Bill Clinton offered his take Tuesday for how he would solve the debt ceiling: Oder the Treasury to keep issuing debt under the 14th Amendment, which states: "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." Some have interpreted this Civil War-era language to mean the debt ceiling is unconstitutional, and that it is within Treasury Secretary Timothy Geithner's power to continue issuing debt to cover the funds Congress has already appropriated.
President Obama has dismissed the idea so far. Clinton, however, thinks it is clearly within constitutional bounds and said he would evoke the 14th Amendment justification “without hesitation, and force the courts to stop me.” That pronouncement comes on the heels of a suggestion from Moody's -- who has threatened to downgrade the U.S.'s triple-A status if no deal is struck by August 2 -- that the government should eliminate the debt ceiling entirely. Annie Lowrey asked the living former Treasury secretaries what they thought, and a plurality believe the debt ceiling is an unneeded law. Dylan Matthews argues that utilizing the 14th Amendment is both sound policy and politics:
This is very, very good policy. Denmark is the only other country with a comparable setup, and other developed countries seem to get on fine without it … But it’d also be smart politics for Obama to insist on full elimination of the debt ceiling, rather than a temporary increase. The current setup means that every year he needs the House GOP to sign on to both a budget and/or continuing resolution AND an increase in the debt ceiling. That means two occasions every year where John Boehner has leverage to demand policy changes.
Eliminating the debt ceiling is certainly the best policy. It would keep the U.S.'s credit rating in good standing, without imposing the drastic cuts currently on the table. Sharp cuts in the government spending would be devastating as the unemployment crisis persists and the economy limps into recovery.
However, taking Clinton's advice would be politically disastrous for Obama at the moment. With the spotlight focused on the negotiations, Republicans would paint the president as the one who left the negotiation table when serious progress at reducing the deficit was at hand.
In the scenario where Obama gets tough and ignores the debt ceiling, it is unclear who, if anyone, would have grounds to challenge that decision in court. Instead, Republicans would surely begin impeachment proceedings in the House. That may further solidify Republicans' place as the extremes in the current political climate, but it would also provide them with a platform to tarnish Obama before the 2012 race.
Obama should certainly use the 14th Amendment if the current gridlock continues and no deal is in place by August 2. The risk of impeachment hearings is worth protecting the U.S.'s credit rating. But at this point, the ideal solution is for Obama to strike an accord with congressional Republicans (with the cuts scheduled down the road for once the economy has recovered), move past this immediate debate, then reject the debt ceiling during a calmer period before our nation's standing is once again put at risk.