The Eternal Recurrence of Debt Ceiling Debates

The current debate is a replay of debates we have had before (and will likely have again).

In yesterday's New York Times, Michael McConnell explains why "The idea that the 14th Amendment gives the president unilateral power to borrow is dangerous nonsense." He writes:

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.

Moreover, even if the president were to issue new bonds without congressional authorization, the text of Section 4 makes plain that these bonds would not be constitutionally binding. Only public debt "authorized by law" — meaning by statute — has that status. Were Mr. Biden to issue bonds on his unilateral authority, the bond market would know that those bonds were not backed by the full faith and credit of the United States. Sensible investors would not purchase such bonds or would demand such a high risk premium as to make them uneconomical.

Professor McConnell's op-ed reminded me that this is not the first time we have heard these arguments. Indeed, I blogged on Professor McConnell's views about the debt limit over a decade ago in this post. It was one of a series of posts I wrote between 2011 and 2013 over the debt ceiling, the 14th Amendment, and platinum coin fantasies. (For some reason—likely my error—that listing excludes this post, noting then-Treasury Department General Counsel George Madison's insistence that the Department "has always viewed the debt limit as a binding legal constraint that can only be raised by Congress," and this post  noting the history of government shutdowns.)

For those interested in more historical perspective on the use of debt ceiling standoffs to pursue other political goals, I recommend this paper from 1993 explaining how "the use of the debt ceiling vote as a vehicle for other legislative matters," had become a "pattern" in the mid-1970s and 1980s, and this Washington Post fact check noting the history of attaching non-budget items to debt ceiling increases.