What is 14th Amendment and can it resolve US debt ceiling fight?

President Biden can invoke the 14th Amendment and order the Treasury to issue bonds and keep paying government bills in full.

U.S. President Joe Biden hosts debt limit talks with U.S. House Speaker Kevin McCarthy
US Treasury Secretary Janet Yellen has warned repeatedly that the Treasury could run out of money to pay its bills as soon as June 1 [File: Leah Millis/Reuters]

While United States President Joe Biden and the Republicans fight about raising the limit on government borrowing to avoid a default on its debt, one idea being kicked around is to invoke the 14th Amendment of the US Constitution.

Clause 4 of the 14th Amendment states that the “validity of the public debt of the United States … shall not be questioned”. By invoking this provision, Biden could order the US Treasury to keep issuing bonds and keep paying the government’s bills.

The idea of invoking the 14th Amendment in this way was introduced soon after the civil war, predominantly to address the debts incurred then, and has not been tested in modern times. But it has surfaced as a last-ditch strategy to avert a default in case negotiations between the Democrats and the Republicans fail.

Why is this being considered?

US Treasury Secretary Janet Yellen has warned repeatedly that the Treasury could run out of money to pay its bills as soon as June 1 without action by Congress to increase the debt ceiling.

Earlier this month, dozens of Democrats sent a letter (PDF) to Biden urging him to consider invoking the 14th Amendment.

“If the options are either agreeing to major cuts to domestic priorities under the Republican threat of destroying the economy and moving forward to honor America’s debts, we join prominent legal scholars, economists, former budget officials, and a former president in advocating for invoking the 14th Amendment of the Constitution,” they wrote.

Biden, too, has referred to the idea.

“I’m looking at the 14th Amendment,” he said in Japan while there for the Group of 7 summit last week. “As to whether or not we have the authority, I think we have the authority.”

What would be the consequences of invoking the 14th Amendment?

Biden would only go down this route if there is absolutely no breakthrough, said Bernard Yaros, assistant director at Moody’s Analytics.

“In that dark scenario, this is the most viable solution,” Yaros told Al Jazeera.

Al Jazeera

Invoking the 14th Amendment would put an end to the debt limit and allow the Treasury to continue making its payments in full.

The Republicans would likely challenge such a move in the Supreme Court, leading to a constitutional crisis and weeks of uncertainty while the matter was looked at.

“We’re talking about at least a month, and that means a month of volatility, uncertainty and hit to the economy that would put the US under a knife’s edge for a recession,” Yaros said.

“We don’t need another shock, especially one like this,” he added.

Were the court to rule in favour of the White House invoking the 14th Amendment, it would effectively end the debt limit as we know it. In the process, it would also end the use of the debt ceiling as political leverage forever, Yaros said.

Such a move would also make the battle over financing the government through fiscal 2024 “much more contentious” and raise the risk of a prolonged government shutdown in the fall, Yaros said.

Is it legal?

It depends on who you ask.

Some experts say such a move would actually be unconstitutional as Congress holds the power to spend.

“The Biden administration even flirting with these ideas really suggests that the administration’s fidelity to the Constitution is questionable or opportunistic,” Philip Wallach, a senior fellow who focuses on regulatory-policy issues at the American Enterprise Institute, a centre-right think tank based in Washington, DC, told the Wall Street Journal.

Anna Gelpern, a law professor at Georgetown Law, disagrees.

“The Constitution requires the president to perform Congressional promises. If he must borrow to perform, so be it. The 14th Amendment shields the new debt from court challenges to its validity,” Gelpern told Al Jazeera.

The ongoing negotiations between the Democrats and the Republicans are about future budgets – they do not and cannot cut spending or raise revenues to pay for outstanding promises, she pointed out.

“People who are saying, pay this but don’t pay that are being disingenuous. Where would they have the president stop when they hit the ceiling – pay Treasury securities but not flood insurance? [This argument] threatens public credit to gin up political theatre. It is not about the Congress’s borrowing power, which is not supposed to be used to undermine the credit of the United States … This is precisely the sort of political sabotage that the 14th Amendment drafters were concerned about.”

Source: Al Jazeera