Biden Baloney: The 14th Amendment Does Not Say What He Thinks It Says

Debt Default Would Be An Illegal Act By The President

I am firmly of the opinion that whenever a politician says “I have the authority”, we may be confidently assured that he has absolutely no authority whatsoever.

Dementia Joe is the latest exemplar of this principle, given his recent nonsense about using the 14th Amendment to resolve the debt ceiling talks with the GOP.

President Biden on Sunday said he believes he has the authority to use the 14th Amendment to unilaterally address the debt ceiling, but he acknowledged potential legal challenges could still lead the nation to default if he went that route.

While it has never seemed likely that his handlers had ever bothered to read the Constitution or the Amenmdents, this bit of ignorant illogic is among the silliest things to emerge from 1600 Pennsylvania Avenue with the exception of Dementia Joe himself.

In brief, not only does the 14th Amendment not give him license to void the debt ceiling, but it actually compels him to avoid default on the debt. If the US should through some burst of incompetence manage to miss a payment on the debt, the President can and should be impeached and removed from office, along with the Vice President and the whole of his Cabinet.

The text in the 14th Amendment that gives rise to such effusions of pure nonsense is the first sentence in Section 4:

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.

The President has hinted before at using this supposed loophole to bypass Congress and void the debt ceiling altogether.

“I have been considering the 14th Amendment, and the man I have enormous respect for, Larry Tribe … thinks that it would be legitimate,” Biden told reporters after a meeting with congressional leaders on the debt ceiling.

“But the problem is it would have to be litigated,” Biden continued. “And in the meantime, without an extension, it would still end up in the same place.”

“Larry Tribe” is, of course, Harvard law professor Lawrence Tribe, who firmly but erroneously believes that the 14th Amendment gives the President unilateral power to act to in effect negate the debt ceiling—which he seems to believe is somehow unconstitutional.

Gazette: So how can a law passed by Congress in 1917 establishing a debt ceiling decide which debts are valid and should be paid and which are less valid, and can be put off?

Tribe: In my view, a debt ceiling law can’t legitimately do that. But there’s a catch. By leaving that law in place and threatening for the first time ever not to raise the ceiling as needed to pay all the debts it has already created, Congress can cause economic crises by pointing to that ceiling and generating panic because nobody can say for sure what would happen when the ceiling is breached.

From 1789 to 1917, Congress incurred debts pursuant to statutory authorizations, levying taxes and also borrowing money from time to time. When Congress authorized an individual bond issue, typically for a stated purpose, the Treasury Department could borrow money pursuant to that authorization.

That cumbersome process was replaced in 1917 with a statute generally described as the debt limit or the borrowing ceiling. It permits the Treasury to issue bonds that would raise revenue that could then be used for any lawful purpose — up to whatever total Congress had previously specified. The statute’s original purpose was to simplify things, not to create a tool that could be used to create uncertainty and chaos.

Throughout this process, both before 1917 and up to the present, Section 4 of the 14th Amendment has hovered in the background, promising the world that the U.S. could always be counted on to pay its debts in full — as long as those debts had been authorized by law.

The 1917 law in question was the Second Liberty Bond Act¹, which, among other things, amended the US code² by both authorizing the Treasury to issue general obligation bonds (as opposed to bonds issued for a specific spending item or project), and by capping the value of all bonds issued.

The face amount of obligations issued under this chapter and the face amount of obligations whose principal and interest are guaranteed by the United States Government (except guaranteed obligations held by the Secretary of the Treasury) may not be more than $14,294,000,000,000, outstanding at one time, subject to changes periodically made in that amount as provided by law through the congressional budget process described in Rule XLIX [1] of the Rules of the House of Representatives or as provided by section 3101A or otherwise.

That debt limit has been raised periodically, the most recent being at the end of 2021³.

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, <<NOTE: 31 USC 3101 note.>> That the limitation under section 3101(b) of title 31, United States Code, as most recently increased by Public Law 117-50 (31 U.S.C. 3101 note), is increased by $2,500,000,000,000.

Tribe’s thesis is notionally correct: the plain reading of the text of Section 4 of the 14th Amendment is that the United States categorically will pay its lawfully authorized debts.

Where Professor Tribe—and every other advocate of this foolhardy way to circumvent Congress—goes off the rails is he conflates legally obligated spending with debt.

Such legal authorizations can take the form of laws empowering the Treasury Department to issue bonds. But legal authorizations for debts incurred by the U.S. can also take the form of laws empowering other federal agencies to administer programs to promote the general welfare or provide for the nation’s defense, like those that fund the military or fund Social Security, Medicare and Medicaid, or the Affordable Care Act.

They also direct the executive branch to incur obligations, most of them to ordinary citizens and not in the form of Treasury bonds or other obligations formally created by the borrowing process that is subject to the statutory borrowing ceiling.

The key point is that the debt limit, or borrowing ceiling, just limits the amount the Treasury may borrow. It doesn’t cancel the obligations that happen to come due when the ceiling is reached.

The flaw in this logic is that “obligations” are not necessarily “debts”.

To understand the distinction, I am going to substitute the term “liability” for “obligation”, thus bringing us within the argot of accounting but more importantly the law (bear with me…I am, after all, a recovering Cost Accountant!).

Merriam-Webster gives us a basic definition of liablity that seems to make it synonymous with “debt”.

something for which one is liable
especially : pecuniary obligation : debt

Indeed, Merriam-Webster’s definition of “debt” would seem to confirm this.

something owed : obligation

However, when we apprehend these terms as terms of art within the law, we have to apply a more precise legal definition⁴.

The term liability refers to a broad spectrum of things a person may be held responsible for. This may be a legal liability, a financial liability, or other responsibility. An example of liability includes the legal obligation to pay a debt, or to pay for damages an individual has caused someone else. Liabilities are also counted in finances as debits on the ledger. To explore this concept, consider the following liability definition.

Definition of Liability

Noun

1. The state of being liable, or responsible, for something

2. An obligation, debt, or responsibility

3. Something that serves as a hindrance or disadvantage

Legally speaking, when we speak of debts, we are referring to “indebtedness”⁵.

Indebtedness is the state of being in debt, or owing money to someone else. When someone is in debt, it means that he has borrowed money, or received goods or services, with a promise to pay the sum back. Someone can be in debt for bills that are due now, as well as bills that he knows will be due in the future. For example, indebtedness can refer to someone’s mortgage, or a car purchase on credit. To explore this concept, consider the following indebtedness definition.

Definition of Indebtedness

Noun

1. The state of owing someone else money

2. The amount of someone’s debt

In most situations, making this distinction between debts and liabilities/obligations might seem an almost Clintonian level of word-parsing. However, it is crucial to understanding the proper interpretation of the 14th Amendment’s text.

In short, “debt” means there is an incurred obligation to actually transfer a sum of money, whereas a liability encompasses a broader spectrum of obligations. For example, a bank records its customers’ deposits as “liabilities” even though there is no obligation to transfer a sum of money until the customer chooses to withdraw from his or her deposits with the bank; prior to a withdrawal demand, the bank's obligation is to safeguard the customer’s deposits.

Thus all debts are necessarily obligations, but not all obligations are necessarily debts.

Nor is this distinction a phantom of my own invention. The US Treasury’s Bureau of The Fiscal Service makes the same distinction⁶.

The national debt is the amount of money the federal government has borrowed to cover the outstanding balance of expenses incurred over time. In a given fiscal year (FY), when spending (ex. money for roadways) exceeds revenue (ex. money from federal income tax), a budget deficit results. To pay for this deficit, the federal government borrows money by selling marketable securities such as Treasury bonds, bills, notes, floating rate notes, and Treasury inflation-protected securities (TIPS). The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities. As the federal government experiences reoccurring deficits, which is common, the national debt grows.

The national debt—i.e., the “public debt”—is whatever has been borrowed to spend on various government programs—the “legal authorizations” Lawrence Tribe mistakenly lumps in with the public debt.

This is the crux of the matter: the “public debt” is what has been borrowed in order to administer the various programs and projects authorized by Congress through various legislative acts. This is the obligation for which the 14th Amendment rejects any challenge to its validity.

Moreover, this reading of the 14th Amendment, including the distinction between debt (i.e., what has been borrowed) and “legal authorization”/obligation, is necessitated by the Constitution’s empowerment of the Congress to borrow money (Article 1 Section 8 Clause 2):

To borrow Money on the credit of the United States

This reading is reinforced by the requirement that monies be expended from the Treasury only pursuant to appropriate acts of Congress (Article 1, Section 9, Clause 7):

No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

Follow the Constitutional structure: The Treasury disburses money in accordance with Congress’ enacted will, by which the many programs and functions of the government are administered. When needed and/or appropriate, Congress may authorize the Treasury to borrow that money. Spending on government programs is thus always a Treasury disbursement of money, and the public debt is merely one source of that money (the other being government revenues from taxes, tariffs, and various other fees and levies).

To lump the programs enacted by Congress in with the actual borrowings is notionally at odds with the ordinary understanding of what borrowing is. An employee does not view himself as having loaned his wages to his employer, even though there is no doubt in his mind that his employer owes him those wages. Similarly, many businesses manage their cash flows by borrowing funds in the short term to satisfy obligations such as wages—the “debt” is the borrowing, not the wages, even though the wages are a liability/obligation.

The wages example also shows why Tribe’s conflation is untenable. As a matter of basic business management, an employer does not merely pay his employee upon demand for his wages. The employer will want to see a time sheet, or time card, or some other record establishing that the work has been done and the wages are in fact owed.

Similarly, a contractor might tender an invoice for services rendered, but before that invoice is payed it has to be approved—the accounting department of a business has to confirm that the invoice is legitimate, that it is appropriate, and that it is timely. Government offices are no different; invoices for services rendered must be approved before they are paid. By Tribe’s construction of the 14th Amendment, the approval process itself can never be performed, as no one is allowed to question the “validity” of the obligation (i.e., the invoice).

As there is much waste in government that attends upon bureaucrats not questioning enough the validity of contractors’ invoices and other bills, it is utterly absurd to suggest any Constitutional interpretation which would make all such invoices uncontestable. Yet that is exactly what Professor Tribe’s interpretation of Section 4 of the 14th Amendment would require.

Surely even Harvard Law professors have a better understanding of the law than this!

The 1935 Supreme Court Case Perry v United States⁷ further supports this particular understanding of the “public debt”. In this case, plaintiff Perry, having purchased a Liberty Bond during WW1, the issuance of which explicitly provided that “The principal and interest hereof are payable in United States gold coin of the present standard of value.”

However, prior to the bond being called in by the government, Congress passed the “Gold Repeal Joint Resolution”⁸, which in 1933 suspended government payments in gold. Perry, undeterred, demanded payment in gold coin per the terms of the bond. Citing the resolution, the Treasury refused to pay Perry in gold. Perry sued, claiming the resolution was unconstitutional, and the case went before the Supreme Court in 1935.

While the Court did not challenge the right of the Congress to regulate money value, including whether or not payment in gold would be allowed, it did draw the line at Congress’ seeming ability to rewrite contractual terms passed by previous sessions.

here is no question as to the power of the Congress to regulate the value of money -- that is, to establish a monetary system, and thus to determine the currency of the country. The question is whether the Congress can use that power so as to invalidate the terms of the obligations which the government has theretofore issued in the exercise of the power to borrow money on the credit of the United States. In attempted justification of the Joint Resolution in relation to the outstanding bonds of the United States, the government argues that "earlier Congresses could not validly restrict the 73rd Congress from exercising its constitutional powers to regulate the value of money, borrow money, or regulate foreign and interstate commerce;" and, from this premise, the government seems to deduce the proposition that, when, with adequate authority, the government borrows money and pledges the credit of the United States, it is free to ignore that pledge and alter the terms of its obligations in case a later Congress finds their fulfillment inconvenient. The government's contention thus raises a question of far greater importance than the particular claim of the plaintiff. On that reasoning, if the terms of the government's bond as to the standard of payment can be repudiated, it inevitably follows that the obligation as to the amount to be paid may also be repudiated. The contention necessarily imports that the Congress can disregard the obligations of the government at its discretion, and that, when the government borrows money, the credit of the United States is an illusory pledge.

In brief, the government argued that Congress had the ability to repudiate contracts and to unilaterally rewrite contracts to avoid onerous contract obligations.

Suffice it to say, the Court rejected this view of the Constitution.

We do not so read the Constitution. There is a clear distinction between the power of the Congress to control or interdict the contracts of private parties when they interfere with the exercise of its constitutional authority and the power of the Congress to alter or repudiate the substance of its own engagements when it has borrowed money under the authority which the Constitution confers. In authorizing the Congress to borrow money, the Constitution empowers the Congress to fix the amount to be borrowed and the terms of payment. By virtue of the power to borrow money "on the credit of the United States," the Congress is authorized to pledge that credit as an assurance of payment as stipulated, as the highest assurance the government can give -- its plighted faith. To say that the Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise, a pledge having no other sanction than the pleasure and convenience of the pledgor. This Court has given no sanction to such a conception of the obligations of our government.

Per the Fourteenth Amendment, the Gold Repeal Joint Resolution was found to be an unconstitutional excess of Congressional authority.

The Fourteenth Amendment, in its fourth section, explicitly declares: "The validity of the public debt of the United States, authorized by law, . . . shall not be questioned." While this provision was undoubtedly inspired by the desire to put beyond question the obligations of the government issued during the Civil War, its language indicates a broader connotation. We regard it as confirmatory of a fundamental principle which applies as well to the government bonds in question, and to others duly authorized by the Congress, as to those issued before the Amendment was adopted. Nor can we perceive any reason for not considering the expression "the validity of the public debt" as embracing whatever concerns the integrity of the public obligations.

We conclude that the Joint Resolution of June 5, 1933, insofar as it attempted to override the obligation created by the bond in suit, went beyond the congressional power.

In Perry, the Court relied on an earlier ruling in the Sinking Fund Cases⁹ to confirm the principle of the sanctity of government contracts.

The United States are as much bound by their contracts as are individuals. If they repudiate their obligations, it is as much repudiation, with all the wrong and reproach that term implies, as it would be if the repudiator had been a state or a municipality or a citizen. No change can be made in the title created by the grant of the lands, or in the contract for the subsidy bonds, without the consent of the corporation.

Simply put, the government is required to stand by the terms of its contracts. As bonds and other debt instruments call for payments of interest and/or principal on specific dates, a default—a failure to pay on the specified date—is by definition an abrogation of the contractual elements of the bond.

However, not every government payment is occasioned by a contract. There are no contracts signed for paying out various types of welfare benefits, for example. One need only consider both the expansion of Medicaid benefits as a result of the COVID-19 pandemic and their subsequent withdrawal to see that such benefits are hardly tied to a formal contract. To argue otherwise would be to contradict the reasoning of both Perry and the Sinking Fund Cases that the US government has no power to alter the terms of an agreement.

Even the dysfunctional reality of government shutdowns argues against the sweeping interpretation of “the public debt”. If all authorized government expenditures counted directly as “the public debt”, then every government shutdown already violates the Fourteenth Amendment’s prohibition against challenging the “validity of the public debt.”

During the 2018 government shutdown, the IRS recalled as many as 26,000 workers to work even though their pay would be delayed.

But when the IRS briefed Congress behind closed doors Thursday, it told staffers that 14,000 of the 26,000 workers recalled to work without pay at IRS processing and call centers across the country didn’t show. About 9,000 of the workers weren’t reachable while 5,000 had claimed financial hardship, the House Democratic staffer told ABC News.

If the “validity” of workers’ paychecks cannot be questioned, then the government has already violated the 14th Amendment prohibition multiple times.

Similiarly, the 2018 government shutdown impacted the Supplemental Nutritional Assistance Program.

Funding for the food stamp program — called the Supplemental Nutrition Assistance Program — is mandatory, but the government's ability to distribute the benefits to its 42 million recipients could be impacted, the CRFB said. 

That's because a stopgap funding bill would be needed to authorize the Department of Agriculture  to send out benefits for 30 days after the start of a shutdown. In the 2018 shutdown, the USDA avoided that issue by paying food stamp benefits early in January of 2019. If it hadn't done so before the 30-day window expired, the agency wouldn't have been able to pay the benefits in March, according to the CRFB. 

If the “validity” of food stamp benefits cannot be questioned, then this disruption was also a violation of the 14th Amendment prohibition.

Tribe's broad view of what constitutes “the public debt” is not a view that is currently held by anyone in Washington. Indeed, the Fourteenth Amendment is raised only when the debt ceiling is at issue, which means all of Washington already views “the public debt” as those amounts already borrowed, not those amounts for which an obligation exists. Lawrence Tribe’s effort to extend the sanctity of government contracts to all authorized payments thus flies in the face of judicial reasoning as well as existing government practice.

As the established judicial view of Section 4 of the Fourteenth Amendment is to establish the sanctity of government contracts, instead of the Fourteenth Amendment empowering the President to breach the debt ceiling on his own initiative, in fact it obligates the President to ensure bond payments are made timely.

We must not forget that it is absolutely inconceivable for the President of the United States to presume the power to borrow money on the credit of the United States. The Constitution explicitly reserves that power to the Congress. The Second Liberty Loan Act and subsequent legislation dealing with the debt ceiling authorize the Treasury to borrow within specified parameters—those parameters being the limit imposed on total indebtedness—and no more.

Voiding the debt ceiling already written into law would be a blatant and unconstitutional seizure of Congress’ explicit authority ro borrow money. Even if Congress could delegate the borrowing authority entirely to the President, the very existence of debt ceiling means it has not done so.

The Constitution instead obligates the President to faithfully execute the nation’s laws.

He shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient; he may, on extraordinary Occasions, convene both Houses, or either of them, and in Case of Disagreement between them, with Respect to the Time of Adjournment, he may adjourn them to such Time as he shall think proper; he shall receive Ambassadors and other public Ministers; he shall take Care that the Laws be faithfully executed, and shall Commission all the Officers of the United States.

It takes no great leap of legal scholarship to see that bonds which Congress has by law authorized must be paid timely by the President as part of his discharge of his duty.

As the Fourteenth Amendment affirms the sanctity of lawfully-incurred debt, neither the President nor the Secretary of the Treasury have the option of declining to make scheduled bond payments. As we have seen in government shutdowns, other payments may be delayed without a repudiation occurring, but not bond payments.

This means that, when the debt ceiling is reached, the Secretary of the Treasury and the President are legally obligated to make the required payments of bond interest and principal, even if that means postponing other payments.

As I have noted previously, this arguably should have been the Administration’s barganing tactic with the GOP for getting a debt ceiling increased passed by Congress.

Moreover, this clear legal requirement means that, by threatening default, the Administration is actually choosing to do so—and doing so illegally. The Fourteenth Amendment means this is not a choice the government gets to make. In the event the debt ceiling is reached, the Treasury will have to prioritize its payments. This is not current practice, but it would be legal requirement in a debt ceiling scenario.

Contrary to what the Treasury pretends—to what the Administration as a whole pretends—the government has always had both the legal and administrative capacity to prioritize its payments. This was the view established by the Government Accountability Office in 1985¹⁰. What Tribe and the Administration fatuously overlook is that Section 4 of the Fourteenth Amendment means the Treasury also has the legal duty to prioritize payments.

The Administration’s threat of default must be understood for what it is—an illegal, unconstitutional, and untenable threat to engage in deliberate dereliction of duty. If the debt ceiling is not raised, the Treasury is obligated to prioritize its various payments, with the legal requirement that scheduled payments on the public debt must be made first. The Treasury is not constrained from making the required payments on the public debt merely because the debt ceiling is reached.

1. Sept. 24, 1917, ch. 56, 40 Stat. 288

2. 31 USC §3101(b)

3. United States Congress. Public Law 117-73. govinfo.gov, 2021, U.S. Government Printing Office, https://www.govinfo.gov/content/pkg/PLAW-117publ73/html/PLAW-117publ73.htm

4. Legal Dictionary Content Team. Liability - Definition, Examples, Cases. 5 Sept. 2016, https://legaldictionary.net/liability/.

5. Legal Dictionary Content Team. Indebtedness - Definition, Examples, Cases, Processes. 31 Dec. 2016, https://legaldictionary.net/indebtedness/.

6. Bureau of The Fiscal Service. Fiscal Data Explains the National Debt. https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/.

7. Perry v. United States, 294 U.S. 330 (1935)

8. United States Congress, Public Resolution 9, “Gold Repeal Joint Resolution”. WikiSource, 1933, United States Congress, https://en.wikisource.org/wiki/Gold_Repeal_Joint_Resolution

9. Sinking Fund Cases, 99 U.S. 700 (1878)

10. U.S. Government Accountability Office. Question Concerning Secretary of the Treasury’s Authority. 9 Oct. 1985, https://www.gao.gov/products/b-138524-0.