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Constitutional Nonsense on Debt
What the 14th Amendment really says about the debt ceiling and debt default


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John Berlau

3. “Public debt” does not include government benefits, the Supreme Court has ruled.

Progressive constitutionalists argue that the term “public debt” embraces every transfer payment of every spending program under the sun. But the Supreme Court has already shot down the argument that government benefits — even if they are labeled “entitlements” — represent contractual obligations. In Flemming v. Nestor, 363 U.S. 603 (1960), the court ruled that a deported member of the Communist party did not have any “earned rights” to his Social Security benefits, and neither did other recipients. Calling benefits a “noncontractual interest,” the Court declared, “To engraft upon the Social Security system a concept of ‘accrued property rights’ would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands.”

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Ironically, proposals for personal accounts championed by center-right groups would give recipients a contractual interest in some of the taxes they pay, but the Left shot this down in favor of keeping Social Security as a pay-as-you-go Ponzi scheme with “guarantees” not worth the paper they are written on.

Despite the obvious hypocrisy of these newfound defenders of constitutional limits, they have the chutzpah to attempt to tar the tea-party movement with hypocrisy if conservatives and libertarians don’t profess absolute fealty to this new constitutional theory. But genuine constitutionalists should respond simply that all parts of the Constitution should be honored, and that Article I and the 14th Amendment do not conflict with each other.

The Constitution places a burden both on borrowing and on default of valid existing debt. As difficult as they may make the legislative process, both provisions serve to prevent short-term and long-term fiscal catastrophe.

John Berlau is director of the Center for Investors and Entrepreneurs at the Competitive Enterprise InstituteCEI counsel for special projects Hans Bader provided invaluable insights and assistance with this article.



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