Why the Debt Ceiling doesn't matter

July 26th, 2011

There’s been a lot of hubbub lately about the threat of the United States government defaulting on its loans and other financial commitments because congress hasn’t raised the cap on the maximum amount it is allowed to be in debt by law. Scary thoughts like Social Security checks not going on out, Treasury bonds not being paid out upon maturity, Veteran’s Administration hospitals closing their doors, and other calamaties have been put forward as possible repercussions of this political fuss. Here is, quite simply, why this shouldn’t be a problem even if Congress can’t get its act together in the next week or so:

From the U.S. Constitution:

Article. VI.

All Debts contracted and Engagements entered into, before the Adoption of this Constitution, shall be as valid against the United States under this Constitution, as under the Confederation.

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

The Senators and Representatives before mentioned, and the Members of the several State Legislatures, and all executive and judicial Officers, both of the United States and of the several States, shall be bound by Oath or Affirmation, to support this Constitution; but no religious Test shall ever be required as a Qualification to any Office or public Trust under the United States.

Supreme law of the land means that other laws, regulations, and practices are subordinate to the Constitution, and only laws that are consistent with it are valid. Dig down a little further and you find that it has been amended several times. Of particular interest these days is the 14th time it was amended:

Passed by Congress June 13, 1866. Ratified July 9, 1868.

Section 1.
All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Section 2.
Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice-President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age,* and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State.

Section 3.
No person shall be a Senator or Representative in Congress, or elector of President and Vice-President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.

Section 4.
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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Section 5.
The Congress shall have the power to enforce, by appropriate legislation, the provisions of this article.

Section 4 was meant to distance the Union from debts incurred by the Confederacy leading up to and during the U.S. Civil War, but starts with a clear affirmation that the United States federal government will and must meet any and all of its financial commitments.

In the light of the 14th amendment, the debt ceiling is not valid under Article 6 of the Constitution. If the Republicans want to cut spending, they should past more austere budgets, and shame on President Obama for playing along with the scare-mongering.

2 Responses to “Why the Debt Ceiling doesn't matter”

  1. emawkc Says:

    You’re partially correct. The govt. is constitutionally obliged to pay all interest on outstanding debts.

    What this means is that if the debt ceiling isn’t raised, government funds will go first to service debts (i.e., those who own Treasury Bills (bond holders both foreign and domestic).

    After that, whatever is left (which would be nothing given our budget deficit) would be used to fund government services (salaries, regulation, digital cable converter boxes). Since no money would be left to fund all (any?) services, we’d be looking at a drastic government shut down.

    But not a debt default.

  2. Burrowowl Says:

    Debt service on Treasury bonds doesn’t equal or exceed the revenue taken in by the government on a monthly basis. Not even close. I think Garrett Epps put it better in a speech he wrote that President Obama could, but won’t, put up on the teleprompter to address the matter (link).