There are increasing signs pointing to President Biden warming up to the idea of invoking the 14th Amendment to simply ignore the debt ceiling and issue new debt without striking a deal with Republicans.
Asked about the option in an interview with MSNBC, Biden was equivocal, saying, “I’ve not gotten there yet.” Does that mean he could get there eventually? On Sunday, Treasury Secretary Janet Yellen, who previously ruled out the 14th Amendment strategy, did not try to shut the door, either. On ABC, she was suddenly reluctant to say point blank that the strategy was off the table even as she described it as a “constitutional crisis” and a “not good option.” Perhaps another sign that a shift might be brewing is that influential left-wing law professor Laurence Tribe, who had previously advocated against the strategy when the Obama administration rejected the option, is out with a conveniently-timed New York Times op-ed saying he has come around to the idea.
Proponents of the strategy point to the text of the 14th Amendment, which says, “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.” Under a specious legal theory, this means the debt ceiling itself is unconstitutional and the president has the right, if not the duty, to simply ignore it.
There are multiple issues with this theory. One is that when adopted, the purpose of the language was not to give new unilateral power to the president, but to prevent a scenario in which ex-confederates gained control of the federal government and decided to not recognize debts incurred during the Civil War. The other is that even if Biden were to come to the conclusion that the debt ceiling, which was created by an act of Congress, violates the 14th Amendment, the process for seeking a remedy would be to challenge the provision and seek a ruling before the Supreme Court. For Biden to behave otherwise would be to assume unilateral authority to declare acts of Congress unconstitutional — effectively usurping the power of the judicial branch.
Nonetheless, there are numerous examples, most recently with the student loan forgiveness program, of Biden, after some initial reluctance, embracing dubious legal theories to take executive action. So the possibility could not be ruled out.
It’s also possible that Biden is letting the idea that he may be open to invoking the 14th Amendment percolate without actually intending to pursue the strategy. Essentially, it could be a way to signal to Republicans, ahead of negotiations, that they better cut a deal or else he’ll go it alone and they’ll get nothing. He also may be attempting to calm markets, by telling investors that somehow, if push came to shove, he’d be willing to do what it takes.
However, it isn’t even clear to me that if Biden ignored all of the red flags and pursued this strategy, that it would assuage investors, as any debt issued under such an action would be under immediate legal threat. How many investors would want to park their money in debt instruments when there’s a good chance they will be voided by courts?