US Politics Mega-thread - Page 3946

The threat of a debt default is again in the air, with the possible dreadful effect of ruining the credit of the U.S. To stave off that default and embarrassment, President Biden is toying with the idea of asserting that the debt ceiling violates the 14th Amendment. Neither the Constitution nor the law nor common sense is on his side.
The 14th Amendment is often cited but rarely quoted. Section 4 both repudiates Confederate debt and promises to honor U.S. debt. The provision at issue provides that the “validity of the public debt of the United States, authorized by law . . . shall not be questioned.” Section 4 doesn’t address default or other failures to honor terms of a debt contract. It bars repudiation. A debtor who is late on a payment isn’t questioning the debt’s validity; he is merely tardy. To my knowledge, no one on either side of the debate is suggesting that the U.S. repudiate its debt.
Further, even if one assumes the 14th Amendment bars debt defaults, it nowhere authorizes the president to take whatever measures he deems necessary to prevent default. It no more empowers him to take such measures than it does you or me. As per the Constitution, Congress, not the president, has the power to “borrow money on the credit of the United States.” If the Constitution bars default and more money is needed to prevent default, Congress must act. The president can’t issue debt on his own say-so.
And even if one assumes the president has the authority to borrow to pay interest on existing debts, why would he be able to issue debt sufficient to fund all fiscal operations, including not only debt service but hundreds of billions of spending? What Mr. Biden is contemplating isn’t an increase in the debt ceiling sufficient to pay the interest. He is considering defiance of the debt ceiling altogether to spend all that Congress has appropriated. There is no constitutional requirement that once Congress appropriates funds, the federal government must do whatever it takes to spend that money. If Congress appropriates $1 trillion and the Treasury has only $900 billion, there is no constitutional issue with spending only the money available. What the president is contemplating has nothing to do with questioning the validity of federal debts.
Perhaps most important, the White House and the Treasury are hiding the ball. Even with no increase in the debt ceiling and no new borrowing, there’s more than enough money to service the existing debt. According to the Treasury, in March federal receipts were $313 billion and interest payments were $67 billion. In April the receipts were $639 billion and interest $62 billion. There is no month of the year when interest on the debt will outstrip federal tax receipts.
Hence, even if there were a constitutional requirement to avoid default—and there isn’t—the government has ample funds to meet that obligation. The Treasury knows this. Secretary Janet Yellen’s May 15 letter warns of being “unable to continue to satisfy all of the government’s obligations.” The “government’s obligations” aren’t limited to the debt. Ms. Yellen is referring to the money that Congress has appropriated. In other words, if the debt ceiling isn’t raised, the amounts that Congress appropriated for this year won’t be spent because there are insufficient funds in the Treasury. But that isn’t a constitutional problem, and it has nothing to do with the 14th Amendment.
If Congress fails to raise the debt ceiling, the only reason there would be a default is if the executive fails to pay the interest on the debt as it comes due. But if the executive branch believes there is a constitutional requirement to pay the interest, why would it even consider refusing to do so? To my knowledge there is no law that prevents the executive from prioritizing interest payments above all other spending.
In fact, there is an argument that having by statute pledged the “faith of the United States Government,” Congress implicitly prioritized the payment of the interest and principal. If the debt ceiling isn’t raised, the Treasury should pay the interest as it is due and spend less than Congress appropriated. That would be the best solution in the wake of a mismatch between total inflows (taxes plus new borrowing) and Congress’s desired spending.
If Mr. Biden borrows money by executive fiat, the U.S. would be in dangerous and uncharted territory. It’s unclear if anyone would have legal standing to bring a court challenge. But purchasers of these Biden bonds would be assuming an enormous risk. Because the 14th Amendment refers only to debt “authorized by law,” the government could repudiate the Biden bonds. In fact, because there is no lawful authority to pay interest on them, there would be no legal way to repay buyers of his bonds.
I hope a compromise is reached. But if our politicians fail us again, the president would be violating the Constitution if he ignored the debt ceiling and borrowed money without Congress’s authorization. The Constitution doesn’t make the president a Mr. Fix-It, empowered to do whatever he feels just or right.

Point of Clarification 3: Were “Clean” or Less
Contentious Debt Limit Increases Once the Norm?

Some commentators have claimed that contentious debt limit episodes are a recent phenomenon
or that “clean” debt limit increases were once the norm.
93 Debt policy, however, has been a
divisive issue since the beginning of American government and has often been linked with other
policy decisions.
94 Debt, by its nature, allows government to shift the fiscal burden of current expenditures or lessen the burden of current taxes by transferring obligations to future
taxpayers.95 Shifting fiscal burdens into the future through debt management is a powerful and
potentially beneficial tool of fiscal policy, but can also become a means of avoiding fiscal
responsibility in the present. Debt policy discussions, therefore, often become contentious.
Since 1978, 27 of a total of 59 debt limit modifications were “clean”—meaning that a debt limit
measure was not linked to other provisions.96 That delineation, however, is imperfect. In some
cases, a debt limit provision might have been attached to another measure that acted as a
convenient legislative vehicle for passage. In other cases, combining a debt limit modification
with other provisions may have resulted from a broad fiscal compromise among policymakers. In
addition, a debt limit modification enacted as a standalone measure could have resulted from a
policy compromise involving other issues. For instance, on February 15, 2014, a “clean” debt
limit suspension (P.L. 113-83) was enacted. On the same afternoon, another measure (P.L. 113-
82) was enacted to reverse certain reductions in cost-of-living adjustments to working-age
military retiree pensions that had been included in the Bipartisan Budget Act of 2013 (BBA2013;
P.L. 113-67). Although nothing formally linked the two measures, their passage in quick
succession may have reflected a fiscal compromise.
Debt limit measures have been informally or formally linked with other issues for many
decades.97 In 1939, when Congress was considering creating what became the modern debt limit,
Senator George Norris offered an amendment to allow the Tennessee Valley Authority (TVA) to
use bonds to consummate purchases of some power plants. Once a separate TVA measure was
agreed to, the amendment to the debt limit measure (H.R. 5748, 76th Congress) was withdrawn.98
In 1957, Congress declined to raise the limit until the following February, in part to “compel more
economy of efficiency, better management of money and manpower in the defense program.”
99
In the 1960s, debt limit debates provided a forum for those concerned about the expansion of
federal spending due to federal credit guarantees, new social insurance programs, and the
escalation of the Vietnam War.100 After a June 1960 debt limit increase (P.L. 86-564) that included
various tax provisions, however, unrelated matters were not attached to debt limit measures
during Senate floor consideration for the rest of the 1960s.101
In the early 1970s, debt limit measures were embroiled in debates over campaign finance reform
and in congressional conflicts with the Nixon and Ford Administrations.
102 Senate amendments to
debt limit measures increased Social Security benefits in 1971, 1972, and 1973. In 1973,
proposed amendments to provide federal campaign financing, to cut off funding for bombing in
Cambodia, and to limit presidential impoundment of funds were all rejected.103
In the mid-1980s, a group of Senators attached a system of budget constraints and deficit targets,
which became known as the Gramm-Rudman-Hollings framework, to a debt limit provision after
“partisan and sometimes testy wrangling.”
104
Debates over what provisions should accompany a debt limit increase in late 1995 and early 1996
also were contentious. In 1995, some Members called for spending reductions of about $245
billion over seven years as a condition for raising the debt limit.105 After a related lapse in
appropriations and a veto of one debt limit bill (H.R. 2586, 104th Congress),
106 the debt limit was
raised on March 29, 1996.107 The debt limit episode of 1995-1996 was described by GAO as a
“crisis.”
108