Follow along with the video below to see how to install our site as a web app on your home screen.
Note: This feature may not be available in some browsers.
Before 1917 the debt had been permanently limited and every single new bond sale had to be individually approved by Congress. 31 USC § 3101 and 31 USC § 3101A upped it to the current $16.8T. Please point out which wording in the current law is specifically creating a situation for illegal non-payment that did not already exist....the debt limit law (created in 1917) creates a situation where congress can choose not to allow payment of the debt...
In the mean time we'll just work with the understanding that nobody can post it because it's simply not there.
Just to be clear, I believe the argument is that Article I authorizes Congress to borrow for the account of the United States. It says nothing about repayment of that debt. Theoretically there was nothing prior to the Fourteenth Amendment that that would prevent Congress from repudiating the public debt as a number of states have done (A friend of mine represented the British bondholders in negotiations of the State of Mississippi's repudiate debt of guaranteed 1820's railroad bonds a few years ago. The state is still blacklisted by Lloyds'!).
Clearly the main purpose of the Fourteenth Amendment was not concerning the debt, but Section 2 was inserted to prevent Southern states re-entering the Union from ever abrogating obligations for Union pensions or granting such pensions to Confederate veterans. So although the language was turgid, the intent was clear, once appropriated, funds to meet obligations and claims on the United States must be met regardless of actions of a subsequent Congress.
Whether or not this implies a general requirement that the public debt of the United States must be repaid is the issue, and there is an argument both for and against. In essence the question is "Can Congress by legislation repudiate the public debt?" If it were a matter of law, the answer would be obvious, of course Congress may by law undo any law. But if the Fourteenth Amendment makes such a law unconstitutional, Congress has no such authority. By definition a law cannot be illegal, but it can be unconstitutional.
Were the Supreme Court to rule that the Fourteenth Amendment requires the honoring of the public debt by Congress, and by extension the act of appropriating money in accord with Article I is sufficient to require payment, the power of Congress to repudiate appropriations already expended but unpaid and the power to repudiate the debt would both be unconstitutional, and the Executive would have a constitutional duty to ignore any law having the effect of repudiation, and payment would become automatic, with the Executive to determine the mechanism for payment.
This situation would be the exception to the rule that a government is different financially from a household or business. There would be no default provision for the federal government. All of those who beat their chest proclaiming the sanctity of living within the government's means would be forced to manage the deficit and debt limit to avoid default or abdicate the right to do so to the Executive. The argument leaves conservatives hoist by their own petard.
We agree that lawyers can say anything they're paid to say....Were the Supreme Court to rule that the Fourteenth Amendment requires the honoring of the public debt by Congress, and by extension the act of appropriating money in accord with Article I is sufficient to require payment, the power of Congress to repudiate appropriations already expended but unpaid and the power to repudiate the debt would both be unconstitutional, and the Executive would have a constitutional duty to ignore any law having the effect of repudiation, and payment would become automatic, with the Executive to determine the mechanism for payment...
In the past the SCOTUS has agreed to go along with the Fugitive Slave Act, Separate but Equal, and The Affordable Care Act. The can do so in the future, and at the same time they usually try to appear to be reasonable. With the debt ceiling the SCOTUS would probably want to explain why they did not order more taxes, spending cuts, issuing more dollars, or any number of other choices alternative to this one solo obsession for unlimited debt.
A mindless SCOTUS debt fetish would be without precedent.
That, and the fact that default warnings have a habit of being forgotten with short attention spans. Remember there was a time that the sequester was supposed to cause a default--Constitutional or not, Obama has said he won't unilaterally raise the debt ceiling.
Obama calling the treasury and having them to hurry up and print money to match his pet rock spending seems the same thing to me.Constitutional or not, Obama has said he won't unilaterally raise the debt ceiling.
Before 1917 the debt had been permanently limited and every single new bond sale had to be individually approved by Congress. 31 USC § 3101 and 31 USC § 3101A upped it to the current $16.8T. Please point out which wording in the current law is specifically creating a situation for illegal non-payment that did not already exist.
In the mean time we'll just work with the understanding that nobody can post it because it's simply not there.
Just to be clear, I believe the argument is that Article I authorizes Congress to borrow for the account of the United States. It says nothing about repayment of that debt. Theoretically there was nothing prior to the Fourteenth Amendment that that would prevent Congress from repudiating the public debt as a number of states have done (A friend of mine represented the British bondholders in negotiations of the State of Mississippi's repudiate debt of guaranteed 1820's railroad bonds a few years ago. The state is still blacklisted by Lloyds'!).
Clearly the main purpose of the Fourteenth Amendment was not concerning the debt, but Section 2 was inserted to prevent Southern states re-entering the Union from ever abrogating obligations for Union pensions or granting such pensions to Confederate veterans. So although the language was turgid, the intent was clear, once appropriated, funds to meet obligations and claims on the United States must be met regardless of actions of a subsequent Congress.
Whether or not this implies a general requirement that the public debt of the United States must be repaid is the issue, and there is an argument both for and against. In essence the question is "Can Congress by legislation repudiate the public debt?" If it were a matter of law, the answer would be obvious, of course Congress may by law undo any law. But if the Fourteenth Amendment makes such a law unconstitutional, Congress has no such authority. By definition a law cannot be illegal, but it can be unconstitutional.
Were the Supreme Court to rule that the Fourteenth Amendment requires the honoring of the public debt by Congress, and by extension the act of appropriating money in accord with Article I is sufficient to require payment, the power of Congress to repudiate appropriations already expended but unpaid and the power to repudiate the debt would both be unconstitutional, and the Executive would have a constitutional duty to ignore any law having the effect of repudiation, and payment would become automatic, with the Executive to determine the mechanism for payment.
This situation would be the exception to the rule that a government is different financially from a household or business. There would be no default provision for the federal government. All of those who beat their chest proclaiming the sanctity of living within the government's means would be forced to manage the deficit and debt limit to avoid default or abdicate the right to do so to the Executive. The argument leaves conservatives hoist by their own petard.
The questions that you ask were already answered in a 1935 SCOTUS decision. It's discussed about 3/4 into this article:
14th Amendment: Democratic Senators See Debt Ceiling As Unconstitutional
Basically it says that Congress is obliged to pay all debts.
Hypothetical.
If Congress approved $500 in spending but they know they will only get around $400 in revenue, how else but by borrowing are we supposed to spend $500?????
We need to remember what really has worked in the past. Back in the 1940's debt % GDP was far higher than today's level and--Ordering more taxes or spending cuts are ways to prevent the creation of debt, not ways to pay off current debt. Printing more money could be a solution, however it would be a poor alternative......With the debt ceiling the SCOTUS would probably want to explain why they did not order more taxes, spending cuts, issuing more dollars, or any number of other choices alternative to this one solo obsession for unlimited debt...
Hypothetical.
If Congress approved $500 in spending but they know they will only get around $400 in revenue, how else but by borrowing are we supposed to spend $500?????
Hypthetically, we aren't, which is why we should only spend $400.
I bet you thought that was a stumper.
We need to remember what really has worked in the past. Back in the 1940's debt % GDP was far higher than today's level and--Ordering more taxes or spending cuts are ways to prevent the creation of debt, not ways to pay off current debt. Printing more money could be a solution, however it would be a poor alternative......With the debt ceiling the SCOTUS would probably want to explain why they did not order more taxes, spending cuts, issuing more dollars, or any number of other choices alternative to this one solo obsession for unlimited debt...
-- it got there by raising the ceiling. After the war the debt burden plummeted when we lowered and held the ceiling. This current nonsense about paying the debt with more debt was the reason we raised the limit over $300B just a few months ago. That should have been enough money to pay total debt interest for a year and a half but some how it's all gone and we need more debt ceiling hikes.
Hypothetical.
If Congress approved $500 in spending but they know they will only get around $400 in revenue, how else but by borrowing are we supposed to spend $500?????
Hypthetically, we aren't, which is why we should only spend $400.
I bet you thought that was a stumper.
The problem is that Congress doesn't 'Approve' $500 in spending, congress 'mandates' it. Congress is the cause of the creation of debt, not the President.
We need to remember what really has worked in the past. Back in the 1940's debt % GDP was far higher than today's level and--Ordering more taxes or spending cuts are ways to prevent the creation of debt, not ways to pay off current debt. Printing more money could be a solution, however it would be a poor alternative...
-- it got there by raising the ceiling. After the war the debt burden plummeted when we lowered and held the ceiling. This current nonsense about paying the debt with more debt was the reason we raised the limit over $300B just a few months ago. That should have been enough money to pay total debt interest for a year and a half but some how it's all gone and we need more debt ceiling hikes.
You don't seem to understand that the problem is not the debt ceiling, it's the debt. If Congress were to raise the debt ceiling to $100T, it would not increase the debt.
The debt is created by congress not taxing enough to pay for the spending that congress has mandated.
Congress has an obligation to "faithfully execute the duties of their office".
By failing to correlate the amount collected in taxes, the mandated spending and the amount of debt authorized, congress will have severely violated their oath of office.
-- and the gold digger wife piles up bills while blaming the husband for not making enough money.We cannot tax enough to pay the spending, yet you insist the problem is low taxes....debt is created by congress not taxing enough to pay for the spending...
The questions that you ask were already answered in a 1935 SCOTUS decision. It's discussed about 3/4 into this article:
14th Amendment: Democratic Senators See Debt Ceiling As Unconstitutional
Basically it says that Congress is obliged to pay all debts.
The questions that you ask were already answered in a 1935 SCOTUS decision. It's discussed about 3/4 into this article:
14th Amendment: Democratic Senators See Debt Ceiling As Unconstitutional
Basically it says that Congress is obliged to pay all debts.
Thanks for the citation. I am familiar with the case but it has been a few years since I read it and I forgot the name of the case.
The case left a few fuzzy loose ends. By my reading, if Congress appropriates the money and the government receives the the goods and services, the resulting obligation (an account payable) is treated as a part of the debt for purposes of the Fourteenth Amendment. It does not matter if the obligation has been memorialized into a Treasury security or not. If this view is rejected, then the provisions regarding the payment of pensions by the government in the Fourteenth Amendment would make no sense. The Fourteenth Amendment is clearly about more than the issued debt obligations of the United States Treasury. So today the redemption of Treasury bills is not constitutionally superior to payment of veterans benefits; and any attempt to prioritize one legitimate obligation of the United States over another is clearly unconstitutional. No other reading of the Amendment makes any sense.
But the situation with appropriated but unexpended monies may be a different story. Social Security and veterans benefits have to be paid because they are already appropriated and are "spent" if the beneficiary simply remains alive. If the Fourteenth Amendment prevented Congress from terminating Union Civil War pensions already granted, it also prevents elimination or reduction of veterans, federal employee or Social Security pensions also. Similarly when the government has received goods or services, the funds have been spent and must be paid. But projects not yet contracted can be cancelled and they clearly are not required to be paid, except for any penalty payment in a cancellation clause in a contract. Similarly the status of pay for furloughed workers is a matter for labor and contract law. Sovereignty is not a defense here; if the United States is a party to a contract its financial obligations under that contract are covered by the Fourteenth Amendment, but to the extent the government can lawfully terminate such a contract, the Amendment does not apply.
So IMHO the Treasury cannot prioritize valid obligations of the United States and cannot default on them. The Fourteenth Amendment contained no enforcement mechanism in this regard, but the Executive takes an oath to uphold the Constitution of the United States and so is required by that oath to not default in those obligations. If Congress cannot reconcile it constitutional duties to establish revenue and expenditure acts and to reconcile those with the constitutional obligation to approve all borrowing for the account of the United States, and is constitutionally forbidden to abrogate any obligation of United States (including pensions and so forth as I discussed above), then the power and duty to make such reconciliation passes to the executive. The executive may not do anything constitutionally forbidden to Congress, which leaves the executive with the duty to pay all valid obligations of the United States first and work out the ex post facto accounting in good time.
[ADDED] BTW, the argument is not that the debt ceiling law is unconstitutional, it is that the debt ceiling law when considered with the revenue laws and disbursement statutes is an overdetermined system. If Congress cannot reconcile that difference, the Constitution requires that the Article I powers of Congress be preserved, that the Fourteenth Amendment be honored, and requires the executive to reconcile them if Congress does not. There is no constitutional mechanism provided to assure that Congress is forced to carry out its constitutional obligations within the budget and debt framework established by Congress. [/ADDED section]
The accounting games have been discussed before; I personally favor the $2 trillion coin, but many favor the Federal Reserve forgiving a trillion dollars of so of the Treasury securities it holds. No statute forbids either action. Both would lower the public debt by the amount of the operation dollar for dollar and eliminate the crisis as there would then be room under the debt limit.
The bitter enders have some recourse but not much. A suit in the federal courts requires standing, and I don't think the House has standing by itself in this issue; a Senate resolution would be necessary for Congress as a whole to assert standing. If the barrier of standing were met, the judicial process might not be swift enough to avoid grave economic damage to the country, and frankly I see no principle upon which an argument against executive action of the form mentioned above could be mounted.
Theoretically the possibility of impeachment is a little brighter, but holds even less chance of success. Impeachment is a political process not a judicial one, and the House and Senate separately and under different rules are the sole determinants of the grounds. Conviction in the Senate requires 67 votes which is clearly impossible. The process would take too long, do grave damage economically and politically to the nation, and probably be so politically unpopular as to permanently destroy the Republican Party. Failed impeachment efforts have never launched a successful political career.
So if Obama were to declare a policy Monday as I have outlined above, and Congress had not fully resolved the issues, I think that we would be at the end game. Whining would be heard for years, just like Republicans complained about "that man in the White House" up to FDRs death and for years thereafter. But it would be the politically impotent whining of those left behind by a broad public consensus not to go through the same agony again.
Finally I do not minimize Obama's ability to screw this up. More likely than not he would agree to almost any solution the Republicans came up with that would avoid a constitutional conflict. There is still a stop or two left before the bus reaches the end of the line and perhaps the Republican Party as a whole can see a way to get off and declare victory. For the good of the country I certainly hope so.
The questions that you ask were already answered in a 1935 SCOTUS decision. It's discussed about 3/4 into this article:
14th Amendment: Democratic Senators See Debt Ceiling As Unconstitutional
Basically it says that Congress is obliged to pay all debts.
Thanks for the citation. I am familiar with the case but it has been a few years since I read it and I forgot the name of the case.
The case left a few fuzzy loose ends. By my reading, if Congress appropriates the money and the government receives the the goods and services, the resulting obligation (an account payable) is treated as a part of the debt for purposes of the Fourteenth Amendment. It does not matter if the obligation has been memorialized into a Treasury security or not. If this view is rejected, then the provisions regarding the payment of pensions by the government in the Fourteenth Amendment would make no sense. The Fourteenth Amendment is clearly about more than the issued debt obligations of the United States Treasury. So today the redemption of Treasury bills is not constitutionally superior to payment of veterans benefits; and any attempt to prioritize one legitimate obligation of the United States over another is clearly unconstitutional. No other reading of the Amendment makes any sense.
But the situation with appropriated but unexpended monies may be a different story. Social Security and veterans benefits have to be paid because they are already appropriated and are "spent" if the beneficiary simply remains alive. If the Fourteenth Amendment prevented Congress from terminating Union Civil War pensions already granted, it also prevents elimination or reduction of veterans, federal employee or Social Security pensions also. Similarly when the government has received goods or services, the funds have been spent and must be paid. But projects not yet contracted can be cancelled and they clearly are not required to be paid, except for any penalty payment in a cancellation clause in a contract. Similarly the status of pay for furloughed workers is a matter for labor and contract law. Sovereignty is not a defense here; if the United States is a party to a contract its financial obligations under that contract are covered by the Fourteenth Amendment, but to the extent the government can lawfully terminate such a contract, the Amendment does not apply.
So IMHO the Treasury cannot prioritize valid obligations of the United States and cannot default on them. The Fourteenth Amendment contained no enforcement mechanism in this regard, but the Executive takes an oath to uphold the Constitution of the United States and so is required by that oath to not default in those obligations. If Congress cannot reconcile it constitutional duties to establish revenue and expenditure acts and to reconcile those with the constitutional obligation to approve all borrowing for the account of the United States, and is constitutionally forbidden to abrogate any obligation of United States (including pensions and so forth as I discussed above), then the power and duty to make such reconciliation passes to the executive. The executive may not do anything constitutionally forbidden to Congress, which leaves the executive with the duty to pay all valid obligations of the United States first and work out the ex post facto accounting in good time.
[ADDED] BTW, the argument is not that the debt ceiling law is unconstitutional, it is that the debt ceiling law when considered with the revenue laws and disbursement statutes is an overdetermined system. If Congress cannot reconcile that difference, the Constitution requires that the Article I powers of Congress be preserved, that the Fourteenth Amendment be honored, and requires the executive to reconcile them if Congress does not. There is no constitutional mechanism provided to assure that Congress is forced to carry out its constitutional obligations within the budget and debt framework established by Congress. [/ADDED section]
The accounting games have been discussed before; I personally favor the $2 trillion coin, but many favor the Federal Reserve forgiving a trillion dollars of so of the Treasury securities it holds. No statute forbids either action. Both would lower the public debt by the amount of the operation dollar for dollar and eliminate the crisis as there would then be room under the debt limit.
The bitter enders have some recourse but not much. A suit in the federal courts requires standing, and I don't think the House has standing by itself in this issue; a Senate resolution would be necessary for Congress as a whole to assert standing. If the barrier of standing were met, the judicial process might not be swift enough to avoid grave economic damage to the country, and frankly I see no principle upon which an argument against executive action of the form mentioned above could be mounted.
Theoretically the possibility of impeachment is a little brighter, but holds even less chance of success. Impeachment is a political process not a judicial one, and the House and Senate separately and under different rules are the sole determinants of the grounds. Conviction in the Senate requires 67 votes which is clearly impossible. The process would take too long, do grave damage economically and politically to the nation, and probably be so politically unpopular as to permanently destroy the Republican Party. Failed impeachment efforts have never launched a successful political career.
So if Obama were to declare a policy Monday as I have outlined above, and Congress had not fully resolved the issues, I think that we would be at the end game. Whining would be heard for years, just like Republicans complained about "that man in the White House" up to FDRs death and for years thereafter. But it would be the politically impotent whining of those left behind by a broad public consensus not to go through the same agony again.
Finally I do not minimize Obama's ability to screw this up. More likely than not he would agree to almost any solution the Republicans came up with that would avoid a constitutional conflict. There is still a stop or two left before the bus reaches the end of the line and perhaps the Republican Party as a whole can see a way to get off and declare victory. For the good of the country I certainly hope so.
So even if a deal goes through before deadline, this squabble about the debt hasn't helped the USA's and the dollar's reputation in the world as I see it. Si or no?
Thanks for the citation. I am familiar with the case but it has been a few years since I read it and I forgot the name of the case.
The case left a few fuzzy loose ends. By my reading, if Congress appropriates the money and the government receives the the goods and services, the resulting obligation (an account payable) is treated as a part of the debt for purposes of the Fourteenth Amendment. It does not matter if the obligation has been memorialized into a Treasury security or not. If this view is rejected, then the provisions regarding the payment of pensions by the government in the Fourteenth Amendment would make no sense. The Fourteenth Amendment is clearly about more than the issued debt obligations of the United States Treasury. So today the redemption of Treasury bills is not constitutionally superior to payment of veterans benefits; and any attempt to prioritize one legitimate obligation of the United States over another is clearly unconstitutional. No other reading of the Amendment makes any sense.
But the situation with appropriated but unexpended monies may be a different story. Social Security and veterans benefits have to be paid because they are already appropriated and are "spent" if the beneficiary simply remains alive. If the Fourteenth Amendment prevented Congress from terminating Union Civil War pensions already granted, it also prevents elimination or reduction of veterans, federal employee or Social Security pensions also. Similarly when the government has received goods or services, the funds have been spent and must be paid. But projects not yet contracted can be cancelled and they clearly are not required to be paid, except for any penalty payment in a cancellation clause in a contract. Similarly the status of pay for furloughed workers is a matter for labor and contract law. Sovereignty is not a defense here; if the United States is a party to a contract its financial obligations under that contract are covered by the Fourteenth Amendment, but to the extent the government can lawfully terminate such a contract, the Amendment does not apply.
So IMHO the Treasury cannot prioritize valid obligations of the United States and cannot default on them. The Fourteenth Amendment contained no enforcement mechanism in this regard, but the Executive takes an oath to uphold the Constitution of the United States and so is required by that oath to not default in those obligations. If Congress cannot reconcile it constitutional duties to establish revenue and expenditure acts and to reconcile those with the constitutional obligation to approve all borrowing for the account of the United States, and is constitutionally forbidden to abrogate any obligation of United States (including pensions and so forth as I discussed above), then the power and duty to make such reconciliation passes to the executive. The executive may not do anything constitutionally forbidden to Congress, which leaves the executive with the duty to pay all valid obligations of the United States first and work out the ex post facto accounting in good time.
[ADDED] BTW, the argument is not that the debt ceiling law is unconstitutional, it is that the debt ceiling law when considered with the revenue laws and disbursement statutes is an overdetermined system. If Congress cannot reconcile that difference, the Constitution requires that the Article I powers of Congress be preserved, that the Fourteenth Amendment be honored, and requires the executive to reconcile them if Congress does not. There is no constitutional mechanism provided to assure that Congress is forced to carry out its constitutional obligations within the budget and debt framework established by Congress. [/ADDED section]
The accounting games have been discussed before; I personally favor the $2 trillion coin, but many favor the Federal Reserve forgiving a trillion dollars of so of the Treasury securities it holds. No statute forbids either action. Both would lower the public debt by the amount of the operation dollar for dollar and eliminate the crisis as there would then be room under the debt limit.
The bitter enders have some recourse but not much. A suit in the federal courts requires standing, and I don't think the House has standing by itself in this issue; a Senate resolution would be necessary for Congress as a whole to assert standing. If the barrier of standing were met, the judicial process might not be swift enough to avoid grave economic damage to the country, and frankly I see no principle upon which an argument against executive action of the form mentioned above could be mounted.
Theoretically the possibility of impeachment is a little brighter, but holds even less chance of success. Impeachment is a political process not a judicial one, and the House and Senate separately and under different rules are the sole determinants of the grounds. Conviction in the Senate requires 67 votes which is clearly impossible. The process would take too long, do grave damage economically and politically to the nation, and probably be so politically unpopular as to permanently destroy the Republican Party. Failed impeachment efforts have never launched a successful political career.
So if Obama were to declare a policy Monday as I have outlined above, and Congress had not fully resolved the issues, I think that we would be at the end game. Whining would be heard for years, just like Republicans complained about "that man in the White House" up to FDRs death and for years thereafter. But it would be the politically impotent whining of those left behind by a broad public consensus not to go through the same agony again.
Finally I do not minimize Obama's ability to screw this up. More likely than not he would agree to almost any solution the Republicans came up with that would avoid a constitutional conflict. There is still a stop or two left before the bus reaches the end of the line and perhaps the Republican Party as a whole can see a way to get off and declare victory. For the good of the country I certainly hope so.
So even if a deal goes through before deadline, this squabble about the debt hasn't helped the USA's and the dollar's reputation in the world as I see it. Si or no?
What if that is a good thing?
The questions that you ask were already answered in a 1935 SCOTUS decision. It's discussed about 3/4 into this article:
14th Amendment: Democratic Senators See Debt Ceiling As Unconstitutional
Basically it says that Congress is obliged to pay all debts.
Thanks for the citation. I am familiar with the case but it has been a few years since I read it and I forgot the name of the case.
The case left a few fuzzy loose ends. By my reading, if Congress appropriates the money and the government receives the the goods and services, the resulting obligation (an account payable) is treated as a part of the debt for purposes of the Fourteenth Amendment. It does not matter if the obligation has been memorialized into a Treasury security or not. If this view is rejected, then the provisions regarding the payment of pensions by the government in the Fourteenth Amendment would make no sense. The Fourteenth Amendment is clearly about more than the issued debt obligations of the United States Treasury. So today the redemption of Treasury bills is not constitutionally superior to payment of veterans benefits; and any attempt to prioritize one legitimate obligation of the United States over another is clearly unconstitutional. No other reading of the Amendment makes any sense.
But the situation with appropriated but unexpended monies may be a different story. Social Security and veterans benefits have to be paid because they are already appropriated and are "spent" if the beneficiary simply remains alive. If the Fourteenth Amendment prevented Congress from terminating Union Civil War pensions already granted, it also prevents elimination or reduction of veterans, federal employee or Social Security pensions also. Similarly when the government has received goods or services, the funds have been spent and must be paid. But projects not yet contracted can be cancelled and they clearly are not required to be paid, except for any penalty payment in a cancellation clause in a contract. Similarly the status of pay for furloughed workers is a matter for labor and contract law. Sovereignty is not a defense here; if the United States is a party to a contract its financial obligations under that contract are covered by the Fourteenth Amendment, but to the extent the government can lawfully terminate such a contract, the Amendment does not apply.
So IMHO the Treasury cannot prioritize valid obligations of the United States and cannot default on them. The Fourteenth Amendment contained no enforcement mechanism in this regard, but the Executive takes an oath to uphold the Constitution of the United States and so is required by that oath to not default in those obligations. If Congress cannot reconcile it constitutional duties to establish revenue and expenditure acts and to reconcile those with the constitutional obligation to approve all borrowing for the account of the United States, and is constitutionally forbidden to abrogate any obligation of United States (including pensions and so forth as I discussed above), then the power and duty to make such reconciliation passes to the executive. The executive may not do anything constitutionally forbidden to Congress, which leaves the executive with the duty to pay all valid obligations of the United States first and work out the ex post facto accounting in good time.
[ADDED] BTW, the argument is not that the debt ceiling law is unconstitutional, it is that the debt ceiling law when considered with the revenue laws and disbursement statutes is an overdetermined system. If Congress cannot reconcile that difference, the Constitution requires that the Article I powers of Congress be preserved, that the Fourteenth Amendment be honored, and requires the executive to reconcile them if Congress does not. There is no constitutional mechanism provided to assure that Congress is forced to carry out its constitutional obligations within the budget and debt framework established by Congress. [/ADDED section]
The accounting games have been discussed before; I personally favor the $2 trillion coin, but many favor the Federal Reserve forgiving a trillion dollars of so of the Treasury securities it holds. No statute forbids either action. Both would lower the public debt by the amount of the operation dollar for dollar and eliminate the crisis as there would then be room under the debt limit.
The bitter enders have some recourse but not much. A suit in the federal courts requires standing, and I don't think the House has standing by itself in this issue; a Senate resolution would be necessary for Congress as a whole to assert standing. If the barrier of standing were met, the judicial process might not be swift enough to avoid grave economic damage to the country, and frankly I see no principle upon which an argument against executive action of the form mentioned above could be mounted.
Theoretically the possibility of impeachment is a little brighter, but holds even less chance of success. Impeachment is a political process not a judicial one, and the House and Senate separately and under different rules are the sole determinants of the grounds. Conviction in the Senate requires 67 votes which is clearly impossible. The process would take too long, do grave damage economically and politically to the nation, and probably be so politically unpopular as to permanently destroy the Republican Party. Failed impeachment efforts have never launched a successful political career.
So if Obama were to declare a policy Monday as I have outlined above, and Congress had not fully resolved the issues, I think that we would be at the end game. Whining would be heard for years, just like Republicans complained about "that man in the White House" up to FDRs death and for years thereafter. But it would be the politically impotent whining of those left behind by a broad public consensus not to go through the same agony again.
Finally I do not minimize Obama's ability to screw this up. More likely than not he would agree to almost any solution the Republicans came up with that would avoid a constitutional conflict. There is still a stop or two left before the bus reaches the end of the line and perhaps the Republican Party as a whole can see a way to get off and declare victory. For the good of the country I certainly hope so.
So even if a deal goes through before deadline, this squabble about the debt hasn't helped the USA's and the dollar's reputation in the world as I see it. Si or no?
What if that is a good thing?
It could only be considered a good thing by people who hate humanity.
No, it will not be a catastrophe. The U.S. is one of the few countries in the world and in history that has NOT defaulted on its debt; consequently we suffer the consequences of the curse of a reserve currency. The great housing-mortgage market bubble, 1997-2006, was fueled by a massive inflow of foreign investment funds. This is the other side of our deficit on trade account which looks like a sweet deal in which foreigners send us more goods and services value than we send them. But it has negative consequences and cannot be sustained indefinitely.
