constitutional legal disputes, that's not necessarily much better than just missing a payment.

Well, if this passes muster with the courts then there will never be a debt repayment crisis again unless the US actually runs out of money.

[The Brain]

I don't see how that section would mean POTUS could circumvent Congress. Surely the president isn't law?

[Zanza]

Not my business, but I suggest the United States finds a 21st century solution to this issue and does not rely on an obscure 19th century provision meant for a completely different purpose.

The issue that the GOP obstructs governing the United States needs to be solved eventually. You cannot run a two-party system where one party is hostile to the system.

[Josquius]

Not my business, but I suggest the United States finds a 21st century solution to this issue and does not rely on an obscure 19th century provision meant for a completely different purpose.

The issue that the GOP obstructs governing the United States needs to be solved eventually. You cannot run a two-party system where one party is hostile to the system.

And I fear the Democrats are gambling on this continuing in order to keep them in power as the only sensible party around.
What is a feasible way out of the FPTP two party trap for the US?- getting rid of the electoral college seems a sensible first step I guess? Or would that just cement the Dem's hold, giving us a perpetual 'meh'?

[Sheilbh]

Well, if this passes muster with the courts then there will never be a debt repayment crisis again unless the US actually runs out of money.

Sure - but I just don't know why "we only have to deploy innovative and technical constitutional arguments through our partisan court system" would re-assure the markets any more than Congressional votes.

If it went your way it could end future use of the debt ceiling - but in the context of an impending debt ceiling issue it doesn't help very much and I can't imagine how this would come up except in that context.

The issue that the GOP obstructs governing the United States needs to be solved eventually. You cannot run a two-party system where one party is hostile to the system.

Yeah this is the core - and I'd add where a significant portion of that party's support does not believe the system is fair or democratic.

I've said before but I don't know how the US fixes that and I can't think of any international or historic analogies of a similar situation that is able to correct itself.

[The Brain]

A situation where the GOP isn't actively sabotaging the work of POTUS is a lot worse than a situation where they are.

[The Minsky Moment]

I don't see how that section would mean POTUS could circumvent Congress. Surely the president isn't law?

The Constitution overrides contrary statutory law. Thus, the argument is that the statute establishing the "debt ceiling" is unconstitutional.

The matter at issue is not Presidential "law" vs Congress; it is the conundrum of a President who faces two contradictory acts of Congress.. I.e. what is supposed to happen when Congress passes a law and appropriates funds but then does not supply enough tax money *AND* refuses to authorize additional borrowing?  The President is supposed to faithfully execute the laws: so does he ignore the borrowing limit to carry out the mandate, or ignore the mandate to respect the borrowing limit?  Either way a Congressional act is being slighted.  The constitutional argument is that in such situations, the priority goes to the appropriation because otherwise the public credit is called into question.

[The Brain]

I don't see how that section would mean POTUS could circumvent Congress. Surely the president isn't law?

The Constitution overrides contrary statutory law. Thus, the argument is that the statute establishing the "debt ceiling" is unconstitutional.

The matter at issue is not Presidential "law" vs Congress; it is the conundrum of a President who faces two contradictory acts of Congress.. I.e. what is supposed to happen when Congress passes a law and appropriates funds but then does not supply enough tax money *AND* refuses to authorize additional borrowing?  The President is supposed to faithfully execute the laws: so does he ignore the borrowing limit to carry out the mandate, or ignore the mandate to respect the borrowing limit?  Either way a Congressional act is being slighted.  The constitutional argument is that in such situations, the priority goes to the appropriation because otherwise the public credit is called into question.

Thanks.

Sounds like a seppuku situation to me.

[The Minsky Moment]

Sure - but I just don't know why "we only have to deploy innovative and technical constitutional arguments through our partisan court system" would re-assure the markets any more than Congressional votes

Most important constitutional arguments began as being innovative and all have had to wind their way through a partisan court system.  Brown v Board of Ed was very innovative in its day; it is now accepted as obviously correct and a bedrock of the constitutional system. 

The Constitution has always changed (through interpretation) in light of developments in culture and technology - just as the 4th amendment changes contours in an era of audio-visual surveillance and electronic communications, or the 1st amendment in era of mass media, or 14th amendment equal protection in an era of a more civilized understanding of race and gender, so to can the 14th amendment debt clause acquire a more sophisticated meaning in the context of a more sophisticated financial system.

[Barrister]

Sure - but I just don't know why "we only have to deploy innovative and technical constitutional arguments through our partisan court system" would re-assure the markets any more than Congressional votes

Most important constitutional arguments began as being innovative and all have had to wind their way through a partisan court system.  Brown v Board of Ed was very innovative in its day; it is now accepted as obviously correct and a bedrock of the constitutional system. 

The Constitution has always changed (through interpretation) in light of developments in culture and technology - just as the 4th amendment changes contours in an era of audio-visual surveillance and electronic communications, or the 1st amendment in era of mass media, or 14th amendment equal protection in an era of a more civilized understanding of race and gender, so to can the 14th amendment debt clause acquire a more sophisticated meaning in the context of a more sophisticated financial system.

But that's just it - they worked their way up through the court system.  Just looking up the facts, Linda Brown was denied admittance to an all-white school in 1951.  It wasn't until 1954 that the USSC issued it's decision (plus it actually combined with 3 other court cases also working its way through the system).  You saw the same kind of process in Obergefell.

But the debt ceiling isn't a local issue that can work its way up through the courts.  It's not like someone challenging the debt limit of Peoria, Illinois and having it work its way up the system.  The 14th amendment option instead would have Biden unilaterally saying 'I'm going to put the full good will and credit of the US in the hands of an untested legal theory'.  Then have all of America's creditors hang in the balance as the USSC waits for a court case to come before it.

[OttoVonBismarck]

I always find it interesting people assume that the debt ceiling being "gone" would just mean the President (or SecTreas) could issue as much debt as they wanted.

That just isn't the case. The core issue isn't the debt ceiling law, it is the Constitutional provision that only Congress can issue new debt. The debt ceiling is actually a statutory grant of Congressional authority to the executive. If the ceiling itself was done away with, it'd revert to the state we had before we had a debt ceiling--specific acts of Congress would be required approving every series of debt issuance. The core issue is our country vests both appropriations/taxing AND debt issuance in the legislature, and also doesn't require the legislature to issue appropriate debt to cover its budgets. Most other countries the rough equivalent of the SecTreas just has a legal authority (vested in the executive) to issue such debt as is necessary for government operations.

There is no magic fix for that by getting rid of the debt ceiling, nor is the problem caused by the existence of the debt ceiling.

[Berkut]

I am genuinely unsure how the Dems should be handling this politically.

The GOP is being complete douchebags. They are using the fililbuster to stop any vote on raising the debt ceiling from coming to the floor, and just telling the Dems to handle it through reconciliation. This is a tactical move on their part, that has nothing to do with any principal at all, other then straight out obstructionism.

Should the Dems knuckle under, it of course will just validate the GOP position of just being obstructionist assholes. But they are using the debt ceiling to call the Dem bluff. And they have built into the modern Conservative pollical movement a total disregard for ethical or moral standing, or any kind of responsibility for their actions. It is the current *definition* of "conservatism", so they don't really have a downside to pay that has already not being absorbed into the basic ethos of the GOP.

I am really not sure how the Dems should respond to this.

[Barrister]

I am genuinely unsure how the Dems should be handling this politically.

The GOP is being complete douchebags. They are using the fililbuster to stop any vote on raising the debt ceiling from coming to the floor, and just telling the Dems to handle it through reconciliation. This is a tactical move on their part, that has nothing to do with any principal at all, other then straight out obstructionism.

Should the Dems knuckle under, it of course will just validate the GOP position of just being obstructionist assholes. But they are using the debt ceiling to call the Dem bluff. And they have built into the modern Conservative pollical movement a total disregard for ethical or moral standing, or any kind of responsibility for their actions. It is the current *definition* of "conservatism", so they don't really have a downside to pay that has already not being absorbed into the basic ethos of the GOP.

I am really not sure how the Dems should respond to this.

Progressive Dems are also being douchebags though.

They are refusing to vote for reconciliation unless it includes the 3.5 trillion "human infrastructure" bill which notably Sinema and Manchin in the Senate have refused to vote for (because it's a crazy amount of money).

What Dems should do is simple.  They should vote for the bipartisan real infrastructure bill, include the debt limit, declare victory and go home.