Biden contemplates appealing to the Constitution to avoid a default

The president of USA, Joe Bidendescribed this Sunday as “unacceptable” the proposals of the Republicans to raise the debt limit of the country, and mentioned the possibility of appealing to the Constitution to avoid a default.

Negotiations to remove USA of this crisis when the date of June 1 approaches and the country could run out of resources to honor its commitments, are stuck between the government and the opposition leaders in Congress, who are demanding a sharp cut in spending from the Executive in exchange for increasing the called “ceiling” of the debt that allows issuing more credit.

“The time has come for the other (Republican) side to abandon their extreme positions, because much of what they have proposed is simply and simply unacceptable”Biden declared to the press during the G7 summit in Japan.

Immediately afterwards, he maintained: “I’m considering the 14th amendment.”

What is the 14th amendment?

The 14th Amendment, added in 1868 to the Constitution, stipulates that “the validity of the public debt of the United States, authorized by law, (…) should not be questioned.” In other words, the expenses already voted must be able to be paid.

According to some experts, this provision makes the debt limit unconstitutional.

If the Treasury borrows above the debt limit set by Congress, that would violate the law, said Neil Buchanan, a law professor at the University of Florida.

But failing to meet spending obligations set by Congress could be a worse violation, giving the Treasury justification to borrow more money and keep paying its bills.

Invoking the 14th Amendment could lead to litigation, but failing to do so also carries risks.

If the Treasury runs out of room to meet its obligations and ends up delaying certain payments, creditors have a “perfectly valid legal claim”, Buchanan said.

Social Security recipients who don’t receive their checks could join a class action lawsuit, he added.

On the other hand, if the Biden administration continues to borrow money, Republicans could sue it for defaulting on the debt ceiling.

That would put them “in a very uncomfortable position, because they would be suing to force the president to stop paying the national debt”explained Robert Hockett, a professor of law at Cornell University.

“We can reach an agreement” Biden reiterated during his flight back to Washington from Japan aboard Air Force One this Sunday. But “I cannot guarantee that they would not force a default”, added about his adversaries, to justify his consideration of the 14th amendment.

“I think we have the power” to use the resource, but “the question is whether it can be done and invoked on time”qualified the president.

political arm wrestling

Biden was scheduled to have a phone conversation on Sunday with the leader of the Republicans in the House of Representatives, Kevin McCarthy.

The Republicans claim to lower public spending and the fiscal deficit, and they want to reduce the issuance of debt that usually makes it possible to cover that gap.

McCarthy told Fox News on Sunday that his proposals are not “extreme” or “draconian”.

About Biden, he noted that “It seems that he wants a default more than he wants an agreement.”

The sticking point is the opposition’s demand to reduce federal spending to the 2022 level, which represents a cut of $130 billion.

“We cannot spend more money next year” prosecutor, McCarthy said last week.

Democrats oppose it, proposing instead to cut spending by raising taxes on the wealthiest and on businesses that now benefit from tax rebates. Republicans fervently object to any tax increase.

The president indicated on Sunday that it is precisely on the tax revenues that the “major disagreements”.

Biden and McCarthy held two meetings in recent days as a deadline looms that the Treasury Department says could put the United States between a rock and a hard place.

Treasury Secretary Janet Yellen reiterated this Sunday to NBC that June 1 is a key date. “My evaluation is that the possibility of reaching June 15, being able to pay all our bills, is quite low”indicated.

Democrats and Republicans raise their tone and do not agree on this increase in the United States’ debt issuance capacity, despite the fact that it is essential for the country to honor its payments to creditors, suppliers, pay salaries of public officials and pensions.

Raising the debt issuance limit is usually a routine procedure in the country, which has used this system dependent on Congress for decades. But this time, as has been the case more frequently, the issue is the subject of a political wrestling match.

USA In January, it exceeded the maximum limit for public debt issuance of 31.4 trillion dollars, and since then extraordinary measures have been applied that only allow it to comply with obligations for a while.

Source: AFP