The 14th Amendment – Nuclear Option or Tough Love to Resolve the Debt Ceiling Crisis?
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Stephen R. Rolandi
January 30, 2023
“I sincerely believe … that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a larger scale.” – Thomas Jefferson (1816)
Our third President was deeply concerned about the long-term effects of a nation having massive debt to pay off—and, as historians will tell you, the United States as a young republic owed nearly $77 million in debt owing from the American Revolution when George Washington assumed the Presidency in 1789. For a brief period in the mid-1830s, the United States had pared its national debt to nearly zero.
As of today, the nation’s cumulative national debt totals approximately $31.5 trillion, which is above the statutory debt ceiling approved by Congress in December 2021 (which works out to an average of $ 95,000 for every American). As I have written previously on this subject (refer to my article appearing in the September 30, 2021 PA Times), the debt ceiling refers to a legislative limit on the amount of cumulative national debt that can be incurred by the U.S. Treasury Department—in effect, it is a cap on how much money the Federal government can borrow to meet its financial obligations.
The debt ceiling needs to be distinguished from the annual operating budget of the United States (for example, the budget proposal submitted by President Biden to the 117th Congress called for almost $5 trillion in revenue and $6.3 trillion in expenditures).
The United States reached the debt limit on January 19, 2023, forcing the Treasury Department to utilize emergency measures to buy time to avoid an unprecedented default. If Congress does not raise the debt ceiling over the next few months, a default may become a reality (the so-called “X” date)—which is projected to occur sometime during the summer of 2023. A default would have catastrophic consequences not only for the U.S. economy, but for the entire global economy as well.
If Congress and the White House fail to reach an agreement, it has been suggested that the Treasury Department issue a $1 trillion platinum coin and deposit it with the Federal Reserve Bank; the coin would then be used to meet the Federal government’s outstanding debt obligations. Many, including Treasury Secretary Janet Yellen, see this idea as a “gimmick,” and not a realistic option. I agree with Secretary Yellen, as I believe that this would trigger hyper-inflation, as it basically amounts to printing money, even though minting of such a coin is permitted by statute.
If both ends of Pennsylvania Avenue fail to reach an agreement on a new debt ceiling, there is another option that could avert a default, which is found in the Fourteenth Amendment to the U.S. Constitution, sometimes referred to as the Public Debt Clause. This amendment became law in 1868, as part of the series of post-Civil War constitutional amendments.
The relevant portion of the Fourteenth Amendment is as follows:
Section 4: “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. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid or insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave: but all such debts, obligations, and claims shall be held illegal and void.”
The issue that has been raised concerns the President’s ability to unilaterally raise the debt ceiling. Interpretation of this clause has received considerable attention and raised debate not only about presidential powers and checks and balances, but also the debt ceiling and the continued ability of the United States to honor its financial obligations. Two former Presidents (Clinton and Obama) briefly considered invoking this constitutional provision during the two major debt ceiling crises in 1995 and 2011; both opted not to.
In November 2013, the National Constitution Center in Philadelphia, PA (www.constitutioncenter.org) held a Town Hall debate on the Public Debt Clause featuring Professors Sean Wilentz (Princeton University); Ilya Shapiro (CATO Institute); and Neil Buchanan (George Washington University). Wilentz argued that the original intent of the Fourteenth Amendment required both the President and Congress to honor the debt and not take any action that would trigger a default. Shapiro, on the other hand, contended that the exact meaning of the phrase “questioning the debt” is ambiguous at best. Professor Buchanan referred to the 1935 U.S. Supreme Court case of Perry v. United States, 294 U.S. 330 (one of the famous “Gold Clause Cases”) and argued that Perry confirmed the validity of the Public Debt clause as part of the Federal constitution; further, if Congress took take action to default on the debt, it would be unconstitutional.
The debate continues. It is my sincere hope that President Biden and legislative leaders in Congress can reach an agreement soon. However, if no agreement can be reached, President Biden should seriously consider invoking the Public Debt Clause of the Fourteenth Amendment.
As I have written before, it is time for the White House and Congress to get serious about Federal spending and revenue (tax policy). Along these lines, I would endorse a recent call by U.S. Senator Joe Manchin (D-W.Va.) for bi-partisan/bicameral committees on Federal spending and trust funds.
Time will tell.
Author: Stephen R. Rolandi retired in 2015 after serving with the State and City of New York. He holds BA and MPA degrees from New York University, and studied law at Brooklyn Law School. He teaches public finance and public management as an Adjunct Professor of Public Administration at John Jay College of Criminal Justice (CUNY) and Pace University. Professor Rolandi is a Trustee of NECoPA; President-emeritus of ASPA’s New York Metropolitan Chapter and past Senior National Council Representative. He has served on many association boards in Washington, DC and New York, and is a frequent guest commentator on public affairs and political issues affecting the nation and New York State. You can reach him at: [email protected] or [email protected] or 914.441.3399 or 212.237.8000.
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The 14th Amendment – Nuclear Option or Tough Love to Resolve the Debt Ceiling Crisis?
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Stephen R. Rolandi
January 30, 2023
“I sincerely believe … that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a larger scale.” – Thomas Jefferson (1816)
Our third President was deeply concerned about the long-term effects of a nation having massive debt to pay off—and, as historians will tell you, the United States as a young republic owed nearly $77 million in debt owing from the American Revolution when George Washington assumed the Presidency in 1789. For a brief period in the mid-1830s, the United States had pared its national debt to nearly zero.
As of today, the nation’s cumulative national debt totals approximately $31.5 trillion, which is above the statutory debt ceiling approved by Congress in December 2021 (which works out to an average of $ 95,000 for every American). As I have written previously on this subject (refer to my article appearing in the September 30, 2021 PA Times), the debt ceiling refers to a legislative limit on the amount of cumulative national debt that can be incurred by the U.S. Treasury Department—in effect, it is a cap on how much money the Federal government can borrow to meet its financial obligations.
The debt ceiling needs to be distinguished from the annual operating budget of the United States (for example, the budget proposal submitted by President Biden to the 117th Congress called for almost $5 trillion in revenue and $6.3 trillion in expenditures).
The United States reached the debt limit on January 19, 2023, forcing the Treasury Department to utilize emergency measures to buy time to avoid an unprecedented default. If Congress does not raise the debt ceiling over the next few months, a default may become a reality (the so-called “X” date)—which is projected to occur sometime during the summer of 2023. A default would have catastrophic consequences not only for the U.S. economy, but for the entire global economy as well.
If Congress and the White House fail to reach an agreement, it has been suggested that the Treasury Department issue a $1 trillion platinum coin and deposit it with the Federal Reserve Bank; the coin would then be used to meet the Federal government’s outstanding debt obligations. Many, including Treasury Secretary Janet Yellen, see this idea as a “gimmick,” and not a realistic option. I agree with Secretary Yellen, as I believe that this would trigger hyper-inflation, as it basically amounts to printing money, even though minting of such a coin is permitted by statute.
If both ends of Pennsylvania Avenue fail to reach an agreement on a new debt ceiling, there is another option that could avert a default, which is found in the Fourteenth Amendment to the U.S. Constitution, sometimes referred to as the Public Debt Clause. This amendment became law in 1868, as part of the series of post-Civil War constitutional amendments.
The relevant portion of the Fourteenth Amendment is as follows:
Section 4: “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. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid or insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave: but all such debts, obligations, and claims shall be held illegal and void.”
The issue that has been raised concerns the President’s ability to unilaterally raise the debt ceiling. Interpretation of this clause has received considerable attention and raised debate not only about presidential powers and checks and balances, but also the debt ceiling and the continued ability of the United States to honor its financial obligations. Two former Presidents (Clinton and Obama) briefly considered invoking this constitutional provision during the two major debt ceiling crises in 1995 and 2011; both opted not to.
In November 2013, the National Constitution Center in Philadelphia, PA (www.constitutioncenter.org) held a Town Hall debate on the Public Debt Clause featuring Professors Sean Wilentz (Princeton University); Ilya Shapiro (CATO Institute); and Neil Buchanan (George Washington University). Wilentz argued that the original intent of the Fourteenth Amendment required both the President and Congress to honor the debt and not take any action that would trigger a default. Shapiro, on the other hand, contended that the exact meaning of the phrase “questioning the debt” is ambiguous at best. Professor Buchanan referred to the 1935 U.S. Supreme Court case of Perry v. United States, 294 U.S. 330 (one of the famous “Gold Clause Cases”) and argued that Perry confirmed the validity of the Public Debt clause as part of the Federal constitution; further, if Congress took take action to default on the debt, it would be unconstitutional.
The debate continues. It is my sincere hope that President Biden and legislative leaders in Congress can reach an agreement soon. However, if no agreement can be reached, President Biden should seriously consider invoking the Public Debt Clause of the Fourteenth Amendment.
As I have written before, it is time for the White House and Congress to get serious about Federal spending and revenue (tax policy). Along these lines, I would endorse a recent call by U.S. Senator Joe Manchin (D-W.Va.) for bi-partisan/bicameral committees on Federal spending and trust funds.
Time will tell.
Author: Stephen R. Rolandi retired in 2015 after serving with the State and City of New York. He holds BA and MPA degrees from New York University, and studied law at Brooklyn Law School. He teaches public finance and public management as an Adjunct Professor of Public Administration at John Jay College of Criminal Justice (CUNY) and Pace University. Professor Rolandi is a Trustee of NECoPA; President-emeritus of ASPA’s New York Metropolitan Chapter and past Senior National Council Representative. He has served on many association boards in Washington, DC and New York, and is a frequent guest commentator on public affairs and political issues affecting the nation and New York State. You can reach him at: [email protected] or [email protected] or 914.441.3399 or 212.237.8000.
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