Writes lawprof Michael W. McConnell in "The Case for Violating the Debt Limit Is Dangerous Nonsense" (NYT).
"Section 4 of the 14th Amendment, enacted in the wake of the Civil War, says: 'The validity of the public debt of the United States, authorized by law … shall not be questioned.' The immediate purpose was to prevent future Congresses (if controlled by pro-Confederate Democrats) from repudiating pension obligations and other debts incurred to win the Civil War. No doubt it applies beyond those narrow circumstances. But by its terms it does not authorize the president to borrow more money in violation of Article I, Section 8, Clause 2. Nor does it authorize the president to impose taxes in violation of Article I, Section 8, Clause 1. By its terms, it does not augment the president’s powers one iota. Nor does Section 4 have anything to do with payment of the national debt. It does not make it unconstitutional for the United States to run out of money. Nice idea, but impossible. Section 4 prevents the only institution of government that could deny the validity of the debt — namely, Congress — from doing so. For the United States to fail to pay interest or principal on its debt would be financially catastrophic, but it would not affect the validity of the debt. When borrowers fail to make payments on lawfully incurred debt, this does not question the validity of those debts; their debts are just as valid as before. The borrowers are just in default...."
(I added the boldface.)
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59 comments:
Our White House insider already told us they wanted 60 days cash reserves to meet their obligations. I’m not your financial advisor but sounds like a good idea…
This is the same insanity we go through again and again with each side seeking to blame the other.
Simple solution. Stop the rate of growth in spending AND grow the economy at 4-5%.
Do it. Please, do it.
One of the hallmarks of the current political class is their inability to take their lumps, and instead their need to burn down every scrap of institutional credibility and social capital accumulated over generations, all in the sake of a short-term win, or worse, merely avoiding the embarrassment of a loss.
So please, try to push some stupid and crackpot interpretation of the 14th Amendment. Not only will it fail, but in doing so you'll set this country even closer to burning to the ground. And then you'll stand in the ashes and whine about how this could possibly occur.
They are out of control. They spend WAY too much money on stupid things, and not enough on what America really needs. Time to cut ALL GOVERNMENT agencies across the board at least 30% if not more. Government is too bloated, and they are all getting rich because of the deals they make against our best interests.
(I clicked on the Michael McConnell tag, wondering what he'd done to merit your attention. You might want to check. His tag pulls up Mitch McConnell posts.)
So, if pension obligations were considered as debt when this was passed why does it not apply to social security in the same way?
But doesn't our living constitution explicitly give ALL Power over life and death; to the dem party?
After all, It's NOT as if we are living in a democratic republic.. We live in a fascist dictatorship
"All within the party, nothing outside the party, nothing against the party."
Having Biden in the game of chicken is him throwing the steering wheel out.
Thanks for this explainer. I was curious if that maneuver had any validity.
So frustrating that the argument is always about raising the debt ceiling, and not about figuring out what we can cut and do without in order to pay down the debt and have the headroom we need for future critical expenses. You know, like a real budget.
By the way, where did the allocation come from to support the illegal immigrant invasion? There was no money for Trump to fund a wall, but Biden has money to fund all these “asylum seekers”?? Was that part of the IRA too? Or America Cares Act? Or discretionary DHS? Wherever, it needs to be shut off, or better yet spent on deportation only, not housing etc.
If their is sincere bipartisan negotiation here, it'll be the first time since November 2016. Living in denial has become the norm.
Negotiation is a slippery slope toward facing reality. Watch for signs of emotional snaps per the stages of grief: Anger, bargaining, depression. Until then, the childish cartoon of version of reality will continue.
We are ruled by a cargo cult. Scratch out John Frum and put down Dark Brandon.
"In ceremonies of the horsemen
Even the pawn must hold a grudge"
So, if pension obligations were considered as debt when this was passed why does it not apply to social security in the same way?
Social Security isn't considered a pension.
One more data point showing Camp Obama still runs things. Remember those phony ‘signing statements’ and the ceremony with Obama and the pens? Then they drop the folder into the burn barrel. Expect some kind of show starring Bernie…er, Biden authorizing the spending then the wails of Republicans not playing ‘their part’…
If your house is filling with sewage, do you pump it out or raise the roof?
Whistle!
Using logic on government
15 yards
Loss of down
I like the idea of a serious negotiation about federal spending and a budget. We have those every single year in Washington. Budget negotiations.
This tactic — holding the debt ceiling hostage to the outcome of negotiations — is completely illegitimate. It’s a power play that stands a good chance of hurting, not helping, the country.
And what is uniquely reprehensible about the House GOP position is that they are insisting that federal spending be cut significantly, while Social Security, Medicare and defense spending remain unreformed. That leaves federal discretionary spending to be cut drastically. But the House GOP isn’t saying how those discretionary spending line items could be slashed. They haven’t drafted a budget. They are demanding a vastly reduced federal budget but not saying where the reductions need to come.
The House GOP is building a record of countless outrages in this Congress. But this debt ceiling argument is their most dishonest effort yet. The only resolution I see is that after we get to a point of absolute crisis, a small group of Republican moderates in the House and Senate will do the responsible thing and pass a debt ceiling increase, and then leave Kevin McCarthy to fend for himself with the Freedom Caucus.
And we can then vote on the Freedom Caucus as a national issue (along with abortion, and the defense of Ukraine) in 2024.
Another scene from the White House's Weekend-at-Bernie's. Cue the W.D. Texas....
"When borrowers fail to make payments on lawfully incurred debt, this does not question the validity of those debt."
Exactly. And subsidy tsunamis promised by Dems don't count as debt.
The cost of living has doubled during Biden's 'reign'.
Your revenue would have to quadruple to get back to where you were.
Well, it is only the Constitution and they are, after all, Democrats.
Constitution? Pish posh!
SCOTUS will stomp over any attempt Biden's handlers try to spend more...
Keep in mind Biden ain't doing squat... it is Soros or whomever is pulling the strings. Biden is just the crooked senile front man.
Cmon! “Dangerous nonsense” is Biden’s hallmark!
The language is being MANGLED here, deliberately.
The Democrats equate not raising the debt limit with "default." But that's just not so.
Imagine you have a mortgage, and a credit card and a wife. And she runs your credit card up to its maximum of $5,000. And Visa decides it won't extend you any MORE credit.
Have you defaulted? No.
You are no longer allowed to borrow any MORE money. That's not default. You're still paying your mortgage. You're still paying your monthly Visa payment. You just cannot borrow any MORE money.
That's what the debt ceiling is. If the government is prohibited from borrowing any MORE money, it hasn't defaulted on anything. It will still pay its debt to its lenders. It just won't have any MORE money to waste.
That's not defaulting on anything, and Janet Yellen knows it. So should we let lying liars bankrupt our country? Lying liars who have never had to run for office themselves?
"…Mr. Biden’s advisers reportedly are contemplating violating the congressional debt limit based on a far-fetched interpretation of Section 4 of the 14th Amendment propounded by some academics...."
Or, he could agree to the "extreme" step of limiting spending to last year's spending levels. Hell, McCarthy would probably budge on even that.
Politicians agreeing on anything is very bad for the rest of us.
Yellen actually said a few months ago there's no way to pay debt obligations but not pay other accounts. Apparently, it's too hard to figure out…
BIII Zhang said...
You are no longer allowed to borrow any MORE money. That's not default. You're still paying your mortgage. You're still paying your monthly Visa payment. You just cannot borrow any MORE money.
That argument is fine and dandy for normal household/business management, but we're talking the Federal government here. The difference is that Congress, and the President through Executive orders, are constantly incurring future obligations that have never been budgeted. They way over-promise goodies that are not part of the formally budgeted "mortgage/monthly VISA payment" schedule.
If Biden says "come on over the border; we will house you somewhere", that is an un-budgeted item that cannot be covered with current budgeted funds, and so requires a 'bump-up' in the debt ceiling. We are just not able to keep up with Federal government overspending and meet the formal budget.
Congress is so lazy now (and the Executive Branch so brazen), that they just expect to be able to increase the US debt obligations at will, damn the consequences.
Violation of the debt limit means the debt gets serviced first out of tax revenue, and all other spending authorizations take second place to that. I feel bad about wanting to see the chaos this would cause, and the rethinking of deficit spending it would encourage.
"The two sides can posture all they want, but in the end, Congress and the president have to reach an agreement.
Actually, no.
In the end, the government has to operate within the current debt limit UNLESS they can reach an agreement with Congress to raise it.
If the President decides he can generally borrow and spend money without authorization, there's your end game. The Constitution is void and the government is illegitimate. This is not a minor thing.
Original Mike said...
"…he could agree to the 'extreme' step of limiting spending to last year's spending levels."
You left out draconian.
Any reduction in the rate of requested spending growth is, by definition, a draconian spending cut that constitutes violence against retirees, children, and under-served populations.
Pay the freakin bills you already charged up! Its not science Good grief Lucy.
Original Mike said...
Yellen actually said a few months ago there's no way to pay debt obligations but not pay other accounts. Apparently, it's too hard to figure out…
5/15/23, 9:10 AM
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She's not very...bright.
When I listen to her, I think of the supported employment program.
"Biden has normalized the COVID-19 2020 emergency budget
The president and his White House have taken the 2020 COVID-19, one-time-only crisis budget as his administration’s working baseline, rather than the pre-Covid 2019 budget, which had a significant $4.4 trillion price tag.
In 2020, because of the pandemic, the budget jumped 47 percent to $6.5 trillion, as both Democrats and Republicans supported the need for emergency funding. That COVID funding was to sunset as the country returned to normal — as it did last year. Apparently, Biden decided to ignore that crucial point.
Instead, he saw that supersized budget in 2020 not as a crisis, but an opportunity that could be exploited going forward to pay for what amounted to a historic spending spree that kicked off with the $1.9 trillion American Rescue Plan and drove what became the worst inflation in 40 years. During Biden’s first two years in office, he oversaw spending that was 40 percent higher than the pre-COVID 2019 budget.
Biden’s add to the national debt outdoes Trump
According to the CBO, Biden is going to match Trump’s addition to the national debt in just three years, reaching a total of $7.1 trillion over his four years. That would be $1.5 trillion more than Trump contributed during his term, which included the 2020 one-time COVID emergency spending. If Biden’s 2024 proposed budget actually passed, he would add as much to the national debt as Trump and Bush 43 combined. House Republican leaders have made clear his budget isn’t going anywhere; but it illustrates just how out of control Biden’s spending policies really are.
Yearly federal revenues increased 43 percent in two years
In dealing with the debt and deficit, President Biden has had the advantage of a 43 percent increase in federal tax receipts from 2020 to 2022, thanks to the 2017 Tax Cuts and Jobs Act. In 2020, federal income tax revenues were $3.4 trillion. In 2022, they increased to a record $4.8 trillion. Revenues from both individual income taxes and corporate income taxes were the highest they have ever been.
Individual income tax revenues were over $2 trillion in 2021 and 2022 for the first time — a 64 percent increase in 2022 over 2020. Contrary to Biden’s constant complaint that business doesn’t pay its fair share, revenues from corporate income taxes in 2022 were over $400 billion, also for the first time, and an increase of 101 percent over 2020.
Biden could have been close to a balanced budget
If Biden had returned to the 2019 pre-COVID spending levels and rejected the trillions of dollars in excess spending that has characterized his first two years, he could have come much closer to a balanced budget for 2022. Adjusting the 2019 spending for inflation, and given the remarkable increase in revenues, the deficit in 2022 would have been only $194 billion instead of a deficit of $1.3 trillion.
However, given the direction of current spending, the CBO baseline projects the annual deficit will be over $1 trillion dollars through 2029, and then it goes over $2 trillion dollars for the years spanning 2030-2033.
Future proposed yearly spending could top $10 trillion
Worse, CBO baseline spending projections show that Biden’s proposed budgets for the next two years will continue the $6 trillion-dollar spending of 2020 and drive it even higher through the rest of his term and beyond.
Biden’s own proposed 2024 budget would be 55 percent higher than Trump’s spending in 2019, and his budget projections are even more alarming. His 2024 proposed budget has spending that will reach the $7 trillion threshold in 2025, $8 trillion in 2028, $9 trillion in 2031, and $10 trillion in 2033.
Biden’s political decision to propose these levels of spending, despite the current $31 trillion federal debt, shows how important it is for Congress to clearly establish some level of fiscal discipline. The CBO baseline is projecting that if things stay on the current path for the next 10 years (2024-2033), the debt will be increased by $20.2 billion. "
https://tinyurl.com/3phtswe4
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Let's Go Brandon!
That argument is fine and dandy for normal household/business management, but we're talking the Federal government here. The difference is that Congress, and the President through Executive orders, are constantly incurring future obligations that have never been budgeted. They way over-promise goodies that are not part of the formally budgeted "mortgage/monthly VISA payment" schedule.
Then comes bankruptcy. Think it can't happen? Think of Zimbabwe. Think of the similarity between this regime and Zimbabwe.
This is not the most ridiculous misuse of the 14th Amendment by a long shot.....
how does debt limit get violated?
will it still be debt-debt after that?
I'm so old I remember how shocking it was when the accumulated debt of the United States reached a trillion dollars under President Reagan.
Who is going to stand up and take the lumps to bring our fiscal house back into order? Nobody is serious about cutting spending on the Left, and not nearly enough of those on the Right are. It's going to be career and political suicide for whoever does it, but it needs to be done.
I say we begin by making Heinlein's young adult novels mandatory reading in elementary schools.
SCOTUS will stomp over any attempt Biden's handlers try to spend more...
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so who has standing [+ stiff spine] to bring this up to SCOTUS?
So, if pension obligations were considered as debt when this was passed why does it not apply to social security in the same way?
Social Security is not a pension. It is an insurance system.
The Treasury does not have to default on the debt if no agreement is reached. That is the major lie being told right now by the Biden people. Even Social Security and Medicare are not threatened by the lack of an agreement as both programs are funded via the trust fund operations, and the special debt securities it holds. The truth is that more than enough tax revenue streams in every single month to pay interest on the issued debt to all parties that hold it.
So, when you are told that the US is in risk of default- someone is telling you a lie.
As for how this turns out in the long run- I have long predicted that, eventually, the President would simply assert the power to ignore Congress and spend what he/she wants to spend, and on what, and that Congress would be ok with that.
And, while Team Biden considering ripping up constitutional limitations on executive branch powers, never forget that Trump is the dangerous demagogue singlehandedly trying to undermine American Democracy.
To corporate lawyers, the meaning of the 14th amendment’s prohibition on the “questioning” of the “validity” of public debt is perfectly clear. Corporate lawyers regularly give legal opinions that obligations are “valid.” That means that the obligation is legal as written in accordance with its terms. That does not mean that the obligation is enforceable — legal opinions usually exclude enforceability. When a person defaults on his debts, those obligations remain legally valid but they may be unenforceable. What’s different about the government is that it can pass laws that affect the validity of debt. For example, the government could pass a law reducing by 50% the face amount of all bonds issued before this year. Argentina enacted a law in 2020 giving its government the power to do just that. Such a law would mean that the bonds are not valid in accordance with their terms. The purpose of the 14th amendment provision in question is to prevent the US government from doing anything like that, making any US government debt either wholly or partially invalid. It has nothing whatsoever to do with the payment of the debt. Just like a person, the government can default on a payment without making that debt invalid.
Of course, not authorizing additional debt is not a prohibition on spending to pay down existing debt.
A couple of questions in all this though:
What is the breakdown of who holds that debt? Who are the creditors?
How much of the debt is held by China?
How much of it is owed to the U.S. Federal Reserve?
And what would happen if we told Creditor Communist China to GFY?
Deficit spending, which leads to increases in debt, is really nothing more than a scheme to enrich the wealthy and foreign nations (who hold the bonds) at the expense of the middle class and tax-paying lower-income class.
"And what would happen if we told Creditor Communist China to GFY?"
I'm thinking two things:
1) China would be mad. Not necessarily a bad thing.
2) We couldn't borrow any more money. Bad things would happen, but at this point the debt hole is so deep, bad things are inevitable anyways. It may be the only way we kick our addiction.
I was assured that McCarthy was engaging in "dangerous brinksmanship," and Joe Bide was simply exercising "responsible statecraft," because our purblind founders didn't realize that the executive should have supreme power over everything.
We all know that Joe Biden would never engage in any sort of brinksmanship, no less a light than Lindsay Graham has assured us that Biden could not have been behind blowing up Nordstream because he knows Joe Biden, and "Joe Biden would never be that reckless," so there's your proof.
Progressive prices through shared responsibility... public debt incurred from single/central/monopolistic solutions, progressive productivity, the effects of which were previously sequestered... mitigated through labor and environmental arbitrage that has questionable forward-looking viability amidst the progress of ethnic Springs, [catastrophic] [anthropogenic] immigration reform, etc.
"Social Security isn't considered a pension."
And yet for some reason it EXACTLY resembles a defined benefit pension plan. Funny that.
The whole thing is a mess created by the party that wants to spend more and the party that pretends to not spend more. Fix it how? Try using a sabot!
Seems like some people aren’t making a distinction between “. . . Debt, authorized by law” and debt issued in contravention of law. The latter can surely be “questioned”.
But if the government keeps sending out checks to pay obligations, and banks or the Federal Reserve system keep honoring those checks, who has standing to bring suit?
Pretty much every damn thing the Democrats have done since January 20, 2021, has been dangerous nonsense, much of which has badly harmed our country.
@FreeManure: You have no legal right to future social security payments. The government can change or delete the program any time it wants to. All it is legally required to do is pay you benefits that you've accrued up to the date the program is changed or deleted. I don't know how many people understand this.
Seems like some people aren’t making a distinction between “. . . Debt, authorized by law” and debt issued in contravention of law. The latter can surely be “questioned”.
But if the government keeps sending out checks to pay obligations, and banks or the Federal Reserve system keep honoring those checks, who has standing to bring suit?
I think the smart move by House Republicans would be to raise the limit enough to keep the government solvent for a few months, but have the law doing so establish the order in which obligations are payed when income is insufficient to pay all obligations. For example, pay Social Security and the military first, interest on debt last. The Democrats would then be stuck with a choice between refusing to increase the limit (despite their alarmism about the effects of failing to do so) or accepting restrictions that prevent them from using the strategy of choosing what not to pay if/when the temporary extension runs out on the basis of what choices maximize voter anger.
Per Chuck:
Dems do nothing to alleviate debt problem financially crippling the US.
GOP: doesn't do enough to solve problem, ergo they are worse than the Dems.
Got it.
Pedhaps, we should repeal the Fourteenth Amendment. This makes two reasons.
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