The Best Of Biden’s Options On The Debt Ceiling
Republicans are once again holding the world economy hostage in brinksmanship-style cruelty. Here are President Biden’s option, and an argument for invoking the Fourteenth Amendment to thwart them.
Hello, friends,
Last week, we discussed the ongoing Writers’ Strike and how it was a good strike. We’ll have an update on that after the main article as part of “In Other News.”
In this week’s The Progressive Cafe, we’re going to talk about an issue that’s a little more pressing: The Debt Ceiling crisis of May 2023. We’ll start with what’s going on, we’ll review President Biden’s options, and I’ll make the argument that invoking the Fourteenth Amendment to the U.S. Constitution is the best of them.
Just a note, we touched on important principles like interest payments in our article on debt discharging.
What Is The Debt Ceiling, And How Would The U.S. Default?
The Debt Ceiling is essentially a self-imposed limit on how much money the United States is willing to borrow in order to pay for its financial commitments. This is often deliberately-misleadingly called “America’s credit card limit,” but a credit or other kind of debt limit is a limit enforced by a lender to a borrower. As a random citizen, I can only borrow (making up numbers here) $1,000 on this lender’s credit card because that’s all they are willing to lend me due to my credit history or whatever factors they choose to use.
The Debt Ceiling is not imposed by a lender, but rather by the U.S. Congress, utterly destroying the credit limit narrative. The Debt Ceiling is simply the U.S. Congress saying, “under no circumstances will we borrow more dollars than this overall number, regardless of who is willing and ready to lend it to us.”
But let’s say that the U.S. hits this limit (currently about $31.4 trillion). Let’s say an interest payment on our already-agreed-upon debt comes due that the treasury does not have any cash with which to pay it off. The treasury has already been doing “extraordinary measures” to pay bills. If nothing is done at that very moment a new debt payment comes in, and the U.S. misses the bill, well, it has entered a state known as “default.”
The consequences of a default, even a brief and minor one, are cataclysmic. The U.S. stock market (and therefore the global stock market) would collapse. Right there, the global economy takes a huge hit. Social security checks would likely not be sent out, leaving millions to starve to death. Medicare and Medicaid have no money to pay doctors, and our healthcare system collapses. Foreign aid doesn’t get sent out, meaning other countries destabilize further, creating more conflict, refugee crises, etc etc. Federal workers don’t get paid, meaning they probably don’t show up to work, meaning jobs don’t get done. “Best” of all, the military might not even get paid - and I’ll leave you to research how History instructs us on what happens when the army isn’t paid.
In short, a default is a really really bad thing.
In order to prevent it, President Joe Biden has a number of options. None of them are particularly great. There is no “click this link and you’re a winner!” (and there never was). There’s just least-bad options and the ability to push through them towards something better.
What Are President Biden’s Options On The Debt Ceiling?
To get one thing out of the way: There is the extremely unlikely possibility that Republicans back down and decide of their own volition to raise the debt ceiling. This is unlikely because all it takes under Republican Speaker of the House Kevin McCarthy’s rules is for one lone Republican to demand a call to vacate his position, and he’s in danger of no longer being Speaker. Even if McCarthy wanted to back down, he might not be allowed to by his subordinates. But given that their current plan is to tie the debt ceiling to a budget reduction of approximately 22%? Given that Republicans are having a hard time just staying in the room to negotiate?
I won’t consider anything strictly “impossible,” because for all we know there are “reasonable Republicans” (I know, roll with me on this for a sec) who choose to put Hakeem Jeffries in charge to pass a debt ceiling reform, but I will consider it extremely unlikely until it’s proven otherwise.
At any rate, my focus isn’t so much on things that Republicans might do (I.E. surrender to economic sense), but rather on the levers of power Joe Biden currently possesses. There are, to that end, four things Biden could choose to do. Let me sum them up.
1: He could choose to negotiate with Republicans
2: He could instruct the treasury to mint and deposit the legendary one-trillion-dollar coin into the U.S. treasury’s accounts.
3: He could invoke the Fourth Section of the Fourteenth Amendment.
4: He could do nothing and accept a default.
We’ve already explained why Option 4 is simply unacceptable. We cannot sleepwalk into an economic apocalypse.
Option 1 sounds like the “yay bipartisanship!” move, in that it hurts a lot of people for no clear gain. In this scenario, Biden accepts some Republican demands. Maybe that 22% cut gets reduced to just a 5%-7% cut in all discretionary spending. That’s still 5%-7% less money going to families on SNAP, less money spent on infrastructure, etc etc. There might also be more esoteric demands, like cutting back on certain projects or forcing others to go forward, that might be against the interest of the country but in the interest of Republicans and their paymasters. Maybe one such thing would be to cancel the hiring of IRS agents to improve tax accountability? Who could say?
Option 2 sounds crazy. “Oh, great, we’re just going to print money like inflation isn’t high enough already!” And, yeah, sure, there’s some logic to that. If Biden wanted, he could instruct the U.S. mint to produce a coin worth $1 Trillion dollars. This would be available to spend on future debts. It would also probably heavily spike inflation at a time when that seems dangerous, but at least it would stabilize the global economy for a while. It might also be challenged in court, as it’s unsure if the government has any right to do this.
How The Fourteenth Amendment Can Fix The Debt Ceiling Crisis
But Option 3 sounds like the least crazy of them all. The Fourth Section of the Fourteenth Amendment reads as follows:
“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.”
The key points I’d put into place is the phrase, “The validity of the public debt…Shall not be questioned.”
Now, I’m not a lawyer, but I am capable of reading basic text. Right now, it’s being questioned in a political sense. Once extraordinary measures are exhausted, which could be as early as June 1st, 2023 - and, for reference, it’s 5/19/2023 as I write (but likely not finish) this - the U.S. Debt becomes truly questioned. Point of fact, it becomes a very binary question: “Will we pay our debt, or will we not?” And if we do not, global economic collapse happens.
Well, according to the Fourteenth Amendment, letting that question be asked for real, and letting that answer be “no, we won’t pay,” is unconstitutional.
To his wild detriment, it’s reported by Politico that Biden’s camp has made clear that he will not do it. Maybe they’re concerned that there would be an almost-inevitable Supreme Court fight that they might lose. And they might lose it! There’s no guarantees here. Biden could theoretically invoke it, get slammed in court, and we’d end up in a default anyway.
But the fight is worth putting up.
Our best-case scenario here is that the Debt Ceiling as a concept of law gets struck down by the Supreme Court as unconstitutional. Now, we’re not looking at some negotiation now kicking the can down the road to a future negotiation, and so on and so forth. We’re looking at breaking a negative cycle that only leads to economic destruction.
That’s worth it.
In Other News
Following up on last week’s article about the Writers’ Guild strike, the Screen Actors Guild board has already recommended to its members to authorize a strike if negotiations don’t go their way. The actors have a lot of the same pressures, such as streaming revenues and being duplicated by AI. Right now, it’s possible for shows where the writing is mostly done to stay in development. Take away actors and you take that away entirely.
The Walt Disney Company canceled a nearly one-billion-dollar development project in Florida. We’ve definitely talked about Florida in the past, and I guess a combination of their legislature & governor targeting Queer people (including via a bill allowing the state to kidnap Trans children, if I’m reading this right?) and their restrictions on full bodily autonomy for half the Human species adds up to economic consequences, eh?
Some Democrats have been making efforts to set forth a vision for what they’ll do if they win in 2024. Senator Kirsten Gillibrand (D-NY) and Representative Rosa DeLauro (D-Conn) introduced a bill that would provide for improvements in family leave. Senator Bernie Sanders, alongside many others in the Senate, introduced a version of Medicare For All (which, incidentally, we’ve cheered on here, before). These steps are important because even if they are destined to fail in the Republican-controlled House, it gets Democrats’ names on legislation and sets forth the promise that if they win, they’ll do it.
Thank you for reading The Progressive Cafe. If this article has helped you, please consider signing up for our mailing list. This article is by Jesse Pohlman, a sci-fi/fantasy author from Long Island, New York, whose website you can check out here.