That slippery debt limit

More uncertainty today about the deadline for resolving the debt ceiling fight, as Bruce Bartlett argues that, if necessary, Barack Obama should direct the Treasury to ignore the statutory debt ceiling because it conflicts with the Constitution: namely, the 14th Amendment, which Bartlett quotes: “The validity of the public debt of the United States ... shall not be questioned.” I agree with Brad DeLong:

Bruce is right. At least, he is right in the sense that lawyers could argue and five Supreme Court justices could with a straight face affirm that the Treasury Secretary’s duty to ensure that the validity of the public debt not be questioned overwhelms his duty not to sell bonds in excess of the debt ceiling.

Whether five justices would so rule — that is pure politics.

But remember that if and when the Supremes decided the question, presumably the consequences of ruling against the president would be an immediate government default. Are five Justices really that brave?

On the other hand ... what really matters here, I think everyone agrees, is the long-term damage to the American economy if people no longer believe that the U.S. government can be trusted. Because a large part of that is about beliefs, it’s more than a little hard to guess how things will play out, although presumably a Supreme Court decision that completely eliminated any debt limit would permanently end at least one danger to the credibility of U.S. debt. 

Of course, the more obvious solution is for everyone to just cut it out and pass the ceiling. Alas, that’s not especially likely to happen any time soon.

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