Although this may be old news to some, it was news to me, so I thought I would give it a post.
An article in the HuffPost has Geithner on record saying the 14th amendment of the Constitution requires the Federal government to honor its debts and thusly prevent default regardless of whether or not the debt ceiling is raised.
He says a USA default will not happen! More after the jump /\
According to the article, on May 25 of this year Geithner said this when asked about the debt ceilig at a Politico Playbook breakfast by host Mike Allen:
"I think there are some people who are pretending not to understand it, who think there's leverage for them in threatening a default," Geithner said. "I don't understand it as a negotiating position. I mean really think about it, you're going to say that-- can I read you the 14th amendment?"
Geithner whipped out his handy pocket-sized Constitution. Allen tried to brush it aside. "We'll stipulate the 14th Amendment," he said.
"No, I want to read this one thing," Geithner insisted.
"It's paper clipped!" Allen observed, noting that Geithner's copy of the Constitution was clipped so that it would open directly to the passage in question.
"'The validity of the public debt of the United States, authorized by law, including debts incurred for the payments of pension and bounties for services in suppressing insurrection or rebellion' -- this is the important thing -- 'shall not be questioned," Geithner read.
"So as a negotiating strategy you say: 'If you don't do things my way, I'm going to force the United States to default--not pay the legacy of bills accumulated by my predecessors in Congress.' It's not a credible negotiating strategy, and it's not going to happen," Geithner insisted.
For proof, lets roll the tape:
This seems to add some cred to the possibility President Obama will use the 14th amendment option as an out to avoid default if the debt ceiling isn't raised, instead of folding to Republican demands that raising taxes on the rich not be a part of the deal. At least I hope so!