AMAC Exclusive – By Daniel Berman
With U.S. public borrowing on course to breach the “debt ceiling” as early as June 1 and Congress still gridlocked on a solution, many on the left are urging President Joe Biden to take the “14th Amendment option.”
By this, journalists, politicians, and a few legal scholars, most of whom are Democrats, refer to an argument that the fourth clause of the 14th Amendment declares “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.”
Based on this, say liberal journalists, politicians, and legal scholars, the debt limit itself is unconstitutional and Biden should be able to borrow or print money at will.
While the motives of those pushing this argument are partisan, it is a rare case where the plain text of the Constitution seems to support their position. Unlike the Second Amendment, where only a tortured reading can interpret the “the right of the people to keep and bear Arms, shall not be infringed,” as not guaranteeing a right to private gun ownership, a literal reading of “the validity of the public debt of the United States….shall not be questioned” would seem to suggest that there is a Constitutional limitation on the ability of the U.S. government to default on its debts.
However, it is far from clear that such a restriction, even if it means the Congressional debt limit in its current form is unconstitutional, empowers one branch of government, in this case the executive, to unilaterally dispense with the debt limit altogether by printing a trillion dollar coin or issuing debt in his own name, especially if the dubious nature of such debt would also call into question the validity of the public debts of the United States. In fact, an examination of the history both of the development of Westminster systems before 1789, and of the context in which the Amendment was drafted, implies the opposite.
The 14th Amendment’s clause relating to the public debt was intended as a restraint not on the power of Congress, but on that of the president. The Radical Republicans who drafted and ratified the 14th Amendment were far more concerned with the threat posed by the southern Democrat president Andrew Johnson to the validity of the public debt, and the United States itself, than they were about a future Congress defaulting. This is made clear by the deliberate inclusion of debt incurred through the suppression of rebellion, but the subsequent prohibition on the federal or any state government assuming debt incurred by the Confederate cause or for compensation for slaveholders. The drafters of the 14th Amendment, as we will see, were far more concerned with the prospect of a president paying certain debts on his own authority, without Congress’s approval, than they were with debts going unpaid – directly contradicting Democrat assertions today.
An Effort to Curtail Executive Power
The 14th Amendment to the United States Constitution was sent to the states on June 13th, 1866, after the House concurred with the Senate’s amendments, and ratified by the states on June 9th, 1868. Its promulgation took place in a context of tension between the executive and legislature.
As a gesture to postwar reconciliation, Abraham Lincoln had replaced his first Vice President, Hannibal Hamlin of Maine with the Democrat Andrew Johnson of Tennessee, who had remained in the Senate when his state seceded. Lincoln’s assassination brought Johnson to the presidency, a position he was temperamentally unfit for in any conditions, much less those in which he assumed office.
Johnson was a famous loner, and his support for the Union seemed to be driven as much by his hostility to the Tennessee elite as by anti-slavery sentiment. Unlike his Whig colleague John Bell, he had voted for the Kansas-Nebraska Act, extending slavery to the territories, and his objection to a southern Confederacy run by plantation owners seems to have been linked more to the plantation-owner part than to slavery.
This stood him in bad stead as both a southerner and Democrat facing a Congress which was northern-dominated and Republican, with the Republicans representing the interests of Whig industrialists and expansionists in the North. Johnson’s clashes over Civil Rights are famous, but the clash was over both power and national direction. The southern Republicans after the war depended on the support of African American voters and the disenfranchisement of former Confederates, so Johnson’s willingness to enfranchise the latter at the expense of the former posed an existential threat to southern Republicans in Congress, and the Republican majorities as a whole. On other policy matters, the Democrat Johnson was less enamored with Republican projects such as a trans-continental railroad, the Homestead Act, and Indian wars, all of which required money and debt.
The 14th Amendment grew out of this clash between Congress and the president over policy toward the South and Johnson’s veto of the Civil Rights Act of 1866 on the basis that it was unconstitutional. The 14th Amendment sought to enshrine the principles of that law in the Constitution.
The political nature of this clash was evident in its clauses. While parts of the 14th Amendment have been interpreted since to support everything from abortion (until recently) to the designation of LGBTQ-identifying individuals as a Constitutionally protected class, one reason this has been possible is that legal principles are almost an afterthought in the text. The focus is political.
First is the focus on representation. The Amendment does not provide enforcement mechanisms. At the end, it places the burden on Congress to enforce the Amendment and provides for political enforcement mechanisms such as states losing representation in Congress. It would be unfair, revisionist, and overly cynical to suggest the Radical Republicans were not committed to civil rights for African Americans in the South. But if that could not be achieved without force, they were committed to not allowing that failure to compromise their own power in Washington, and therefore would strip representation from the former Confederate states.
If there was any doubt about the purpose and target of the 14th Amendment, Clause III should erase any doubt: “No person shall be a Senator or Representative in Congress, or elector of President and Vice President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may, by a vote of two-thirds of each House, remove such disability.”
Not only was this clause squarely aimed at the power of former Confederates, but also at the power of the President of the United States, whose power of the pardon would otherwise have allowed him to remove disabilities at will, as Johnson had attempted to do. The 14th Amendment sought explicitly to limit President Johnson’s power to pardon, and power in general.
This is relevant. The 14th Amendment has two targets: the power of the President who loses the right to pardon, and states, which lose control over their own definitions of citizenship through the clause which became the basis for birthright citizenship.
Clause IV, dealing with the validity of the public debt, needs to be read and understood within this context. It would have been absurd for a Congress to pass an Amendment in which the first two clauses were designed to curtail the powers of an executive they did not trust, only to grant him enormous new powers over the purse with the fourth.
A hint as to what the 14th Amendment was intended to do lies with the sentence which follows the oft-quoted requirement to defend the validity of the debt of the United States, revealing that Congress did not view all debts as being equal: “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 inclusion of the word “but” demonstrates that the authors knew what they were doing, and were aware that, absent what followed, Andrew Johnson would be tempted to try to compensate southern slaveholders or assume Confederate debts using exactly the arguments Biden and Democrats are using today. They would argue that Congress, by authorizing the slave trade, endorsed debts incurred in the purchase, sale, and mortgage of slaves, and that a refusal to pay would undermine the creditworthiness of investments in the U.S. How could British bankers trust their investments in the United States if they received no compensation for the money they lost in the South?
To claim, as Democrats now are, that the 14th Amendment gives the president of the United States the ability to define what may “call the validity of the public debt into question,” and the power to print or borrow money at will to do so, goes against what the authors were trying to accomplish by curtailing the influence of Andrew Johnson. It is hard not to conclude that the maximalist “14th Amendment” arguments are ahistorical.
Can Congress Default?
Originalism is not the only manner of reading the Constitution, and there remains, however, the plain text of the Amendment.
“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.”
Critics of the various 14th Amendment executive power grabs, while correctly dismissing the idea that the language was intended to create an all-powerful president, are perhaps too quick to suggest it has no bearing on the issue at stake in the current debate. It was clearly intended to do something. If the goal was merely to curtail Andrew Johnson’s power, Congress could have stuck with the second sentence alone. They did not.
As the Wall Street Journal Editorial Board recently argued, what the 14th Amendment does do is explain how the president is supposed to act in circumstances such as those that are occurring now, rather than giving the president a blank check in the event of any deadlock. If authorized revenue is insufficient to meet expenditures and no new borrowing is authorized, the president is obligated to prioritize payments to bondholders.
Not only is this in line with the wording, but also with precedent. As the Journal Editorial Board again noted, “Congress decided during the Great Depression to begin paying federal bonds in currency, including those that promised payment in gold. Bondholders sued to receive payment in currency equal to the gold value of the notes, and the Justices agreed, saying that Congress had violated the 14th Amendment’s Public Debt Clause.” If the debt limit is not raised, Congress is obligated to raise enough revenue to cover the debt it has authorized, which it has done through enacted taxes, and Biden is then obligated to cover the debt as long as he has enough revenue to do so.
It is clear why Democrats and the Biden administration are less pleased with this interpretation, even if it does not mean that the U.S. cannot default. By requiring the Biden administration to prioritize debt service payments as long as the revenue exists, which it does, the 14th Amendment removes the administration’s leverage in the form of a default, while maintaining that of the House of Representatives, which by refusing to raise the debt limit can potentially block most other discretionary spending.
This explains the reasons the Biden team and its allies have adopted a dualist approach in which they insist the only two interpretations are ones in which they are empowered to do whatever is necessary (minting coins, issuing debt, etc.) if Congress fails to raise the debt limit, and the other one in which they are required to cease all debt payments and default, even though they have enough revenue to cover them. It is the Biden administration, not the House, that is threatening default, and doing so in violation of the 14th Amendment.
Ultimately, the financial markets know this. Despite the efforts of the media and Democrats to publicize the prospect of default, the markets do not buy it. They are reasonably certain that the Supreme Court will neither let the U.S. default, nor let the Biden administration print trillion-dollar coins, which if plausible would trigger a run on the dollar. As the Journal noted, the Supreme Court reserves the option of just telling the White House to pay its bills.
What we are left with, then, is a White House which has seen its “Constitutional” arguments backfire, undermining its position in the debt limit negotiations. What was intended as a bluff to convince Republicans that Biden held a stronger hand than he really did, and thereby extract concessions, has instead convinced Democrats and the media but failed to fool the GOP. The result is that the Biden administration is unable to explain why it is negotiating with the GOP at all to its own supporters, much less sell the concessions it will need to make.
As much as the Biden team might love to throw the issue to the Supreme Court, and then blame the “partisan” court for forcing their hand, the risks are likely too high in an election year. The debate over using the 14th Amendment option is then in fact over whether to make concessions to the GOP now, or attempt something the administration knows will fail, and then blame the Supreme Court for the concessions afterward, even at a risk to the U.S. credit rating,
The outcome is clear. It will be a default – not of the United States, but rather of the Biden administration’s credit with its own supporters. When it finally makes a deal, its supporters will be outraged. The question is whether the Biden administration will also risk the economic damage involved in forcing the Supreme Court to tell it what it already knows in order to limit the political damage first. Past performance is not reassuring on this count.
Daniel Berman is a frequent commentator and lecturer on foreign policy and political affairs, both nationally and internationally. He holds a Ph.D. in International Relations from the London School of Economics. He also writes as Daniel Roman.