As the debt-ceiling standoff grinds toward the so-called X-date, when the government can no longer borrow and must rely on incoming revenue to settle its obligations, the idea of invoking the 14th Amendment as a possible way to avoid a possible debt default has come into the spotlight.
Invoking the 14th Amendment—using executive power to declare the debt ceiling unconstitutional—was floated in several interviews with top Biden administration officials in recent days as a possible last-ditch measure to prevent a U.S. sovereign debt default if negotiations on raising the debt cap fail.
The United States bumped up against its $31.4 trillion debt ceiling in January, leaving it to Congress to raise the cap and allow the government to keep paying its bills. Democrats have insisted on legislation with no preconditions to raise the debt ceiling, while Republicans have demanded spending cuts in exchange for their support to lift the borrowing cap.
President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) are slated to meet this week to discuss raising the debt ceiling, while Treasury Secretary Janet Yellen has warned that if no solution is reached, then the X-date (and a possible debt default) could come as early as June 1.
“Our current projection is that in early June, a day will come when we’re unable to pay our bills unless Congress raises the debt ceiling,” Yellen told ABC in an interview Sunday, in which she urged Congress to act to avoid a “steep economic downturn.”
“It’s widely agreed that financial and economic chaos will ensue,” Yellen added, noting that the U.S. Treasury has been resorting to “extraordinary measures” to allow the government to keep settling its debt obligations since the debt-ceiling cap was hit in January.
With rhetoric heating up around the possibility of a debt default, attention has increasingly turned to what measures aside from a congressionally approved lifting of the debt ceiling could be reached to avoid what Yellen said would be an “economic calamity.”
Biden on Friday suggested that he’s mulling the possibility of invoking the 14th Amendment, which reads in part that the “validity” of America’s public debt “shall not be questioned.”
Biden was asked during an interview on MSNBC on Friday whether he’s “prepared to invoke the 14th Amendment and blow through the debt ceiling,” with the interviewer saying there are members of Congress who might be willing to allow a government debt default to hurt the president politically.
“I’ve not gotten there yet,” Biden replied, adding that he’s prepared to negotiate with Republicans on a budget, but not on the GOP’s latest legislative proposal to raise the debt cap in exchange for spending cuts.
Biden has demanded that Congress pass a “clean” bill to lift the $31.4 trillion ceiling, and has said he would veto the Republican legislation if it reaches his desk.
Risk of ‘Constitutional Crisis’
Yellen was asked about the possibility of Biden invoking the 14th Amendment in the ABC interview on Sunday, with the Treasury Secretary downplaying the idea that this would be a viable solution.
“I’m still not exactly clear on whether it’s on the table or off the table,” ABC’s George Stephanopoulos asked Yellen. “Is it a ‘break glass in case of emergency’ option?”
Yellen replied by saying she doesn’t want to focus on the prospect of last-ditch emergency measures, while reiterating her call for Congress to act.
“What’s important is that members of Congress recognize what their responsibility is, and avert what will surely be—regardless of how it’s handled, what option is used to handle it—an economic and financial catastrophe,” she said.
Stephanopoulos then said it seems Yellen was not taking the option off the table.
“There is no way to protect our financial system in our economy other than Congress doing its job and raising the debt ceiling and enabling us to pay our bills. And we should not get to the point where we need to consider whether the president can go on issuing debt,” Yellen said.
“There is no way to protect our financial system in our economy other than Congress doing its job and raising the debt ceiling and enabling us to pay our bills. And we should not get to the point where we need to consider whether the president can go on issuing debt,” Yellen said. “This would be a constitutional crisis.”
It comes as Biden is slated to meet with congressional leaders on Tuesday to discuss the debt limit deadlock and spending cuts.
Some two dozen Republican senators on Saturday signed onto a letter to Senate Majority Leader Chuck Schumer (D-N.Y.) expressing their commitment to oppose raising the debt cap without “substantive spending and budget reforms.”
“Our economy is in free fall due to unsustainable fiscal policies,” the senators wrote. “This trajectory must be addressed with fiscal reforms.”
They argued that House Republicans have taken a “responsible first step” by putting forward a proposal that pairs raising the debt cap by $1.5 trillion with $4.5 trillion in spending cuts over a decade.
“The House has taken a responsible first step in coming to the table with their proposals. It is imperative that the president now do the same,” they wrote.
The Republicans’ 320-page bill—called the Limit, Save, Grow Act of 2023—seeks to return discretionary spending to 2022 levels, cap spending growth to 1 percent per year, and repeal certain tax credits.
McCarthy has said that he hopes the GOP proposal would drive negotiations forward.
“Remember what this bill is. This bill is to get us to the negotiating table. It’s not the final provisions,” McCarthy told reporters on Capitol Hill in late April.
Biden has refused to negotiate, insisting on a clean bill to raise the debt cap.
“President Biden has refused to do his job—threatening to bumble our nation into its first-ever default—and the clock is ticking,” McCarthy said in response to Yellen’s warning that the United States might be unable to pay its bills potentially as early as June 1.
Invoking the 14th Amendment as Plan B?
The U.S. Constitution gives Congress the power of the purse, though some have argued that the 14th Amendment contains a fail-safe that could be used as a last-ditch measure to avoid a potentially crippling debt default.
An attempt to override the congressionally mandated debt ceiling has never been tried, though it has been put forward as an emergency option in prior debt-limit standoffs.
During the last debt-ceiling impasse in 2011, former president Bill Clinton said that if he were in the shoes of then-president Barack Obama, he would be prepared to invoke the 14th Amendment “without hesitation, and force the courts to stop me.”
Clinton said at the time that raising the debt ceiling is so unpopular because “people think you’re voting to keep [increasing] deficit spending, instead of voting to honor obligations that were already incurred,” essentially the same argument that Biden and the Democrats have made during the current deadlock.
Back then, Congress ultimately resolved the debt-ceiling crisis by passing the Budget Control Act of 2011, which allowed the debt cap to be raised by $2.4 trillion in two phases.
Following the resolution, Standard & Poor’s took the unusual step of downgrading the country’s long-term credit rating from AAA to AA+, despite the fact that a default was averted.
The reason for the downgrade, according to the credit-rating agency’s report (pdf), was that it believed that the agreed-to fiscal consolidation plan “falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.”
At the time, S&P cited the measure’s unimpressive size of deficit-reduction plans compared to the probability of future debt accumulation spurred by politically driven spending.
Meanwhile, House and Senate Democrats have signaled plans to file a “discharge petition,” which would force a vote on a clean debt-ceiling increase without the spending cuts Republicans have demanded.
House Minority Leader Hakeem Jeffries (D-N.Y.) put forward the proposal in a “Dear Colleague” letter on May 2 (pdf). If 218 House members sign the discharge petition, this would force a vote on the clean debt-cap bill.
However, five House Republicans would have to sign the petition for it to proceed, which could be a tall order, given the dynamics of the impasse.
“Leader Jeffries refuses to negotiate,” Rep. Don Bacon (R-Neb.) told Axios in an interview.
“That’s not how it works in a divided government. We have to govern, which means we have to find some agreement, which means we must negotiate.”
