The Wall Street Journal’s editorial board on Monday schooled President Biden on the Constitution in a scathing piece amid debt ceiling talks that declared “letting Treasury default would be a self-destructive act that would violate the 14th Amendment.”
“The debt talks are stalled and President Biden is again threatening to invoke the Constitution’s 14th Amendment to pay interest on America’s debt without Congress raising the debt ceiling. The truth is that the Treasury has more than ample revenue coming in each month to avoid defaulting on the debt, and Mr. Biden doesn’t need to distort the meaning of the 14th Amendment to do it,” the WSJ editorial board wrote.
The WSJ then noted recent remarks Biden made at the G-7 meeting in Japan, when the president declared, “I think we have the authority…. The question is: Could it be done and invoked in time that it could not—would not be appealed and, as a consequence, pass the date in question and still default on the debt. That’s a question that I think is unresolved.”
The editorial board blasted Biden as possibly being “confused” about the consequential amendment.
“He’s confusing the public, and he may be confused himself, about what the 14th Amendment really says and how it affects the debt ceiling. Section 4 of the Amendment says that the ‘validity of the public debt of the United States, authorized by law . . . shall not be questioned,’” the paper wrote.
“This means the Treasury cannot repudiate debt held by the public as issued in Treasury bonds and notes. In practical terms this means Treasury Secretary Janet Yellen must prioritize debt repayment once statutory federal outlays exceed federal revenue,” the editorial board continued. “In other words, she and Mr. Biden can’t willfully default even for a time without violating the 14th Amendment.”
The WSJ cited the Supreme Court held in Perry v. U.S. which found that the 14th Amendment covers all sovereign federal debt.
“Congress decided during the Great Depression to begin paying federal bonds in currency, including those that promised payment in gold. Bondholders sued to receive payment in currency equal to the gold value of the notes, and the Justices agreed, saying that Congress had violated the 14th Amendment’s Public Debt Clause,” the editorial board wrote.
“What the 14th Amendment doesn’t allow is the claim by many progressives that the President can issue new debt without the consent of Congress,” the paper continued. “Merely because Congress has approved new spending doesn’t mean the President can issue new debt on his own authority to finance it. He can’t issue new debt on his own to finance Medicare, for example.”
The WSJ believes that Article I of the Constitution makes it “clear” that power belongs to Congress and Biden cannot “issue new spending or forgive federal loans without Congress’s statutory approval.”
“That’s what the challenge at the Supreme Court to Mr. Biden’s unilateral forgiveness of federal student loans is all about,” the editorial board wrote, adding that “melodrama over U.S. default is overwrought.”
WHAT IS THE DEBT CEILING, AND WHAT DOES IT MEAN FOR YOU?
“That’s because even if federal spending begins to exceed federal tax revenue sometime in June, as Secretary Yellen says it will, Treasury can prioritize paying interest on Treasury bonds or retiring debt principal when it comes due,” the editorial board wrote. “Treasury has more than enough cash to do this.”
Citing Treasury’s monthly report on revenue and outlays, the WSJ reported that Federal tax receipts in March were $313 billion and interest payments were $67 billion, while April receipts were $639 billion and interest was $62 billion.
“It would be the height of fiscal irresponsibility if Treasury failed to use that cash to meet U.S. contractual debt obligations. Mr. Biden and Ms. Yellen would also be violating the law,” the WSJ wrote. “It’s true that prioritizing debt repayment could mean closing down parts of the U.S. government for a time, or delaying payments under federal programs. But there have been partial government shutdowns during previous budget disputes between Congress and the President, and the world hasn’t ended.”
The editorial board ended the cutting piece by declaring “there is no reason for the U.S. to default on its debt held by the public.”
“None,” the WSJ reiterated.
“Mr. Biden and Speaker Kevin McCarthy should still negotiate a deal to raise the debt ceiling and slow future spending growth. This would minimize potential financial market disruptions owing to political uncertainty,” the board wrote. “The credit-rating agencies might also overreact and needlessly downgrade U.S. debt. But letting Treasury default would be a self-destructive act that would violate the 14th Amendment.”
