The Debt Ceiling Countdown 2023: A US Constitutional Crisis?

Its looking increasingly likely that the GOP will try a kamikaze mission with the debt ceiling over the next few weeks given the composition of the extremists in Congress.

For Biden, he has the ability to invoke the 14th ammendement.

A clause in the amendment states that:

I definitely see Biden going down this road but that would then kick off a huge constitutional crisis with lawsuits from the Republicans ending up in front of the Supreme Court.

How damaging would this be for the US?

Even a threat of a default is an issue. An actual default is bigly. An extended fight that includes a default is double bigly. But if it happens we could potentially come out the other side with the debt ceiling nonsense gone.

A related article from a few days ago in the NYT (should be a non-paywalled link):

I think there’s a decent chance that, if they go that far, the application of the debt ceiling to servicing outstanding debt or paying Social Security and pensions will be found unconstitutional, but the remainder of the application would be upheld.

Also, discussion of other ideas to circumvent the debt ceiling (should be a non-paywalled link):

But, what does that mean? Certainly, Biden can pay the interest on Treasury bills out of current tax revenue, without breaching the debt ceiling. He can also redeem bonds as they mature by issuing new bonds without increasing the total debt.

The question is, “What other gov’t spending qualifies as ‘debt’ under the 14th amendment?”

There is an old SC case that says people do not have a legally enforceable right to a certain amount of Social Security. Is Social Security a “debt”? It seems that services already rendered by health care providers working under contract with Medicare/Medicaid would be debt, but would new services provided after we hit the ceiling be debt?

And so on …

Either way, I’m sure this debt ceiling argument is extremely harmful to our credit rating. The simple fact that we are talking about not paying has to give every lender a concern.

I think one issue with this stance is the fact that the validity of the debt isn’t in question.

It’s the ability to pay it that is under scrutiny–that is, what constraints are in place by law that would prevent the immediate payment of that debt.

The 14th Amendment was instituted after the Civil War to limit (formerly) Confederate States from compensating slave holders out of gov’t funds for the economic loss of their (cheap) labor force.

So I don’t know just how far one can take this Amendment toward a declaration of the debt limit being unconstitutional.

I think to the extent that its payments reflect a form of pension, then it’s a debt covered by the 14th Amendment.

I think the gray area there is going to be SSI and disability payments.

I think past court cases show this to be false. I mean, perhaps you are saying since oasdi has been found to be an entitlement set by law, it is in no sense a pension, so it isn’t covered by the 14th at all. Then the statement would be true, but in a trivial sense.

I think the constitutional argument is slightly more complicated than “it’s unconstitutional for the US to default.” The 14th Amendment clearly means that the US has to keep making bond payments, regardless of the debt ceiling.

The rest of the argument deals with the rest of government spending that isn’t debt service. On one hand, Congress passed a debt ceiling, which says “you can only spend this much money.” On the other hand, a different Congress later passed a spending package, telling the Executive branch to spend a bunch of money on a bunch of things. If those two directives are in conflict, which should the Executive branch violate?

The remainder of the argument is that one Congress can’t bind the hands of a later Congress. Therefore, the Executive branch gets to ignore the older debt ceiling and follow the budget and spending that were authorized later.

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This to me until the day the debt defaults is a bunch of shenanigans. The media is click baiting everyone with fear. The politicians are politicking because it’s an opportunity to get their name out there. Whatever, at the end of the day this will get done before the default because enough people know that it has to. My advice is ignore the news until and unless there is actually a default instead of pre blaming the party you hate for a default that hasn’t occurred.

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Just because it’s always gotten done in the past, doesn’t mean it will always get done in the future.

As for blaming parties sure BOTH shoulder some of the blame. But you know when it’s a Republican Administration and Democratic led house there is a usually some sort of bi-partisan compromise that passed with well over 80% of the House voting for it, but when it’s the other way around it seems we go kicking and screaming towards the fiscal cliff until a handful of Republican House members in potential flippable districts can be arm twisted into voting for a bill increasing the this self imposed arbitrary limit.

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:iatp: too many political things to get your blood pressure up about to get it up for another debt ceiling cliffhanger

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Debt would most certainly include settlement of contractual obligations (lease payments, scheduled payments for contracted work, and all sorts of items. Accounts payable are, well, payable. Now I rather doubt that you will see a lot secondary markets for “defaulted Fed debt” like we see in many other consumer credit arenas.even if it did pop up, the haircut would be really slight.

The 14th amendment stuff is an open question. My understanding is the clause was designed to invalidate the debts of the Confederacy while making it clear that the Union debt would be serviced by the whole country. A tricky situation when you think about it. In that context, there is no way to predict the courts will lean.

The Federal Govt. spent the money when it passed through Appropriations in Congress. The Executive branch is just following orders in a lot of ways. So I don’t think the case can be made that POTUS is doing some sort of power grab. It comes down to whether the debt ceiling itself is constitutional.

But IANAL. And I long ago gave up using logic to understand the law.

If it happens there will be plenty of blame to go around. I’ll do that then and if there isn’t a default then I avoided a lot of worry. I think it’s healthy to remember that 90% of what we consume with regards to Washington is theatre. What we see from Washington is a lot more WWE than Greco Roman Wrestling at the Olympics.

All that said if you want my opinion of the public positions of both sides I will give it. Democrats are at we want a new limit with nothing attached and the Republicans are at we want every important thing you just passed and some other stuff defunded. IMO both positions are indefensible. We have elected a split Congress and though the President is a Democrat his approval ratings are abysmal. He really can’t say his agenda is so popular we shouldn’t review the funding on it.

Also both parties have been extremely willing to govern through the reconciliation process which basically is government via the federal budget. If everything depends on the budget then every major budget deadline is going to be contentious and dramatic.

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Nick, you believe we should eliminate the debt limit. There is no gain in having it, and the dangers of default are fairly high. Imo, that’s basically the Democrat position.

IMO the D position is defensible. We have deficits/debt due to unbalanced budgets you’ve approved in the past. Paying your bills is just basic financial responsibility. We have a new fiscal year starting in about 4 months, spend your time arguing about the next budget.

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Thats not a realistic position right now. Right now they’re going to have to give something up. It is what it is.

Your position, which is the Democrat’s position, is correct.
The other position is wrong.
I agree that we may need to compromise between them.

You have a kind of funny identity issue where you don’t like Democrats, but also are a Democrat.

(and FWIW, I agree completely with this)

Why?

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I’m not a Democrat. I’m a former Republican (never Trumper) but I don’t like enough Democratic policies to become a Democrat. I am just a critic right now.

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I’m a bit confused as to who you’re referring to here with “you” in “you’ve approved in the past” . . .

IIRC, the big budget bill that was “passed” recently was done w/o R support . . . it was done through reconciliation which didn’t require any R support.