The word debt means simply to owe something, its definition is not just limited to official financial products such as bonds. Thinking the word debt only refers to financial products is what I believe is the core mistake with Kevin Drum‘s argument that the debt ceiling vote could be constitutional.
Maybe I’m missing something here, but it strikes me that this doesn’t come close to implying that the debt ceiling is unconstitutional. What it really suggests is merely that the public debt is the only untouchable part of the federal budget. The government is required to dedicate its tax revenue first to paying off any debt that’s due, but once that’s done the Constitution is silent. If the debt ceiling has been reached, and there’s not enough money left to issue Social Security checks or buy more aircraft carriers after current debts have been paid, then Social Security checks get reduced and aircraft carriers get put on hold. (emphasis added)
If I owned a company, its debt near the end of the month wouldn’t just be my outstanding loan from the bank. My debts would also include things like the money I owe my employees for all the work they have done but not yet been paid for. Not paying my employees for the work they did would be violating my debt obligations and bring into question my credit worthiness.
Looking at the Section 4 of the 14th amendment, and its legislative history, it would seem the intent is to prevent the government from reneging on its bonds or promises of payment for services rendered. From the 14th 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. (emphasis added)
It would be hard to believe the framers of the 14th amendment intended that section 4 would prevent Congress from violating bonds that had already been issued to raise the money to pay for pensions, but would allow Congress to refuse to issue the bonds needed to pay for the legal pensions. obligations or legal government contracts that had been fulfilled.
There is no reason the debt incurred based on a legal contract regarding the repayment of a loan should be legally any different than the debt incurred for a contract regarded as payment for a service.
Imagine if the government entered into a contract with a construction company promising to pay for a new road after it was build, yet after the road was built the government simply refused to pay its legal debt to the construction company. That would be just as damaging to questioning the validity of the public debt as violating the terms of a bond contract.
The only way to not question the validity of all the public debt of the United States government is for it to pay all the money promised by current law and current contracts. That would include paying things like Social Security and contracts for aircraft carriers. If Congress wants to reduce spending or debt, they have the power to pass new laws changing appropriations. What it seems the 14th amendment doesn’t allow though, is for the government to create laws or enter into contracts promising to pay for something then have one branch of the government simply refusing to hand over the money owed.




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I agree entirely with this argument. Unfortunately, it doesn’t mean that the 14th is in conflict with the debt ceiling, because Congress has legislated jumbo coin seigniorage, which the President can use to raise as much money as needed to pay all our bills. See: http://www.dailykos.com/story/2011/06/30/990018/-The-Debt-Ceiling-Is-Not-Unconstitutional,-Right-Now!?via=history and: http://www.dailykos.com/story/2011/06/27/989304/-How-to-Knock-Two-Trillion-Dollars-Off-the-National-Debt,-Ending-the-Debt-Limit-Crisis?via=search
1935 Perry v. U.S Supreme Court said the 14th covered “obligations” – contracts – and some say that is a pension but not block grants to the states or military pay – how they come to that conclusion is beyond my legal training.
Check out Cherokee Nation of Oklahoma v. Leavitt (2005). Apparently contractors have a constitutional claim for payment.
http://www.law.cornell.edu/supct/html/02-1472.ZO.html
The operative phrase here is “authorized by law.” IMHO, everything that has been budgeted has been “authorized by law.” In any organization, the budget is the administrative control on expenditures. Why should the U.S. government be any different.