Balkinization  

Friday, July 29, 2011

Obama is already invoking the 14th Amendment

JB

Some Democrats in Congress, including Steny Hoyer, have called for President Barack Obama to invoke the 14th Amendment to resolve the debt ceiling crisis.

What they don't realize is that Obama has already invoked it in effect. Despite his statement that his lawyers told him it wasn't a "winning argument."

What?

Obama has already told bond holders that there will be no default on bonds. He plans to use existing revenues to pay off interest on the debt and other vested obligations. This is required by section 4 of the Fourteenth Amendment. Whatever he says in public, his lawyers have almost certainly told him something like that.

But that means less money for other government services, including social safety net programs like Medicare.

So we'll see a partial government shutdown once the government runs out of other options.

This in turn will place enormous pressure on Congress to raise the debt ceiling, which it should have done in the first place.

By requiring a priority rule for payment of bondholders, Section 4 of the 14th Amendment forces the President's hand, which leads to a partial government shutdown, which leads to a political resolution of the crisis.

What if Congress still won't budge after months of government shutdown? Even then, Obama has to wait until the markets threaten to implode and the validity of the public debt is put into question. Then Section 4 says comes into play again, and, in that extraordinary set of circumstances, would require him to act to prevent a meltdown.

But we won't get there. Section 4 already guarantees that. And Obama knows it. No matter what he says in public.

Read other posts on the debt ceiling crisis

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