Calls for President Biden to invoke the 14th Amendment of the Constitution to circumvent the debt ceiling have gotten louder and louder. On Friday, a group of 11 Democratic senators that included both deep blue and purple staters signed a letter demanding Biden exercise his authority under the amendment and bypass “the destructive Republican budget.” Over 66 House Dems have called for the same.
But what does it actually mean? How would Biden use a Reconstruction-era amendment best known for its assurance of “equal protection of the laws”—and more recognizable as the basis of Supreme Court decisions like Brown v. the Board of Education—for the debt ceiling? It has to do with a clause tucked away in Section 4: “The validity of the public debt of the United States … shall not be questioned.”
Some legal scholars say that clause means that it would be unconstitutional for the U.S. to fail to make payments and default on its debts, especially volitionally, for political purposes, which is exactly what Kevin McCarthy is threatening. Biden invoking the amendment would be like calling McCarthy’s bluff, a move that would rely on the cooperation of the Treasury Department to go ahead and just keep borrowing money. It’s a paper solution, but most people would similarly say that an arbitrary limit on how much money the country can borrow—one that is moved up sporadically under threat of self-inflicted catastrophe—is itself a paper problem. Get some lawyers in a room, declare that this action is prohibited by law, sign on the dotted line. Keep paying debts, keep borrowing.
In other words, Biden’s invocation of the amendment wouldn’t be a physical action or display. It would be more like an excuse to just … ignore the Republicans. (For those interested in the technicalities of how it’d all work, I’d recommend this blog post in Employ America which catalogs the actions the Treasury Department would need to take to make a 14th Amendment case plausible; this is also where minting the coin comes in.)
The downside? Democrats would be daring someone to sue the government to get the case in front of the Supreme Court, which could then decide, potentially months later, that Biden’s interpretation of the 14th Amendment was actually incorrect, contravened by, say, Congress’ constitutional right to “borrow Money on the credit of the United States.” That could retroactively plunge the country into default and kick off a global financial crisis, all to abet Republican brinkmanship.
It’s a risky move. (Biden has said he’s “considering” it, but reports of the White House’s coldness to the option abound.) Staking the fate of the economy on the court’s decision-making could sink stocks and increase borrowing costs for the country, with higher interest rates necessary to entice investors and bondholders to continue their faith in getting paid back on U.S. treasury bonds. Democrats have long lived in fear of retribution from the financier class and Mr. Market (you may remember when “bond vigilantes” were keeping the Obama White House from pursuing policies that would help people post-recession). Also, the party’s figureheads have historically much preferred to simply give up preemptively rather than challenge the court head-on.
And not everyone in the White House is convinced. Arguably no cabinet member has been more vocal on that front than Treasury Secretary Janet Yellen. In her own words, on the 14th: “It’s legally questionable whether or not that’s a viable strategy.”
In the past 63 years, the national debt limit has been raised nearly 80 times. And yet, somehow it is only a problem when a Democratic president is in power, given that the Republican Party is willing to hold the entire political and economic apparatus hostage, demanding massive legislative wins in exchange for a simple procedural measure, and Democrats, ever allergic to power politics, are not. Since at least 2021, progressives were clamoring, at various levels of volume, for Democrats to fold a massive debt ceiling increase into legislation when they controlled all branches of government to avoid this very situation.
It is no exaggeration to say that Biden and many, many others in government have had over 10 years to prepare for this. And yet, they seem shockingly flatfooted in their response, taken by surprise that Republicans have done exactly what they have done in the past and said they would do again. One of the lowest moments of the Obama administration was the 2011 debt ceiling fight, when the president ceded cuts in what was known as the “sequestration.” The black eye incurred in that fight was twofold; not only did Democrats serve up huge cuts, they also showed Republicans that hostage-taking during debt ceiling discussion was a legitimate way to negotiate. For all the mistakes Democrats made under Obama that they swore they’d never repeat again, the debt ceiling debacle ranked at the very top of the Never Again list.
It’s useful context for the vocal advocacy of a 14th Amendment fix. Democrats are clearly increasingly edgy about the direction of the White House’s negotiations on an agreement expected to gore public spending on social services but not the military, and raise the debt limit. Even Biden’s close confidant and avowed nonprogressive Jim Clyburn has called for Biden to do it.
McCarthy has succeeded in keeping House and Senate Democrats locked out of the room in deliberations with the White House, which is reason enough for them to be nervous; those concerns are compounded by the fact that Biden is a notoriously terrible negotiator. It’s part of the bigger, more substantial question without a satisfying answer: Why, if Biden believes that default could be legally prohibited, is he entertaining giving McCarthy the crippling cuts he so desires at all? In any event, we can expect to see a deal by June 1, when the U.S. officially runs out of money. Or doesn’t, depending on how you interpret the law.