Friday, July 08, 2011

Treasury Strikes Down 14th Amendment Option

Treasury Department General Counsel George Madison laughably tells the New York Times editors that Sec. Tim Geithner never said that Section 4 of the 14th amendment forbids the the executive branch from paying its debt.

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.

Except that is exactly what Geithner said in the video below. Geithner even bookmarked the 14th amendment with a paperclip.

GEITHNER: "So as a negotiating strategy you say: 'If you don't do things my way, I'm going to force the United States to default--not pay the legacy of bills accumulated by my predecessors in Congress.' It's not a credible negotiating strategy, and it's not going to happen."

Madison's letter to the New York Times editors.

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

The point is America has never had to deal with a Congress willing to default. There is no real legal guideline. Other than the government must pay its debts.

What is illogical of the Jim Demint position is it would actually give the executive branch greater power. The Treasury Department would decide which debts are paid or left unpaid. The government would go into greater debt by missing payments to financial institutions and lose its AAA credit rating. This isn't a conservative position DeMint is proposing. It is anarchy.

Ezra Klein pointed out that the federal government cuts millions of checks every month. Treasury would have to decide who gets paid. Treasury has never had to handle such a workload.

Politically, Geithner and the Obama administration is signaling that they won't play hardball with the Republicans. This should as a surprise to no one.

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