The 14th Option
Ever since invoking the 14th Amendment became part of the of the discourse several weeks ago, there have been hopes and fears that this would be the solution to the debt crisis. What I’ve never been sure of is who should hope and who should fear. I am sure that President Obama should invoke the 14th Amendment prior to the deadline on Tuesday. That would give Congress an excuse not to reach a deal and to blame the President for not doing so. But what about after Tuesday? Yale Law’s Jack Balkin says that the President has already made his decision:
Obama has already told bond holders that there will be no default on bonds. He plans to use existing revenues to pay off interest on the debt and other vested obligations. This is required by section 4 of the Fourteenth Amendment. Whatever he says in public, his lawyers have almost certainly told him something like that.
But that means less money for other government services, including social safety net programs like Medicare.
So we’ll see a partial government shutdown once the government runs out of other options.
So once again, the bondholders would get theirs while the poor and needy are left as the victims of a shutdown. The president’s actions would be the legally safest (I doubt the court would force a default) but the policy implications are ugly.Click here for reuse options!
Copyright 2011 Liberaland