Friday, July 8, 2011

Treasury WILL NOT use 14th Amendment option to prevent default

In previous posts, I've noted that some constitutional scholars and journalists have suggested that the Treasury could bypass the debt ceiling limit by applying section 4 of the 14th Amendment.  See Here. Treasury appears to have taken that option off the table.  Treasury's General Counsel George Madison wrote a letter to the editor of the New York Times saying Treasury considers the debt limit as a "binding legal constraint that can only be raised by Congress."  

Here is Madison's letter.

Treasury's General Counsel George Madison submitted to the New York Times today the following letter to the editor:
July 8, 2011
The New York Times
620 Eighth Avenue
New York, NY 10018
To the Editor:
Contrary to Professor Laurence Tribe’s assertion (Op-Ed, July 8), Secretary Geithner has never argued that the 14th Amendment to the U.S. Constitution allows the President to disregard the statutory debt limit. As Professor Tribe notes, the Constitution explicitly places the borrowing authority with Congress, not the President.
The Secretary has cited the 14th Amendment’s command that “[t]he validity of the public debt of the United States… shall not be questioned” in support of his strong conviction that Congress has an obligation to ensure we are able to honor the obligations of the United States. Like every previous Secretary of the Treasury who has confronted the question, Secretary Geithner has always viewed the debt limit as a binding legal constraint that can only be raised by Congress. 


George W. Madison
General Counsel


This means if Republicans and Democrats cannot reach agreement on the debt ceiling issue, then the U.S. government will DEFAULT on its obligations sometime around August 2nd with severe consequences for the nation.  See my previous post on this here.

RELATED:  Republicans apparently feel emboldened by the dismal job numbers for June out of the BLS.  See Here. 

CNN reports: Boehner led an avalanche of Republican responses, saying "today's report is more evidence that the misguided 'stimulus' spending binge, excessive regulations, and an overwhelming national debt continue to hold back private-sector job creation in our country."  

Republicans appear even less likely to agree to any tax increases or revenue enhancements which Democrats have said is a deal killer.  If true, that takes us back to where we were when the Biden negotiations collapsed.


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