Friday, July 8, 2011

Does the Constitution Forbid Default?

A little blue copy of the Constitution is always on my desk, courtesy of the American Civil Liberties Union. Therefore, getting a hat tip from the Huffington Post here, I looked up the 14th Amendment of the Constitution. It says, 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. 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.
Some hold that this amendment in effect makes debt ceilings unconstitutional. Here is a good example of the deeper problems that underlie the concept of “a government of laws, and not of men.”† Those rather loose words of the amendment were written by men. What exactly does “shall not be questioned” mean? And what is the meaning of that qualifier, “authorized by law”? In turn it will take men to decide whether this amendment applies to our current situation.

In any case, an interesting wrinkle. It appears to provide the President with plenty to lean on if Congress does not extend the debt limit.
†Words by John Adams in Novanglus; or, A History of the Dispute with America, From Its Origin, in 1754, to the Present Time. To be sure, Adams was attributing the concept to Aristotle, Livy, and James Harrington (a seventeenth century political theorist).


  1. I doubt very seriously that this attempt would be made, however, the procedural maneuvering done on behalf of the Healthcare bill may prove me wrong.

    This smacks of imperialism (as in Ceaser) for several reasons:
    1. Congress has always owned the purse strings according to the constitution and the principal of separation of power.
    2. There is no precedent, prior to the debt ceiling, congress had to specifically spell out the terms, usage and amount of each bond issue for debt. This is the exact opposite: Executive Fiat.
    3. There are other options, there is no immediate default, we simply must pay the interest first, other obligations after.

    I think any President who tries to take power from the senate and congress walks a fine line and risks being seen as exceeding his mandate.

    Heathcare bill, Libya, and now this? At some point even the base will break away.

    Obama may find himself primaried, at the very least.

  2. Obama's base may certainly become or already be more than simply restless. The health care bill is not genuinely federal, universal and single-payer. The Libyan incursion is incoherent. The president's attempts at raising taxes never mention income tax increases to 1950s levels, which is what I happen to favor...

  3. It always concerns me when you count the gross instead of the net. I know you must know the difference between the donut, and the donut hole.

    Yes, Gross tax rates were higher in 1950, but as a percent of GDP they are more or less the same, 6% to 10% of GDP.

    What has steadily gone up is the taxes related to Social Insurance. Which is a mixed burden because part is payroll tax, and part is payed by us citizens.

    Personally, I would like to see a national sales tax, which is paid by everyone (including corporations)when they purchase goods.

    That way we are seeing the cost of government directly and on a daily basis. No hiding it in corporate taxes which just get passed on to consumers, or by taking it out of paychecks so we never see the money.

    Then, perhaps, we can make logical decisions about what we are willing to spend on as a country, and what we are not.

  4. I like a VA tax conceptually too, but worry about it hitting the low ranges more than the high when measured either as a percent of assets or of income.