With Congress still at an impasse over raising the debt ceiling, Republicans and Democrats divided like the Montagues and Capulets, or Crips and Bloods if you will, and the Treasury’s deadline for raising the limit less than a month away, now is the time that people start grasping at straws.
Ask most people what the first amendment is, and they might be able to tell you. Same with the second and maybe the fifth. But how many of you know what the fourteenth amendment is about, and more particularly, what it contains in its fourth section? The fourteenth amendment is one of three passed following the Civil War outlining the rights and freedoms that would henceforth apply to all citizens, which the fourteenth amendment defined as any person born in the United States.
Section 4 of the fourteenth amendment was meant to clarify that the United States would not reimburse Confederates for losses incurred during the war, and at one point states that, “The validity of the public debt of the United States, authorized by law … shall not be questioned.”
Largely unnoticed, even by lawmakers, that little section of the fourteenth amendment is now garnering a lot of attention. Some now argue that Section 4 might make a statutory increase in the debt ceiling unnecessary. Some Democratic leaders are saying that the amendment supersedes any legislative debt limits and allows the Treasury to borrow as much as needed so that existing bondholders should not question the validity of the U.S. debt. That is, the amendment would supersede any Congressional debt ceiling, and would allow the president or the Treasury to borrow without Congressional permission.
While it may not be politically popular for the White House to defy a Congressional ruling, interpretations of the amendment allow that, if no consensus is reached by the August 2 deadline, it might not be the catastrophe Ben Bernanke has made it out to be.
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