There's been a lot of wishful thinking about the 14th Amendment in recent weeks. Many smart people -- including my Tax Notes colleague Bruce Bartlett -- believe that the amendment's section 4 allows the president to make an end run around the debt limit.
I'm unconvinced. The amendment certainly bears on the modern politics of debt limit brinkmanship; by clearly prohibiting any sort of default, it seems to drain the issue of its motivating threat.
But a quick survey of the amendment's history doesn't reveal any sort of implicit or intended license for unchecked presidential borrowing. The amendment tells policymakers what to avoid, not what to do.
The amendment could not be worded more clearly: "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."
The references to insurrection and rebellion reveal the amendment's post-Civil War origins. The default prohibition was a direct outgrowth of three factors, all of them intensely politicized: extensive Union borrowing to fund the cost of fighting the war, extensive Confederate borrowing to support its side of the conflict, and political concern among Republicans that Democrats from both the North and South would join forces in the postwar era to stiff federal creditors.
There is an irony surrounding the 14th Amendment. While designed to protect the integrity of one kind of debt, it explicitly repudiated another. Republican politicians were determined that no one -- not the federal government and not the postwar governments of the Southern states -- would ever repay Confederate debt.
Republicans were particularly worried that the reconstituted federal government might be forced to assume Southern war debts. Such fears were not unreasonable, given the political context. The 13th and 14th amendments abolished not only slavery, but also the three-fifths clause that had limited antebellum Southern representation in Congress by counting only a fraction of the slave population.
Of course, counting slaves in any proportion for the purpose of allocating seats in the House of Representatives had always been perverse. But the three-fifths clause had at least reduced the impact.
The end of the three-fifths clause, however, meant that Southern states would return to the federal government with newly inflated House delegations. The 14th Amendment included provisions designed to ensure that such delegations were not dominated solely by the white Southern political aristocracy, but many Northerners feared that the South's new superdelegations would be loaded with Democratic politicians hostile to Northern interests.
In particular, many Republicans worried that Southern Democrats in the enlarged delegations would team up with sympathetic members of their party's Northern wing to demand either federal help in repaying Confederate debt or repudiating Union debt.
They had reasons to worry. In addition to the Democrats' raw political power, there were likely to be legitimate questions raised about the nature and status of Southern debt. "It was not entirely clear whether the Southern states had ever legally left the United States," observed the financial historian Franklin Noll. "So, it could be argued that the Confederate debts were not those of an alien combatant, but merely of member states that had been temporarily taken over by rebellious individuals."1
There was precedent for federal assumption of state debts, of course, most notably in the wake of the Revolutionary War. And in any case, there was certainly "no insurmountable legal impediment to the United States assuming the debt of the Confederacy," Noll wrote.
Nor, for that matter, was there any constitutional obstacle to the repudiation of Union debt by a Southern-dominated congressional majority. Several states had repudiated their debts after the Panic of 1837, Noll pointed out. Might not the new federal government choose to follow suit?
In drafting section 4 of the 14th Amendment, Republicans sought to forestall any sort of Southern mischief around the subject of debt repayment and repudiation. They began with the insistence, quoted above, that federal debt must remain inviolate. But they explicitly repudiated Confederate debts, requiring that "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."
In other words, not only would the federal government be barred from helping to repay Southern debts, but the readmitted states would themselves be forbidden from repaying the debts run up by their Confederate regimes.
Both elements of section 4 survived the legislative process. In fact, some observers have argued that they helped grease the skids for other, less popular sections of the 14th Amendment, including its grant of full citizenship rights to former slaves.
But what does all this tell us about modern arguments over the debt ceiling? Is the 14th Amendment, conceived in the narrow specific context of Reconstruction, even relevant in 2013?
In a limited way, yes. Among other things, the amendment's history reminds us that arguments about the sanctity of federal debt have always been politicized. The near-sacred status granted to federal obligations by the amendment was a function of political worries about Southern power, not solicitude for the rights of lenders or the responsibility of borrowers.
After all, the amendment's default prohibition was paired with an explicit form of repudiation. That repudiation, moreover, was rooted not simply in the conviction that Southern debt was illegitimate and therefore nonbinding on the reconstituted federal and state governments. Repudiation was driven by a pragmatic unwillingness, at least among Northerners, to accept the fiscal burdens of repayment. Republicans were loath to saddle their constituents with higher taxes for the sake of Southern debt repayment.
Moreover, while many Northern politicians insisted that all rebel debts were illegitimate, the Supreme Court later took a more nuanced view. As legal historians have pointed out, debts incurred for explicit war purposes -- used to buy guns and bullets, for instance -- were indeed repudiated under the 14th Amendment. But debts used to support normal functions of government were still binding.2
The 14th Amendment's prohibition of default seems to bear on recent debt limit debates. But the amendment can't bring an end to our series of recurring crises. In particular, it does not explain how politicians are expected to avoid default.
Presumably, there are a variety of ways to keep from becoming a deadbeat, even in the face of large annual, monthly, and even daily deficits. To stay current on our obligations, policymakers might reasonably choose to borrow more money. But the amendment doesn't require that solution. Policymakers might choose instead to take other actions, like radically and immediately slashing federal spending (the GOP's preferred default avoidance technique) or prioritizing debt repayment over other forms of federal spending (the party's second favorite solution).
There are practical reasons, of course, why spending cuts and prioritization might be undesirable or even impossible. But those hurdles don't mean that the 14th Amendment gives the president license to borrow unilaterally. After all, it might just as well empower him to tax unilaterally. Indeed, given the miracle of modern withholding, he might even be able to lay his hands on new tax revenue fairly quickly.
Harvard law professor Laurence H. Tribe made that argument during the 2011 debt debate, when 14th Amendment solutions first made the rounds in legal and political circles. "The argument that the president may do whatever is necessary to avoid default has no logical stopping point," he wrote in a New York Times op-ed.3
In theory, Congress could pay debts not only by borrowing more money, but also by exercising its powers to impose taxes, to coin money or to sell federal property. If the president could usurp the congressional power to borrow, what would stop him from taking over all these other powers, as well?
You don't hear many calls for taxation by presidential decree. Possibly that's because authorized borrowing would be simpler. But I suspect that silence is indicative of something else: a tacit acknowledgment that the 14th Amendment doesn't grant that kind of taxing power to the president.
To my mind, it doesn't grant that sort of borrowing power, either.
1 Noll, "Repudiation! The Crisis of United States Civil War Debt, 1865-1870," Debt Crises: Politics, Economics and History Conference, Graduate Institute of International and Development Studies, Geneva, Dec. 14-15, 2012, pp. 10-11.
2 Sarah Ludington, Mitu Gulati, Alfred L. Brophy, "Applied Legal History: Demystifying the Doctrine of Odious Debts," Duke Public Law & Legal Theory Research Paper Series No. 236, March 2009, pp. 29-30.
3 The New York Times, July 7, 2011.
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