Opinion piece in WSJ today. I go with Lawrence Tribe.
A Less-Bad Option for the Debt-Ceiling Crisis
By Alan S. Blinder
The federal government may run out of money as early as June 1. Without more borrowing, there is a risk that the U.S. will begin defaulting on its financial obligations. Negotiations between Speaker Kevin McCarthy and the White House about raising the national debt ceiling are under way. With luck, they will bear fruit, and America won’t end up in a financial crisis. But if Congress does push President Biden to the edge of the cliff, he will be forced to decide which statutes he will have to ignore. On the one hand, there is the national debt ceiling, first put in place in 1917 and now sitting at $31.4 trillion. On the other hand, there are the many laws instructing the president to make payments that Congress previously authorized. Last month in this space, I argued that this is an easy choice on the merits. Besides, the 14th Amendment provides a decisive tie-breaker by stating unequivocally that “the validity of the public debt of the United States . . . shall not be questioned.” Defaulting on the debt isn’t only reckless. It is also unconstitutional.
Over the past month, there has been an outpouring of talk and writing about the “14th Amendment solution,” which has both critics and supporters. So let me be frank: It isn’t a flawless solution.
Treasury Secretary Janet Yellen has called resorting to the 14th Amendment “legally questionable” and “not a good option.” She’s right. But if Congress fails to do its duty, only bad options will be left, from resorting to the debatable 14th Amendment to allowing a frightening default. The issue is picking the least bad one. This crucial point seems to be getting lost in the debate. Yes, it would be better if House Republicans would abandon budgetary blackmail and negotiate without
threatening the full faith and credit of the U.S. Let’s hope for that. But hope isn’t a plan. We must be prepared for the worst.
In that worst case, the constitutional scholar Laurence Tribe believes the 14th Amendment is the way to go. In his words, “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.” Asked about the 14th Amendment solution in a recent MSNBC interview, Mr. Biden answered that “I’ve not gotten there yet.” He’s right. “Yet” is the operational word. The 14th Amendment solution is a break-the-glass remedy, a last resort that prevents all hell from breaking loose. We’re not there yet, and with luck we never will be. But do you want to bet on the goodwill of Marjorie Taylor Greene and Matt Gaetz?
What are the alternatives to invoking the 14th Amendment? Topping the list is separating the debt-ceiling debate from the budget debate and running them along two tracks—which is what the president and some members of Congress seem to be trying to do. Or the president could cave in to political blackmail and accept a list of Republican demands that could never get through the normal legislative process—thereby inviting repeat performances. Or the administration could opt for one of the exotic remedies that have been suggested, such as issuing platinum coins or premium bonds, and then explaining to the public how these complicated debt instruments would work. For that matter, the president could let the economy fall off the cliff, stiffing thousands, maybe millions, of people who have been promised payments by the U.S. government— telling them that Alexander Hamilton’s version of fiscal prudence lasted only about 230 years.
If a deal can’t be reached, a partial government shutdown is far better than a default on obligations.
Some critics have claimed that avoiding the debt ceiling by invoking the 14th Amendment would make the president a budget czar who can ignore Congress. That isn’t the case. Only Congress can raise taxes, and only Congress can authorize spending.
A vigorous annual debate over the budget is entirely appropriate, and this year’s promises to be a doozy. If that debate comes to an impasse, as has happened in the past, there is a less catastrophic approach for congressional Republicans. When this year’s budget expires on Sept. 30, they could refuse to appropriate enough funds, thereby shutting down parts of the government for a time.
That wouldn’t be pretty. But previous government shutdowns have caused only minor blips in economic growth and have not left the U.S. a deadbeat nation. If the MAGA minority insists on throwing a temper tantrum, a shutdown is a far better option than a default.
Mr. Blinder, a professor of economics and public affairs at Prince-ton, served as vice chairman of the Federal Reserve, 1994-96. He is the author, most recently, of “A Monetary and Fiscal History of the United States, 1961-2021.”
A Less-Bad Option for the Debt-Ceiling Crisis
By Alan S. Blinder
The federal government may run out of money as early as June 1. Without more borrowing, there is a risk that the U.S. will begin defaulting on its financial obligations. Negotiations between Speaker Kevin McCarthy and the White House about raising the national debt ceiling are under way. With luck, they will bear fruit, and America won’t end up in a financial crisis. But if Congress does push President Biden to the edge of the cliff, he will be forced to decide which statutes he will have to ignore. On the one hand, there is the national debt ceiling, first put in place in 1917 and now sitting at $31.4 trillion. On the other hand, there are the many laws instructing the president to make payments that Congress previously authorized. Last month in this space, I argued that this is an easy choice on the merits. Besides, the 14th Amendment provides a decisive tie-breaker by stating unequivocally that “the validity of the public debt of the United States . . . shall not be questioned.” Defaulting on the debt isn’t only reckless. It is also unconstitutional.
Over the past month, there has been an outpouring of talk and writing about the “14th Amendment solution,” which has both critics and supporters. So let me be frank: It isn’t a flawless solution.
Treasury Secretary Janet Yellen has called resorting to the 14th Amendment “legally questionable” and “not a good option.” She’s right. But if Congress fails to do its duty, only bad options will be left, from resorting to the debatable 14th Amendment to allowing a frightening default. The issue is picking the least bad one. This crucial point seems to be getting lost in the debate. Yes, it would be better if House Republicans would abandon budgetary blackmail and negotiate without
threatening the full faith and credit of the U.S. Let’s hope for that. But hope isn’t a plan. We must be prepared for the worst.
In that worst case, the constitutional scholar Laurence Tribe believes the 14th Amendment is the way to go. In his words, “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.” Asked about the 14th Amendment solution in a recent MSNBC interview, Mr. Biden answered that “I’ve not gotten there yet.” He’s right. “Yet” is the operational word. The 14th Amendment solution is a break-the-glass remedy, a last resort that prevents all hell from breaking loose. We’re not there yet, and with luck we never will be. But do you want to bet on the goodwill of Marjorie Taylor Greene and Matt Gaetz?
What are the alternatives to invoking the 14th Amendment? Topping the list is separating the debt-ceiling debate from the budget debate and running them along two tracks—which is what the president and some members of Congress seem to be trying to do. Or the president could cave in to political blackmail and accept a list of Republican demands that could never get through the normal legislative process—thereby inviting repeat performances. Or the administration could opt for one of the exotic remedies that have been suggested, such as issuing platinum coins or premium bonds, and then explaining to the public how these complicated debt instruments would work. For that matter, the president could let the economy fall off the cliff, stiffing thousands, maybe millions, of people who have been promised payments by the U.S. government— telling them that Alexander Hamilton’s version of fiscal prudence lasted only about 230 years.
If a deal can’t be reached, a partial government shutdown is far better than a default on obligations.
Some critics have claimed that avoiding the debt ceiling by invoking the 14th Amendment would make the president a budget czar who can ignore Congress. That isn’t the case. Only Congress can raise taxes, and only Congress can authorize spending.
A vigorous annual debate over the budget is entirely appropriate, and this year’s promises to be a doozy. If that debate comes to an impasse, as has happened in the past, there is a less catastrophic approach for congressional Republicans. When this year’s budget expires on Sept. 30, they could refuse to appropriate enough funds, thereby shutting down parts of the government for a time.
That wouldn’t be pretty. But previous government shutdowns have caused only minor blips in economic growth and have not left the U.S. a deadbeat nation. If the MAGA minority insists on throwing a temper tantrum, a shutdown is a far better option than a default.
Mr. Blinder, a professor of economics and public affairs at Prince-ton, served as vice chairman of the Federal Reserve, 1994-96. He is the author, most recently, of “A Monetary and Fiscal History of the United States, 1961-2021.”
