Jack Balkin, a law professor at Yale, has done a great service by looking at the legislative history of Section four of the 14th Amendment, which I’ve been calling the Constitutional option for the debt limit. For those late to this game, Section four of the 14th Amendment reads:
Section 4. 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.
Legal scholars, Senate Democrats and even Treasury Secretary Timothy Geithner have looked to this section to see whether it makes the concept of the debt limit unconstitutional.
But why was this in the 14th Amendment in the first place, which was adopted in 1868 after the Civil War, and which is usually brought up in a political context to discuss equal protection under the law? Balkin explains that it initially had to do with Confederate debt, and during the legislative debate was expanded to include all public debt:
The original purpose of Section Four, which is reflected in its text, was to prevent political disruption and party wrangling over the public debt following the Civil War. However, the language of the Amendment went beyond this particular historical concern. It was stated in broad terms in order to prevent future majorities in Congress from repudiating the federal debt to gain political advantage, to seek political revenge, or to try to disavow previous financial obligations because of changed policy priorities.
In a famous speech introducing the Fourteenth Amendment before the Senate, Senator Jacob Howard, the floor manager of the amendment, argued that the Union had no obligation to pay the Confederate debt, which had been contracted to support a “wicked war” to destroy the Union. Equally important, if the issue of whether to pay the Confederate debt was left to ordinary politics, it would become a perpetual “subject of political squabbling and party wrangling. . . . It is necessary to act, to extinguish this debt, to put it beyond the pale of party controversy, to put it out of sight, and to bury it so deep that it can never again be raised to life in such manner as to become a theme of party discussion.” […]
Senator Benjamin Wade of Ohio was a leader of the Radical Republicans and the President pro tempore of the Senate. He agreed with Howard’s reasons for why the Confederate debt should be repudiated, but he argued that if the concern was to avoid future disruption of American politics, the current proposal did not go far enough. It was also necessary to guarantee the Union debt, because former rebels or rebel sympathizers who returned to Congress after the war might, out of selfish or malicious motives, seek to prevent Union soliders and their widows from being compensated. Moreover, there was no guarantee of what a later Congress, motivated by different priorities, might do. Shifting majorities in a future Congress might be willing to sacrifice the public debt or the interests of pensioners in the name of political expediency. Thus, it was as important to guarantee the Union debt as it was to repudiate the Confederate debt.
In other words, Sen. Wade felt the need to expand the amendment to cover all debts incurred by the Confederacy or the Union, which amounts to all federal debt. There was some debate at the time over whether this was a change to the Constitution “for the benefit of the bond-holders.” But the sections on Confederate and Union debt were combined into what we have today. And in the ensuing years, this provision was used, most notably in Perry v. US (1935), to argue forcefully that the government’s obligation to pay cannot be repudiated.
The Constitution gives to the Congress the power to borrow money on the credit of the United States, an unqualified power, a power vital to the government, upon which in an extremity its very life may depend. The binding quality of the promise of the United States is of the essence of the credit which is so pledged. Having this power to authorize the issue of definite obligations for the payment of money borrowed, the Congress has not been vested with authority to alter or destroy those obligations.
This is precisely what we’re talking about today. And we can learn from the legislative history that the purpose of adding this to the 14th Amendment was to remove threats of default on federal debts from partisan struggle, in Balkin’s words.
Reconstruction Republicans feared that Democrats, once admitted to Congress would use their majorities to default on obligations they did disliked politically. More generally, as Wade explained, “every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.”
Like most inquiries into original understanding, this one does not resolve many of the most interesting questions. What it does suggest is an important structural principle. The threat of defaulting on government obligations is a powerful weapon, especially in a complex, interconnected world economy. Devoted partisans can use it to disrupt government, to roil ordinary politics, to undermine policies they do not like, even to seek political revenge. Section Four was placed in the Constitution to remove this weapon from ordinary politics.
Balkin’s right, original intent doesn’t always carry the day. But in fact, devoted partisans ARE using the debt limit construction to disrupt government and gain political advantage. They’re doing it right before our eyes. In 1868, members of Congress created a mechanism to defuse that bomb. All the President has to do is use it.