The United State’s debt crisis, caused by the legally enforceable maximum “debt ceiling” in the United States is reaching a point where the USA could default on it’s national debt. An unimaginable situation. Financial Armageddon would probably ensue.
The failure by Congressional Democrats and Republicans to reach a deal on cutting discretionary spending and raising the debt ceiling means that President Obama may be placed in a position where he has to envoke the antiquated Section 4 of the 14th Amendment.
Section 4 of the 14th Amendment (ratified on the 9th July 1868) to the Constitution of the United States reads as follows:
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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
The 14th Amendment would therefore allow, by virtue of the words “validity of the United States public debt….shall not be questioned” President Obama to raise the debt ceiling of his own doing, without Congressional approval.
To do so would be a bold step.
Steny Hoyer and James Clyburn, the second and third highest ranking Democrats in the House, and John Larson and Xavier Becerra, the chairman and co-chairman of the House Democratic Caucus, have said they would support Obama if he uses the amendment to avoid a default.
Senator John F. Kerry and Bill Clinton, the former president, have also supported the idea, with Clinton saying he would use the amendment “without hesitation and force the courts to stop me.’’
International debt holders, in particular China ($1tn +) who are the largest holders of US National Debt have expressed concern at the political crisis which has engulfed Washington.
To invoke the 14th Amendment, and therefore bypass Congress would be a drastic measure which would deviate from a longstanding constitutional convention whereby the debt ceiling of the United States is raised by vote of both Houses of Congress.
The 14th Amendment, ratified during the Reconstruction to ensure that the North could overcome Southern opposition to paying down Union war debts, has never been invoked by a president and has rarely been tested in court.
As the saying goes, desperate times call for desperate measures.
The 14th Amendment provides President Obama with a 143 year old “get out of jail free” card. Will he bold enough to use it?