The Debt Ceiling and the 14th Amendment: Is President Biden Correct?
President Biden and some Democrats in Congress are claiming the 14th Amendment allows them to exceed the Debt Limit without Congressional approval in order to avoid a default on the federal debt. They are wrong, at least in this case.
The 14th Amendment provides “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.”
President Biden and his supporters argue that the current $31.4 trillion Debt Limit will be reached on June 1, 2023. After that date the Treasury Department would be prevented from borrowing funds to finance federal spending, which will result in a default on the federal debt and violate the 14th Amendment’s mandate that the federal debt “shall not be questioned.” Therefore, if Congress doesn’t raise the Debt Limit, the President has the authority under the 14th Amendment to ignore the limit and continue to borrow money needed for federal spending.[1]
I’m sure this argument sounded good in their echo chamber, but it’s silly for at least two reasons. First, contrary to the pronouncements from Washington that the U.S. has never defaulted on its debt, it has – four times since the 14th Amendment was ratified:
- The 1933 default on U.S. Gold Bonds (at the time literally all U.S. bonds were “gold bonds”);
- The 1968 Default on Silver Certificates;
- The 1971 repudiation of the U.S. agreement to exchange the dollar for gold under the Bretton Woods Agreement;
- The 1979 default on principal and interest payments for T-Bills from April 26 through May 10. (This was a short-lived default due to several factors, but a default nevertheless).
More important than the four post 14th Amendment defaults is the fact that even if the Debt Limit is not raised, the government has more than enough income to service the federal debt, just not enough to continue to service the debt and fund all government programs.
The federal government takes in more money every month than is required to service the federal debt. In April 2023, the government took in just over $638.5 billion and needed just over $76 billion to service the debt, leaving a balance of just under $562.5 billion. In March 2023, they took in just shy of $313.5 billion and needed almost $77.6 billion for the debt, leaving a balance of a tad less than $325.6 billion. It’s the same for every month – the federal government has a large balance after servicing the debt. Don’t believe me? Then go to the Treasury Department’s website here and here, download the data and run the numbers…you’ll see I’m correct.
Point I’m making, is even though the Debt Limit prevents the government from borrowing more money, they still have more than enough money to service the debt. Therefore, if they follow the dictates of the 14th Amendment (as Biden interprets it) and service the debt before spending on other programs, there will be no default. Under this scenario, failing to raise the Debt Limit will result in a partial government shutdown which is both legal and constitutional, though not desirable.
Simply put, a failure to raise the Debt Limit will not result in, or at least should not result in a default on the federal debt, therefore the 14th Amendment cannot be invoked in order to bypass the congressionally mandated Debt Limit.
If there is a default, it would be because Biden ordered the continued funding of federal programs to the extent possible and ignored servicing the debt. In this case, it would be Biden who violated the 14th Amendment, not to mention causing significant disruption in the financial markets and further weakening of the economy.
There’s no reason for the government to default on our debt obligations, they just have to prioritize servicing the debt as the 14th Amendment requires.
The bigger and more pressing problem is getting our spending under control and reducing our $31.4 trillion debt. To put it in prospective, $31.4 trillion in $100 bills would weigh 692,251,503 pounds, that is some heavy debt….
[1] I’m not sure Biden’s interpretation that “shall not be questioned” means that the debt has to be paid is correct. Another interpretation is the validity of the debt cannot be challenged (questioned) in a court of law or by any other means.