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I was picking up some paperwork from my accountant, who also happens to be a very astute political analyst and an attorney, when the conversation turned to the debt ceiling debacle.

"Well," I commented, "it would be politically risky, but I suppose the President could just invoke the 14th amendment."

"I think that's what the Right is counting on," my politically astute accountant harumphed.

"What?" I asked, certain that the answer was not going to make me happy.

"Well, the 14th amendment applies to debts--not spending.  I suspect a conservative court will agree that the President can use the 14th amendment, but only to pay existing debt obligations."

"Which means...?" I sheepishly asked, beginning to see where this was going.

"We won't default.  We bring in enough revenue to cover our outstanding debt obligations.  We don't bring in enough to cover our other expenses like Medicare, Veterans benefits, and all the things that we like government doing.  The interest payments will have to be made, and everything else will automatically be cut, because they are expenditures, not debt."

I shuddered as I considered the possibility.  Right now roughly 40 cents of every dollar spent is borrowed.  With no further borrowing and no increase in revenue...it's ugly out there pretty quickly (unless you are a conservative demagogue). You can pay your existing debt--but what gets cut that the 40 borrowed cents has been covering?

This is just one guys observation, but he's usually spot on.  (He predicted this exact scenario when the Bush tax cuts were extended).  

My smugness is gone--the 14th amendment may be the Trojan Horse.

Update:  Some comments have pointed out that SS is a creditor (holds bonds) so it would be treated like any other creditor.  

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Comment Preferences

  •  Social Security holds US bonds (13+ / 0-)

    precisely so it will also be covered, at least according to the 14th. I don't think the other programs do, though.

    Michael Weissman UID 197542

    by docmidwest on Thu Jul 28, 2011 at 08:56:58 PM PDT

    •  yep; good point. (4+ / 0-)
      Recommended by:
      Lujane, erush1345, Sychotic1, neroden

      Social security is a creditor like any other.

      •  How About This, Johnny? (13+ / 0-)
        Jack Balkin, the Knight Professor of Constitutional Law and the First Amendment at Yale Law School, besides arguing that the President can invoke Section 4 of the 14th Amendment to solve the crisis (see next section), also suggests two other ways to solve the debt ceiling crisis: he points out that the U.S. Treasury has the power to issue platinum coins in any denomination, so it could solve the debt ceiling crisis by issuing two platinum coins in denominations of one trillion dollars each, depositing them into its account in the Federal Reserve, and writing checks on the proceeds. Another way to solve the debt ceiling crisis, Balkin suggests, would be for the Federal Government to sell the Federal Reserve an option to purchase government property for $2 trillion. The Fed would then credit the proceeds to the government's checking account. Once Congress lifts the debt ceiling, the president could buy back the option for a dollar, or the option could simply expire in 90 days. [48]
        Garrett Epps argues that the President would not be usurping Congressional power by invoking Section 4 to declare the debt ceiling unconstitutional, because the debt ceiling exceeds Congressional authority: calling it legislative "double-counting," as paraphrased in The New Republic, "because Congress already appropriated the funds in question, it is the executive branch’s duty to enact those appropriations."[56] In other words, given Congress has appropriated money via federal programs, the Executive is obligated to enact and, therefore, fund them; the debt ceiling's limit on debt prevents the executive from carrying out those instructions given by Congress, on the constitutional authority to set appropriations, and is therefore unconstitutional. President Bill Clinton endorsed this line of argument, saying he would eliminate the debt ceiling using the 14th amendment, calling it "crazy" that Congress is allowed to first appropriate funds and then gets a second vote on whether to pay for them.[57]
    •  I would agree (2+ / 0-)
      Recommended by:
      Lujane, erush1345

      That seems to be accurate.  The other programs create an interesting question though.

    •  Federal employees are also covered (1+ / 0-)
      Recommended by:
      the mom in the middle

      Because pay owed to someone is in fact a debt as well.

      Medicare is structured in such a way I'm pretty sure it is also a debt.

      Read pp. 1-7 of Krugman's _The Great Unraveling_ (available from Google Books). NOW.

      by neroden on Thu Jul 28, 2011 at 11:50:47 PM PDT

      [ Parent ]

  •  This is, of course, correct, (5+ / 0-)
    Recommended by:
    canoedog, arpear, Lujane, shenderson, erush1345

    and many of us have been saying it since day one.  The only argument that's even in the ballpark of reasonable is the notion that each successive appropriations act impliedly raises the debt ceiling.  This isn't a 14th amendment argument, of course, but a statutory one, and it falls apart on close inspection: the president is permitted by statute to defer spending.  So appropriations are made but that doesn't mean Congress is saying he must spend them.  To the contrary, Congress tells the President he shouldn't if there is some good fiscal reason not to, and not having enough money certainly qualifies as a good fiscal reason per the statute.

    •  Yep (2+ / 0-)
      Recommended by:
      arpear, erush1345

      The more I looked in to the issue, the more I realized the folly of thinking there was an easy way out of this mess.

      •  Jumbo coin seignorage (1+ / 0-)
        Recommended by:
        HoundDog

        is another easy way out of the mess.  There are actually several.  The trouble is that they're all "outside the box" and Obama is a consummate "inside the box" thinker.

        Read pp. 1-7 of Krugman's _The Great Unraveling_ (available from Google Books). NOW.

        by neroden on Thu Jul 28, 2011 at 11:56:45 PM PDT

        [ Parent ]

    •  Here's What Clyborn had to say: (9+ / 0-)
      Clyburn, the third-ranking House Democrat, said Wednesday that if the president is delivered a bill to raise the debt ceiling for only a short period of time, he should instead it and turn to the phrase in the Constitution that says the validity of the U.S. government’s debt “shall not be questioned.”

      “If that’s what lands on his desk, a short-term lifting of the ceiling, the debt ceiling, he should put it on his desk next to an executive order,” Clyburn said at a press conference. “He should sign an executive order invoking the 14th Amendment to this issue.” The Associated Press reported that he was applauded when he suggested the idea at a caucus meeting earlier in the day.

      “I believe that something like this will bring calm to the American people and will bring needed stability to our financial markets,” Clyburn added, noting that President Harry Truman did it once during his presidency after Congress was unable to pass a bill to raise the debt ceiling.

    •  President is permitted to defer SOME spending (1+ / 0-)
      Recommended by:
      Knarfc

      Not payments of Social Security, not last-I-checked Medicare payments, and there are limits on what he's allowed to do to government employees....

      Read pp. 1-7 of Krugman's _The Great Unraveling_ (available from Google Books). NOW.

      by neroden on Fri Jul 29, 2011 at 12:01:22 AM PDT

      [ Parent ]

      •  Perhaps delay payments to the private security (2+ / 0-)
        Recommended by:
        tobendaro, JamieG from Md

        companies until after a real debt ceiling raise is passed?  

        How about delaying by 90 days payments to any military supplier or subcontractor in a (R) district?

        Start closing military bases in (R) states?  

        Delay payments on all pork projects in (R) states until debt ceiling is passed?

        Play harder hardball than the (R) clan is doing.

        When life gives you wingnuts, make wingnut butter!

        by antirove on Fri Jul 29, 2011 at 12:40:43 AM PDT

        [ Parent ]

        •  Yes. (0+ / 0-)

          Perhaps delay payments to the private security companies until after a real debt ceiling raise is passed?  

          And to all contractors to the federal government.

          But this idea is just goofy:

          How about delaying by 90 days payments to any military supplier or subcontractor in a (R) district?

          Start closing military bases in (R) states?  

          Delay payments on all pork projects in (R) states until debt ceiling is passed?

          Play harder hardball than the (R) clan is doing.

          You are threatening the laying off of Democrats because they are represented by Republicans? Not Republicans because they are represented by Democrats?

          H'mm. I'm not terribly into this, anymore.

          by Knarfc on Fri Jul 29, 2011 at 05:54:05 AM PDT

          [ Parent ]

    •  False. (0+ / 0-)
      So appropriations are made but that doesn't mean Congress is saying he must spend them.

      Obama is required to follow the law, if he can, to the limit of his ability. An appropirations bill, having become law, which calls for certain things to happen, or specific programs or services to exist, must be followed. Anything else is a line item veto, which is unconstitutional, at the federal level (not that it isn't or hasn't been violated all the time). The same anything else exposes Obama to the threat of Impeachment.

      If Obama is unable to follow the law, because there is unsufficient revenue or borrowing authority to fund (note the distinction from operate; Obama may continue to operate the US military without payments to soldiers) all aspects of the federal government, this is where it gets murky and politically tricky. But general agreement here is that he would pay the interest on the debt, and he would some other bills, from current revenues.

      The fact that Obama keeps going on about "default" is obscene, and it implies that perhaps he is in on the concept as a first, rather than as a last, option, should there be no agreement for an increase in the debt ceiling. At best it's just unduely scary rhetoric being used in blaming the GOP. Obama should rather be scaring voters about a possible partial government shutdown.

      H'mm. I'm not terribly into this, anymore.

      by Knarfc on Fri Jul 29, 2011 at 05:50:59 AM PDT

      [ Parent ]

  •  Also, contracts signed ARE debt. (4+ / 0-)

    Lockheed and Halliburton will want to get paid.

    Medicare is funded with its own tax.

    Pensions are on bonds as well.

    "Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity." --M. L. King "You can't fix stupid" --Ron White

    by zenbassoon on Thu Jul 28, 2011 at 09:19:31 PM PDT

  •  I'd been wondering why I hadn't been ... (4+ / 0-)

    ... seeing this discussed more.  

    Granted, I've only waded through a fraction of the ceiling-related discussions (most of which had already degenerated into pie fights before I arrived, so that there wasn't much point in asking a substantive question, since it would only be answered by nasty cracks about 12th-dimensional chess and/or ponies).  But the distinction between debt and expenditure is pretty basic.  

    •  A lot more is debt than this guy thinks. (1+ / 0-)
      Recommended by:
      ItsSimpleSimon

      Every time a federal employee or contractor does work?  The government then has a debt which it owes them.

      Medicare has its own dedicated fund, and just like Social Security, it loans the money to the government -- more debt.

      Rent on federal office buildings?  More debt.

      It could be argued that the 14th Amendment does not give the government permission to incur new debts... but Obama is obligated by law to spend certain appropriations, and for those he is obligated to go into debt.

      If the 14th amendment is applied, the key downside is that funds which are truly discretionary -- "The President is authorized to spend up to so-and-so much, and up to so-and-so much is appropriated" probably don't constitute debts.  If the President is required to spend an amount, he's required to spend it -- but if he's given the option of not doing so, then perhaps he's not.

      Read pp. 1-7 of Krugman's _The Great Unraveling_ (available from Google Books). NOW.

      by neroden on Thu Jul 28, 2011 at 11:55:54 PM PDT

      [ Parent ]

      •  There is a difference between types of (1+ / 0-)
        Recommended by:
        shenderson

        obligations. Contractual debt at the highest level of the US government, such as treasury bonds, bills, are termed the national debts. Failure to pay results in downgrade, threat of default, or potentially, I suppose improbably, seizure of US government assets.

        Salaries, wages, bills from contrators and utilities are certainly obligations. However, failure to pay does not result in a legal avenue by those not paid, for default of the US government, or seizure of US government assets.

        H'mm. I'm not terribly into this, anymore.

        by Knarfc on Fri Jul 29, 2011 at 06:02:02 AM PDT

        [ Parent ]

    •  People are morons. (1+ / 0-)
      Recommended by:
      Knarfc

      "Why aren't there more sophisticated discussions?" is a question that probably doesn't need asking.

    •  Because Obama and the rest of (0+ / 0-)

      Washington are engaged in bullshit Kabuki (they call it delicate negotiations), meaning, the can't tell you what really is likely to happen. The parties instead have to paid the worse case, worst sounding scenarios, and blame it on each other. That's why.

      Obama is just as irresponsible, as the House Republcans, as I have commented repeatedly. Reid and Pelosi appear less so, as they have not given as many, or long winded press conferences.

      H'mm. I'm not terribly into this, anymore.

      by Knarfc on Fri Jul 29, 2011 at 05:58:03 AM PDT

      [ Parent ]

  •  Wait till the Army misses a paycheck. (3+ / 0-)

    And then see how the teabaggers feel about their brilliant stratergery.

    We are all in the same boat on a stormy sea, and we owe each other a terrible loyalty. -- G.K. Chesterton

    by Keith Pickering on Thu Jul 28, 2011 at 09:47:26 PM PDT

  •  It's totally uncharted waters (2+ / 0-)
    Recommended by:
    tobendaro, the mom in the middle

    The debt ceiling has never failed to been raised in the past so there is no precedent for what might happen next.  I imagine years of court battles during which no one's check could be cashed with the probable exception of debt interest payments. I'm not a lawyer nor an economist, but I'm highly skeptical of the idea that invoking the 14th amendment is like a magic spell that will fix our current problem in a puff of sulfur.

    Everything Right is Wrong Again - TMBG (lyrics)

    by GreenPA on Thu Jul 28, 2011 at 09:50:18 PM PDT

  •  He's not correct (3+ / 0-)
    Recommended by:
    neroden, Siri, the mom in the middle

    Debts are debts, regardless of the form they take.

    If the law says Medicare has to pay for something, that's no less a debt than an outstanding bond.

    The bondholder might get higher priority in getting paid because he's wealthier and more powerful, but taht hos nothing to do with the law.

    "What could BPossibly go wrong??" -RLMiller "God is just pretend." - eru

    by nosleep4u on Thu Jul 28, 2011 at 10:07:54 PM PDT

  •  Obama Should Do It (5+ / 0-)

    Yes, the Supreme Court could say that only existing debt obligations are truly debt. I'd suspect that they'd also say that existing contract obligations and payments for all past performances will have to be paid. But again, Obama could win and is a reason I suspect any impeachment proceedings would fail.

    The next question would be whether the GOP would file a lawsuit to force the government to default? This would be highly unpopular and very risky. Video showing Republicans marching to court to force the nation to stop paying grandma's social security check and allowing the economy to collapse would not look good. At least, without Obama invoking the 14th, the GOP could at least argue that it was the Democrats fault for the default.

    You might say that the GOP could use ordinary citizens to file the lawsuit. But its doubtful they could obtain standing. To have standing you must suffer an irreparable harm or injury, and invoking the 14th would pretty much prevent everyone in the world from irreparable harm or injury.

    I say that Obama should dare the GOP to file a lawsuit or try to impeach him.

  •  Check thy premises. (0+ / 0-)
    Well, the 14th amendment applies to debts--not spending.

    What'd he do - pull that out of his ass?

    I didn't care for math, but when I first understood the concept of finding the slope of a curve at a point, I wanted to grab the first girl I saw and kiss her with wild abandon, just like in that WW II photo.

    by dov12348 on Thu Jul 28, 2011 at 10:55:34 PM PDT

  •  Dear Mr. President, (0+ / 0-)

    This Congress made a pint to read the US Constitution in the House. I gave it to the newly elected TEA party members.

    If all else fails, PLEASE SHOVE THE 14TH AMENDMENT DOWN THEIR THROATS! THEN LOOK JUSTICE THOMAS IN THE EYES AND DARE HIM TO DEFAULT!

    If you fail to do so, then I will ask my fellow Kossacks to forgive my sexism, but Nancy Pelosi has more balls than you do!

    I'll sign myself as,

    I like you, but you need to grow a pair!

    "If being informed is the only prime duty of a citizen within a democracy, then being informed is, in fact, the most patriotic act." Hunter

    by KahluaKrazy on Thu Jul 28, 2011 at 11:55:59 PM PDT

  •  Social Security plus Debt (0+ / 0-)

    Wall Street could live with that.

    For those of you who prefer Bartlett to Obama, re-watch the West Wing. For those who prefer Clinton, re-watch old news videos.

    by Ptolemy on Fri Jul 29, 2011 at 02:38:25 AM PDT

  •  Nope, it works like this ... (1+ / 0-)
    Recommended by:
    the mom in the middle

    Bond holders
    Social Security and SSDI (which is a bondholder)
    Medicare (which was paid into and is a "faith and credit" issue)
    Medical Research Grants (already promised by contract)
    Contracts with Contractors (same idea)
    State Grants given in exchange for structural reform within state (promised as if a contract)
    Military Pay (but only through end of term of duty, no stop loss)
    VA Benefits (promised already)
    Congressional Pay (promised through end of term)
    Federal Pay (but only for those with furlough proof contracts)
    Military Contracts for existing items

    It is a grey zone on:
    Aid for Poor not already covered above
    Aid for States not already covered above
    Other Military Spending
    Military Research Projects not in DARPA
    Most Federal Workers beyond current year
    Most of the Cabinet
    Pay for President, Congress or Supreme Court beyond current term (and for court, is that life, or this year?)
    Post Office, NPR
    A lot of other stuff

    For those of you who prefer Bartlett to Obama, re-watch the West Wing. For those who prefer Clinton, re-watch old news videos.

    by Ptolemy on Fri Jul 29, 2011 at 02:46:38 AM PDT

  •  However, FULL faith and credit Trap is this ... (0+ / 0-)

    President says, "Well, I have to keep full faith and credit," and continues to appropriate and issue bonds to keep up with Congressional spending.

    Congress says, "Ok, we can't issue more draconian budgets just yet, but if you don't adhere to FULL faith and credit, then we can impeach you."

    Moody's and S&P swoop in and start issuing demands for continuing triple-A rating.

    Wall Street now controls Congress through the President, who is forced to comply with whatever the rating agencies dictate.

    For those of you who prefer Bartlett to Obama, re-watch the West Wing. For those who prefer Clinton, re-watch old news videos.

    by Ptolemy on Fri Jul 29, 2011 at 02:49:31 AM PDT

  •  THere's really no need for invoking the 14th. (1+ / 0-)
    Recommended by:
    Knarfc

    There are a whole series of laws, passed by congress that require the president to spend money. There is one law that sets the maximum debt he may issue.

    The fact is that for the president to "faithfully execute the laws of the United States" as currently on the books REQUIRES him to violate either the debt limit, or the appropriations. Its really that simple.

    The President should look laws on note that since the current appropriations are more recent law than the debt ceiling, that they are the actual intent of the Congress. He can then continue issuing debt and spending money in accordance with current law.

    The 'debt ceiling' was effectively increased by 1, the extension of the Bush tax cuts, and 2 the final agreement on the 2011 federal budget. Changing the number in the 'debt ceiling' resolution shouldn't trump all the other laws on the books, it is purely bookkeeping, and if the Congress can't do the books correctly, then the President should just as an executive action.

    •  No. The law permits the president to defer (0+ / 0-)

      spending until after the end of the fiscal year.  It's at 2 USC 680 or thereabouts (maybe 684)

    •  Hardly following you here. (0+ / 0-)
      President should look laws on note that since the current appropriations are more recent law than the debt ceiling, that they are the actual intent of the Congress. He can then continue issuing debt and spending money in accordance with current law.

      The 'debt ceiling' was effectively increased by 1, the extension of the Bush tax cuts, and 2 the final agreement on the 2011 federal budget. Changing the number in the 'debt ceiling' resolution shouldn't trump all the other laws on the books, it is purely bookkeeping, and if the Congress can't do the books correctly, then the President should just as an executive action.

      Thought the intent of Congress is certainly a meaningful issue.

      H'mm. I'm not terribly into this, anymore.

      by Knarfc on Fri Jul 29, 2011 at 06:09:28 AM PDT

      [ Parent ]

  •  Your accountant is correct. (0+ / 0-)

    But forget about the 14th amendment being the reason.

    What your accountant said is true politically, and logically.

    The owners of the US debt are very powerful and they will get paid before others. This happens before any Supreme Count weighs in. The Supreme Court could not comment before a court case is brought before them. This would be at earliest a month, plus or minus, after the government stops paying others. Hopefully by then there will be enough pressure brought on the House GOP so that an agreement is made.

    Unless, of course, Obama is in on this idea of preparing conditions in the country for a right wing coup. Perhaps it is too soon to speculate on that concept. Perhaps not.

    H'mm. I'm not terribly into this, anymore.

    by Knarfc on Fri Jul 29, 2011 at 05:40:00 AM PDT

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