Congress and the president have gotten used to punting difficult questions to the courts, rather than doing the hard work of negotiating and compromising. That cannot be allowed to happen in regards to the debt ceiling.
Two schemes have been floated as ways President Joe Biden might be able to lift the debt ceiling on his own without giving into the demands of a Republican majority in the House. One, reportedly being pushed by some of the president’s advisers, is to use the public debt clause, or Section 4 of the 14th Amendment to the Constitution. This says, in part, “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.”
A school of thought says this section could be interpreted beyond the context of the aftermath of the Civil War, in which it was enacted, to end the notion of a debt ceiling completely. A report on this by Politico said, “the untested theory could arguably allow him (Biden) to bust through the debt ceiling without congressional sign-off.”
Michael W. McConnell, the director of the Constitutional Law Center at Stanford and senior fellow at the Hoover Institution has correctly called this “dangerous nonsense.” In a New York Times op-ed published Sunday, he said the amendment doesn’t have a thing to do with paying for the national debt.
“It does not make it unconstitutional for the United States to run out of money. Nice idea, but impossible,” McConnell wrote. “Section 4 prevents the only institution of government that could deny the validity of the debt — namely, Congress — from doing so.”
If the president were to issue new bonds without the permission of Congress, he said, they would not be constitutionally binding, and the bond markets would understand this clearly. “Sensible investors would not purchase such bonds or would demand such a high risk premium as to make them uneconomical.”
In this case, the nation wouldn’t need the Supreme Court to decide whether the move was legal. The bond markets would make the decision much faster, “And the resolution would not be a happy one.”
The other idea, as reported by The Hill, is for the Treasury Department to “redeem debt held by the Civil Service Retirement System and the federal employee’s Thrift Savings Plan” to meet scheduled benefits.
“Consider this analogy,” The Hill said. “You deposit $2,000 in your checking account to pay the rent, but the bank clears a $200 check your spouse wrote for groceries first, so your rent check bounces. One way to avoid this result would be to redeem enough trust fund debt to cover all the government’s bills each month. In other words, deposit $2,200, rather than $2,000.”
Enough with the fiscal gymnastics.
House Republicans have a proposed schedule of budget cuts on the table. Biden, after repeatedly saying he wouldn’t negotiate, now says, “I really think there’s a desire on their part, as well as ours, to reach an agreement, and I think we’ll be able to do it.”
That’s good news, because a negotiated agreement is the only real way forward.
We agree with those who say it would be economically disastrous for the United States to default on its debt obligations by not extending the debt ceiling. That’s not to diminish in any way the seriousness of the nation’s enormous debt problem, which now exceeds $31.7 trillion.
The debt ceiling must be lifted in order to pay for debts already incurred. Congress and the president have a duty to confront that debt going forward, in order to avoid an eventual and inevitable day of reckoning that may be beyond anyone’s ability to negotiate away.
McConnell correctly said that the current process “is not hostage taking. It is the ordinary stuff of politics.” The Constitution doesn’t allow any one branch of government, and certainly not any one person, to unilaterally solve this issue, and Republicans are savvy enough to use the debt ceiling as a tool to enact cuts that could begin the process toward a more austere federal government.
Congress and several presidents have failed to resolve a number of important and difficult issues through the years, most notably immigration reform, in all its nuances, and the tough decisions associated with reform of Social Security and Medicare — two programs on the verge of insolvency. That can’t be allowed to happen to something as important as the nation’s ability to pay its obligations.
The founders established a system of government that requires negotiation and compromise — the hard work associated with representing a nation of widely divergent interests. Instead of looking for loopholes and murky legal theories, President Biden and Congress need to roll up their sleeves and get to work, and quickly.