During Thursday’s talks between the president’s team and congressional leadership, Treasury Secretary Tim Geithner reportedly revealed that he believed the administration did not have the constitutional authority under the 14th Amendment to simply ignore the debt ceiling and continue borrowing money.
The 14th Amendment says, “The validity of the public debt of the United States, authorized by law … shall not be questioned.” Some are now saying that this gives Treasury Secretary Timothy Geithner authority to borrow money even if the statutory debt limit established by Congress has been exceeded.
The White House has been investigating this option as a possible way around the debt ceiling that is scheduled to be exceeded after Aug. 2 if Congress has not approved an extension. Negotiators are considering gutting the social safety net in exchange for a vote to lift the debt ceiling. Sen. Chuck Grassley (R-Iowa), in a conference call with local reporters, said that there may be another way out.
“There’s one thing that hasn’t been talked about yet, and I haven’t checked on the constitutionality of it — and I read the Constitution, but I don’t remember reading this — but in the 14th amendment, there’s something that says something about the debt of the United States government shall be honored,” Grassley said, according to a recording of the call.
“The 14th Amendment includes a public debt clause that insists the obligations of the government ‘shall not be questioned. So people are looking at the fact that maybe the debt ceiling bill that Congress presumably has to pass for the government to borrow more maybe is contrary to that constitutional provision, and that the administration may take out [loans] on their own — just to borrow money — and say that they can ignore the law,” he said.
Grassley said that he was personally supportive of the debt ceiling, because it focuses attention on spending, but that if its existence was unconstitutional, there was nothing he or his colleagues could do.
“I think it’s a discipline that Congress uses effectively from time to time, maybe not to cut down on the amount of spending but to have a refresher course,” he said. “It’s a good discipline, so it bothers me if the Constitution provision would trump it, but that would be up to the courts to say.”
“But who’s going to argue against the Constitution? It’s the basis of our government; it’s the law of our land, and everybody has to abide by it. The Constitution trumps the law, obviously,” he added.
Some House Republicans, meanwhile, are threatening to impeach the president if he goes the 14th Amendment route. Nervous that Democrats might be saving the move as an emergency option, Sens. Lindsey Graham (R-SC) and John Cornyn (R-TX) are putting forward a Senate resolution affirming Congress’ right to determine the debt limit.
“I strongly disagree with those who suggest the President has the unilateral authority to put the American people in even greater levels of debt,” Graham said in a statement. “Every time the debt ceiling has been raised it has been through an act of collaboration between the President and Congress.”
“That is not only the right policy decision to make, but the correct political decision as well. We have a President, not a King. Our resolution puts the Senate on record that any debt-limit increase, today or in the future, should be passed by the Congress and signed by the President.”
Cornyn called the idea “the latest attempt by big-spending Democrats to short-circuit the Constitution in order to avoid making tough budget choices.”
Though the president and Congressional leaders did not close wide gaps on the issues of spending cuts or new tax revenues, officials briefed on the talks said, they emerged with a consensus to aim for the biggest possible deal — one resulting in up to $4 trillion in savings — and a recognition of the dire consequences of not acting before Aug. 2, when the government will lose its authority to borrow.
“Everyone acknowledged that we have to get this done before the hard deadline of Aug. 2 to make sure America does not default for the first time on its obligations,” Mr. Obama said to reporters after the meeting. “And everybody acknowledged that there’s going to be pain involved politically on all sides.”
But Mr. Obama has put popular entitlement programs like Medicare and Social Security on the table, while Speaker John A. Boehner has signaled for the first time his openness to up to $1 trillion in new revenues. The money could presumably be raised through closing loopholes but would also probably require changes to the tax code that would have to be worked out later. [via Huffpost, TPM and The New York Times]