How the 14th Amendment Can Help Biden Avoid Default: Laurence Tribe Explains

As the deadline to raise the nation’s borrowing limit approaches, U.S. Treasury Secretary Janet Yellen has warned Congress and President Biden that they have until June 1st to reach a deal or face a default that could seriously damage the U.S. economy. While Republicans are demanding steep budget cuts to many social, healthcare and climate programs in exchange for their agreement to raise the debt limit, Democrats and Biden have rejected this tradeoff, and a deal is nowhere in sight.

With time running out, some have advised Biden to use his constitutional authority to direct the U.S. Treasury to find a way to pay the nation’s debts even if it exceeds the statutory limit. One strategy Biden said he’s considering is a controversial move advocated by Laurence H. Tribe and some other legal scholars.

The 14th Amendment and the Nation’s Debt

Laurence Tribe, Carl M. Loeb University Professor of Constitutional Law emeritus at Harvard Law School, argues that the 14th amendment requires Biden to pay all authorized debts, an obligation that supersedes any debt limit statute. The text of the 14th Amendment is explicit; Section 4 of the 14th Amendment says, “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.” This is a guarantee that the U.S. will always be good for all its debts, period.

The Role of the Debt Ceiling Law

However, a law passed by Congress in 1917 established a debt ceiling that decided which debts are valid and should be paid and which are less valid, and can be put off. In Tribe’s view, a debt ceiling law can’t legitimately do that. However, by leaving that law in place and threatening not to raise the ceiling as needed to pay all the debts it has already created, Congress can cause economic crises by generating panic because nobody can say for sure what would happen when the ceiling is breached.

Congress authorized the executive branch to spend money, directed where and how it is to be spent, and appropriated the money, there’s no question, given Section 4 of the 14th Amendment, that the federal government must find or mint the money to pay in full those to whom its promises have been made pursuant to law.

The Debt Limit and Obligations

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. Once Congress has authorized the executive branch to spend money, directed where and how it is to be spent, and appropriated the money, there’s no question, given Section 4 of the 14th Amendment, that the federal government must somehow find or mint the money to pay in full those to whom its promises have been made pursuant to law.

The 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.

Related Facts

• The U.S. has reached the debt ceiling limit before, and both Republican and Democratic presidents have used extraordinary measures to pay the bills on time.
• President Obama’s administration had considered using the 14th Amendment to avoid default, but they eventually decided against it.
• The federal government has never defaulted on its debt, and the consequences of doing so could be catastrophic for the U.S. economy and the global financial system.

Key Takeaway

The 14th Amendment could provide an avenue for Biden to avoid default and ensure that the country continues to meet its financial obligations. While using this strategy would be controversial, it could be a necessary step given the current political climate and the potential economic consequences of defaulting on the nation’s debt.

Conclusion

As the deadline to raise the debt ceiling approaches, the debates and negotiations between Republicans and Democrats continue. While it remains uncertain whether Congress and the President will reach a deal in time, the 14th Amendment could provide an alternative solution that ensures the U.S. meets its financial obligations. Only time will tell what course of action the government ultimately takes.