The 14th Amendment Enters the Debt Limit Negotiations

When asked about invoking Section 4 of the 14th Amendment and effectively declaring the debt ceiling unconstitutional, Biden said “I’ve not gotten there yet.” The key word is “yet.” Sunday morning Yellen continued to insist it’s Congress’s problem, but wouldn’t rule out invoking Section 4, saying it’s “among the not good options.” This echoes the language of the best scholarship that characterizes it as “the least unconstitutional option.” Biden and McCarthy meet tomorrow, so brandishing this nuclear option is classic deterrence theory, meant to limit the GOP’s scope of action. Faced with the possibility that Biden will be a hero with bold constitutional action to save the economy, the GOP’s only option is to back down as gracefully as possible. At the same time, money markets are increasingly worried about a technical default.