Monday, September 20, 2021

Section Four of the Fourteenth Amendment (again)

Gerard N. Magliocca

A decade ago when the debt ceiling was in the news, there was discussion about whether Section Four of the Fourteenth Amendment could authorize the President to, in effect, ignore the ceiling and issue new debt on his own authority to avoid a default. (When obscure parts of the Fourteenth Amendment are under discussion, Mark Graber and I are on the case.) I said then that it was highly unlikely that we would find ourselves in a situation where the Section Four issue would be presented. When the issue came up again in 2013, I wrote the following post, which has aged well and might be helpful now. (For more on Section 4 and the Supreme Court's interpretation of that provision in Perry v. United States, see my article on The Gold Clause Cases.)


Now that we are past the fiscal cliff, we can return to what everybody really wants to discuss--the debt ceiling. When Congress and the President sparred over this issue in 2011, there was a lot of debate about whether the President could unilaterally act (to raise taxes, borrow money, or slash spending), if the ceiling was not raised. Less attention was paid (including by me) about the threshold issue--what constitutes a violation of Section 4 of the Fourteenth Amendment, which holds that: "The validity of the public debt of the United States . . . shall not be questioned."

Based on research that I wrote up in an article last year, my conclusion is that hitting the debt ceiling is not, by itself, a violation of Section 4. Why? Consider a hypothetical. Suppose we hit the ceiling and bond payments are suspended. A week later, the ceiling is lifted and Congress provides that the bond holders will be made whole for the missed payments. In that case, I would argue that the public debt has not been questioned in a substantial way and no constitutional violation has occurred.

Why do I add the qualification "in a substantial way?" Because in the years after Section 4 was ratified, Congress made changes to the value of the currency. (Paper money, gold and silver money, just a gold standard.) All of these reforms changed the value of our debts (sometimes to the detriment of the bond holder). Nobody thought, though, that this raised a Section 4 problem. From this, I glean that only a significant or substantial reduction in debt validity is a constitutional violation, not just any modification or reduction. 

Of course, it is possible that hitting the debt ceiling could, combined with other factors, present a different situation. If Congress made clear that the bond holders would not be made whole for any suspension, that would raise serious Section 4 questions. Or a suspension that dragged on for months might cross the line. But on Day One or Day 6, the President would not, in my view, be authorized to do anything because the Constitution would not be infringed.  

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