‘America Does Not Negotiate With Terrorists’ – Invoke the 14th Amendment Against The Unconstitutional Federal Debt Ceiling

How often have we heard the assurances over time that “America does not negotiate with terrorists“?

And yet we have 147 insurrectionist Republicans who voted not to certify the 2020 election and who gave, and continue to give, aid and comfort to the violent MAGA thugs who tried to take the Capitol by force on January 6.

These insurrectionists have now switched tactics to economic terrorism, taking the country hostage and threatening to blow up the U.S. and global economy if President Biden and Democrats do not concede to their extortion demands over the federal debt ceiling.

In what other country would such terrorist conduct be acceptable, and normalized by a complicit media? In  no other country does a debt ceiling limit exist.

Call these Republicans what they are, economic terrorists, and “America does not negotiate with terrorists.”

The New York Times reports, How Might the Government Avoid Default? Biden Offers Clues.

Nearly two hours after the end of what appeared to be a fruitless meeting between President Biden and Republican leaders this week over raising the federal debt limit, Mr. Biden finally offered a hint as to how the government might avoid a catastrophic default.

Actually, it was two hints, contained in an impromptu news conference in the Roosevelt Room. For the first time, Mr. Biden signaled he was open to clawing back some unspent stimulus money included in the economic rescue bill he signed in 2021 during the pandemic. That suggested a potential starting ground for compromise between the president and Republican lawmakers, who have refused to raise the nation’s borrowing limit without deep spending cuts, and who have pushed to rescind some stimulus funds.

Republicans estimate those clawbacks could save the government between $50 billion and $70 billion, a relatively small amount in the context of their $4.8 trillion proposal to cut spending and eliminate clean-energy tax breaks in exchange for raising the debt limit. Asked about the idea on Tuesday, Mr. Biden did not rule it out.

Note: This is a mere “rounding error” in the Pentagon budget, which the economic terrorists say is non-negotiable.

“We don’t need it all,” Mr. Biden said, referring to the unspent coronavirus funds. “But the question is what obligations were there made, commitments made, money not disbursed, etc.? I have to look, take a hard look at it. It’s on the table.”

The second clue was not about possible compromise — it was the opposite. The president acknowledged that he is considering what would effectively be a constitutional challenge to the very existence of the debt limit. It is a unilateral path that Mr. Biden conceded could face legal hurdles. But his comments suggested that if Congress could not find a deal to raise the debt limit on terms acceptable to Mr. Biden — and before the nation runs out of cash to pay its bills — the president might be prepared to try to avoid default on his own.

“I am considering the 14th Amendment,” Mr. Biden said, referring to a clause in the Constitution that stipulates that “the validity of the public debt” issued by the U.S. government “shall not be questioned.” Some constitutional scholars contend that clause requires the government to continue issuing new debt to pay bondholders, effectively overriding the nation’s statutory borrowing limit, which is controlled by Congress.

Still, Mr. Biden noted, “the problem is it would have to be litigated.”

President Biden must have seen his old friend Professor Laurence Tribe on The Last word with Lawrence O’Donnell, as I did. Harvard Law Professor Laurence Tribe explains what the president’s constitutional duties are despite the demands from House Republicans on the debt ceiling.

Too few people realize the debt limit binds Congress itself. Unless & until Congress lifts or repeals it, absolutely nothing Biden can do — not even caving to McCarthy’s demands — would avoid violating the 14th Amendment as well as crashing the economy:https://t.co/hMRYaAXA0Q

— Laurence Tribe 🇺🇦 ⚖️ (@tribelaw) May 8, 2023

Professor Tribe writes at the New York Times, Why I Changed My Mind on the Debt Limit:

At this moment, at the White House as well as the Departments of Treasury and Justice, officials are debating a legal theory that previous presidents and any number of legal experts — including me — ruled out in 2011, when the Obama administration confronted a default.

The theory builds on Section 4 of the 14th Amendment to argue that Congress, without realizing it, set itself on a path that would violate the Constitution when, in 1917, it capped the size of the federal debt. Over the years, Congress has raised the debt ceiling scores of times, most recently two years ago, when it set the cap at $31.4 trillion. We hit that amount on Jan. 19 and are being told that the “extraordinary measures” Treasury has available to get around it are about to run out. When that happens, all hell will break loose.

Taking advantage of that prospect, congressional Republicans are threatening to do nothing unless the administration agrees to slash lots of government programs that their party has had in its sights. If the president caves in to their demands, they will agree to raise the cap — until this crisis occurs again. Then, they will surely pursue the same game of chicken or, maybe more accurately, Russian roulette. It’s a complicated situation, but a solution is staring us in the face.

Section 4 of the 14th Amendment says the “validity” of the public debt “shall not be questioned” — ever. Proponents of the unconstitutionality argument say that when Congress enacted the debt limit, effectively forcing the United States to stop borrowing to honor its debts when that limit was reached, it built a violation of that constitutional command into our fiscal structure, and that as a result, that limit and all that followed are invalid.

I’ve never agreed with that argument. It raises thorny questions about the appropriate way to interpret the text: Does Section 4, read properly, prohibit anything beyond putting the federal government into default? If so, which actions does it forbid? And, most important, could this interpretation open the door for dangerous presidential overreach, if Section 4 empowers the president single-handedly to declare laws he dislikes unconstitutional?

I still worry about those questions. But I’ve come to believe that they are the wrong ones for us to be asking. While teaching constitutional law, I often explored the problem of bloated presidential power, the puzzle of preserving the rule of law in the face of unprecedented pressures, and the paradox of having to choose among a set of indisputably bad options. During my last semester teaching, with Covid forcing my seminars from the classroom to the video screen, I studied the most insightful literature on the debt ceiling and concluded that we need to reframe the argument.

The question isn’t whether the president can tear up the debt limit statute to ensure that the Treasury Department can continue paying bills submitted by veterans’ hospitals or military contractors or even pension funds that purchased government bonds.

The question isn’t whether the president can in effect become a one-person Supreme Court, striking down laws passed by Congress.

The right question is whether Congress — after passing the spending bills that created these debts in the first place — can invoke an arbitrary dollar limit to force the president and his administration to do its bidding.

There is only one right answer to that question, and it is no.

And there is only one person with the power to give Congress that answer: the president of the United States. As a practical matter, what that means is this: Mr. Biden must tell Congress in no uncertain terms — and as soon as possible, before it’s too late to avert a financial crisis — that the United States will pay all its bills as they come due, even if the Treasury Department must borrow more than Congress has said it can.

The president should remind Congress and the nation, “I’m bound by my oath to preserve and protect the Constitution to prevent the country from defaulting on its debts for the first time in our entire history.” Above all, the president should say with clarity, “My duty faithfully to execute the laws extends to all the spending laws Congress has enacted, laws that bind whoever sits in this office — laws that Congress enacted without worrying about the statute capping the amount we can borrow.”

By taking that position, the president would not be usurping Congress’s lawmaking power or its power of the purse. Nor would he be usurping the Supreme Court’s power to “say what the law is,” as Chief Justice John Marshall once put it. Mr. Biden would simply be doing his duty to “take care that the laws be faithfully executed” even if doing so leaves one law — the borrowing limit first enacted in 1917 — temporarily on the cutting room floor.

Ignoring one law in order to uphold every other has compelling historical precedent. It’s precisely what Abraham Lincoln did when he briefly overrode the habeas corpus law in 1861 to save the Union, later saying to Congress, “Are all the laws, but one, to go unexecuted, and the government itself go to pieces, lest that one be violated?”

For a president to pick the lesser of two evils when no other option exists is the essence of constitutional leadership, not the action of a tyrant. And there is no doubt that ignoring the debt ceiling until Congress either raises or abolishes it is a lesser evil than leaving those with lawful claims against the Treasury out in the cold.

Of course, my solution might roil the bond markets and cause lenders to demand a premium for extending credit to the United States. But no path out of the dilemma is without risk.

Some will say that letting the president ignore the statutory limit on borrowing would give him too much power and represent a dangerous step in a tyrannical direction. Wrong. What I propose would in truth give the president a lot less power than entrusting him to decide which of the government’s promises to honor and which creditors to stiff — a power that the Supreme Court denied him when it handed down a 1998 decision that prevented him from vetoing line items within a budget.

In any event, Section 4 prohibits the president from permanently stiffing our creditors — even those required to wait their turn after the Treasury runs dry. So even if Speaker Kevin McCarthy and those pulling his strings succeed in making some of those creditors wait, it wouldn’t eliminate our debts; it would merely replace them with i.o.u.s. And that’s just debt in another form.

All Congress would have done is create economic catastrophe on top of constitutional crisis — and without securing compliance with the debt ceiling that Republican claim to want. The only way out of this forest is through the trees.

Here are my reasons for thinking POTUS needn’t worry about lawsuits challenging him for doing his duty and directing the government to pay all its lawfully authorized debts on time ⬇️https://t.co/VbLophPzz7 via @politico

— Laurence Tribe 🇺🇦 ⚖️ (@tribelaw) May 10, 2023

Robert Hockett, a professor of law at Cornell University and a senior counsel at Westwood Capital, worked for the Federal Reserve Bank of New York and the International Monetary Fund. He writes This Is What Would Happen if Biden Ignores the Debt Ceiling and Calls McCarthy’s Bluff:

The deadline for a debt ceiling hike is only weeks away, with Treasury Secretary Janet Yellen saying the U.S. could run out of money to pay its debts by June 1. Some Republicans, whether serious or bluffing, seem ready to go to the brink of default — if not actually default on the U.S. national debt. Debate has intensified over whether President Biden might sidestep the debt ceiling so the nation can keep paying what it owes.

There are powerful legal reasons and arguments for him to do so. These include the 14th Amendment, which prohibits questioning what we already owe, and the so-called later-in-time rule of statutory construction, which basically means that Congress’s most recent budget legislation trumps any earlier legislated ceiling.

Given the stakes, it’s important to explore the likely consequences if Mr. Biden ignores the debt ceiling — how doing so would affect our economy and the markets, our retirement savings and even our constitutional system. There is encouraging news for the president and those who follow our first Treasury secretary, Alexander Hamilton, in believing we must pay our legally incurred debts. We are far better off doing so, even if it means short-term chaos should Mr. Biden allow the June 1 deadline to come and go.

First, consider the consequences if the United States stopped paying its debts and defaulted on June 1. This would undo what Hamilton and his successors sought to ensure: a national credit rating beyond cavil or reproach. We would see a great tottering — if not worse — of U.S. banking, U.S. financial markets and the world’s capital markets.

For one thing, U.S. Treasury securities, valued at over $24 trillion (by far, the largest asset market in the world), are the primary safe asset held in banking, pension fund, mutual fund and other business portfolios. Our present regional bank crisis involving Silicon Valley Bank and others is occurring in response to a relatively slight, temporary drop in the value of low-yield Treasuries largely because of the Fed’s interest rate hikes. An outright default would leave us nostalgic for the comparable placidity of this troubled moment.

We would also probably see a rapid plunge in the value of the dollar worldwide as a global reserve asset. Our currency’s value in relation to others’ is rooted primarily in global demand for dollar-denominated financial assets, since we have relinquished our primacy as a goods exporter to China. Since Treasury securities are by far the most voluminous asset, their slide would be the dollar’s slide. This would quickly render imports, on which we continue to rely, far more expensive. Inflation could look more like that of Argentina or Russia 20 years ago than that of the present or even the 1970s.

This is to say nothing of our subsequent incapacity to maintain our military bases and other assets abroad and to pay thousands of U.S. military personnel. Only China would be a world-bestriding global superpower, abetting the moves it is already making with Russia, Brazil and other nations to displace the dollar as what Valéry Giscard d’Estaing once called the United States’ global “exorbitant privilege.”

Finally, even the serious prospect of U.S. default would quickly raise debt-servicing costs, rendering our deficit larger than it currently is — a consequence dramatically at odds with Republicans’ professed concerns about tying the debt ceiling hike to massive budget cuts.

It almost makes you think that fiscal responsibility isn’t what House Speaker Kevin McCarthy’s caucus really wants.

Now suppose the president decides to challenge or ignore the debt ceiling and instructs Ms. Yellen, on June 1 or before, to continue paying our nation’s obligations, as established by Congress in the most recent budget legislation, no matter what. Assume also that he and his administration carefully explain to the nation the legal and financial bases — not to mention the moral ones — for continuing to pay our debts.

The best-case scenario in this situation is that Mr. McCarthy’s caucus [the economic terrorists] recognizes it has no legal case and its bluff has been called and that it gives up the tactic and passes budget legislation to which the Senate and the president can ultimately agree. This is unlikely but not impossible. After all, the only real alternative for Mr. McCarthy would be to go to court and seek to enjoin the president’s decision to continue to pay obligations — legal obligations already legislatively incurred. The impact of going to court to argue for defaulting on the nation’s debt, let alone the political optics for Mr. McCarthy, would be very risky.

It’s also possible that Mr. McCarthy’s Republicans howl in protest and stage more hearings and votes on the budget in the House, taking us to the brink of June 1 before legislatively addressing the debt ceiling. But it’s hard to see this getting them anything other than impotent spectacle, further cementing their public image as unserious, especially if the president formally repudiates the debt ceiling now or this month, rather than waiting until June.

But suppose the Republicans take the president to court nonetheless. What then? Assuming the courts didn’t refuse to hear the case on justiciability grounds, the challenge would certainly receive expedited review, given the magnitude of the matter. During the brief time the issue was being litigated, we’d see the beginnings of some of the nightmare economic scenarios sketched above.

But only the beginnings. The president’s multiple arguments would be compelling, and the markets, in any case, are already pricing in worries of this sort. The prospect of an end to the too-often threatened fiscal terrorism that is debt ceiling gamesmanship, moreover, would surely be more welcome to the markets than would be continued hostage taking and associated uncertainty of the kind that Republicans now regularly impose on the nation and its creditors.

However radical some of the Supreme Court’s right-wing justices might be, even they understand the legal precept that the Constitution isn’t a suicide pact. Even less so is the 1917 Liberty Bond Act, in which the debt ceiling is rooted. As a legal matter, this ceiling has long since been superseded by a new congressional budget process that has determined its own ceiling through budgeting since 1974 and was of doubtful 14th Amendment conformity, at least as now interpreted, in 1917.

Several of the court’s justices are pragmatic people on economic questions. It is exceedingly difficult to imagine Chief Justice John Roberts (who famously upheld Obamacare in 2012 and after) or Justices Neil Gorsuch and Brett Kavanaugh, let alone the court’s Democratic appointees, demanding default — especially if the aforementioned financial tremors have already begun.

Justices Samuel Alito and Amy Coney Barrett are a bit harder to call, but it seems likely that at least Justice Alito would refrain from demanding default, given his record of moderate decisions on issues of financial law. All but Justice Clarence Thomas and perhaps Justice Barrett, accordingly, look fairly likely to strike the debt ceiling, at least as applied by Republicans, should they try to sue the president out of paying our already legislated obligations come June.

Will invoking the 14th Amendment amount to a constitutional crisis, as Ms. Yellen suggested this week? Not really. For one thing, as noted above, there are multiple grounds upon which Republican hostage taking on the debt ceiling is contrary to law, and not all of them implicate the Constitution. For another thing — and, in my view, yet more important — the present issue is not really a legal issue pitting the president against Congress.

The current debt ceiling nonsense is a case of one faction of Congress being pitted against Congress itself. Our legally contracted debt is congressionally legislated debt; refusal to pay on this debt boils down to the House Republican faction refusing to pay what Congress itself has mandated we pay.

Let us now end the absurdity. Let us bury the Liberty Bond-era debt ceiling.