The issue of whether raising the debt ceiling is becoming more of a dire threat as each day goes by and as we are getting closer to June 1st. Indeed, the legislative and executive branches have still not found a consensus regarding the debt ceiling. And economists have developed all types of scenarios that could happen if the debt ceiling isn’t raised. Democrats and progressives have encouraged President Biden to use Amendment XIV to address the debt-limit issue. What would be the real impact of using the 14th Amendment to address this issue?
The immediate effect of using the 14th Amendment is that it could help avert default. More importantly, having recourse to the 14th Amendment would grant the President the power to legal authority to raise the debt limit without having to go through Congress. President Biden hasn’t ruled out this option, but he sees it as a problematic, untested legal theory to ensure the country can meet its financial obligations. Meanwhile, the Treasury Department says the United States may not be able to borrow the money it needs to pay its bills and bondholders as soon as June 1 without congressional action—and that failure could kick the country into a painful recession.
The 14th Amendment includes a clause that legal scholars see as relevant to today’s situation: “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.” Legal scholars argue that default is, therefore, unconstitutional and Biden would have a duty to effectively nullify the debt limit if Congress won’t raise it, so the validity of the country’s debt isn’t questioned. However, Congress establishes the limit on borrowing, and it is up to Congress to adjust it.
Treasury Secretary, Janet Yellen, does not believe that relying on the 14th Amendment to raise the debt limit would be “appropriately used.” She stated the following:
“It doesn’t seem like something that could be appropriately used in these circumstances, given the legal uncertainty around it and given the tight timeframe we’re on. My devout hope is that Congress will raise the debt ceiling, and we will pay all of our bills.”
Secretary Yellen believes that invoking the 14th Amendment to get around the debt ceiling and continue borrowing money to pay the nation’s bills would risk a “constitutional crisis,” downplaying the idea that the amendment would simply solve the looming problem, but she also doesn’t rule out this option entirely. Yellen argued that the only way for the U.S. to avoid an unprecedented default as soon as next month is for Congress to pass legislation doing so, even as the White House and congressional Democrats appear to be in a stalemate with Republicans over GOP demands to tie steep spending cuts to raising or suspending the debt ceiling.