Section 4 of the 14th Amendment to the U.S. Constitution, known as the public debt clause, has been in the news lately as a possible avenue of recourse for President Joe Biden should Congress fail to resolve the debt ceiling issue. U.S. Treasury Secretary Janet Yellen has predicted that the country will hit the debt ceiling limit by early June.
The Public Debt Clause
“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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.”
Section 4 was enacted after the Civil War as “insurance” that Southern states, as they rejoined the Union, would acknowledge and pay the Union debt incurred during the war. The first draft of the public debt clause did not contain a reference to the national debt, only to Civil War debt. It was amended shortly after introduction to include protecting the nation’s debt as a whole.
The 14th Amendment, in its entirety, was adopted by Congress and declared ratified by the states on July 21, 1868. No court has ruled specifically on a potential default on U.S. debt obligations, but in the 1935 case Perry v. United States, the U.S. Supreme Court held that the public debt clause applied prospectively.
The Perry case addressed the invalidation of contract clauses that could require payment in gold, known as gold clauses. It held that, although Section 4 “was undoubtedly inspired by the desire to put beyond question the obligations of the government issued during the Civil War, its language indicates a broader connotation. … ‘[T]he validity of the public debt” … [embraces] whatever concerns the integrity of the public obligations, and applies to government bonds issued after as well as before adoption of the [14th] Amendment.”
In the absence of dispositive court rulings on the subject, legal scholars and politicians are looking at a phrase in the public debt clause that says the “validity of the public debt of the United States, authorized by law … shall not be questioned.” They hope to determine what actions can be taken if Congress does not resolve the debt ceiling issue.
Some scholars say that Biden could argue that the government is required to pay its bills and that the language of the constitutional clause supersedes the statute limiting the size of the federal debt.
The question becomes, what conduct should trigger the public debt clause?
Some scholars believe that in the event of litigation, courts should interpret the Constitution using the theory of originalism, meaning they should attribute to the words of the public debt clause the meaning those words had at the time of enactment.
At the time the 14th Amendment was ratified, the originalists say, the words “to question” meant to doubt, to be uncertain of, to have no confidence in, or to mention as not to be trusted. The word “validity” meant force to convince or certainty.
Other scholars believe that looking to the historical context at the time of enactment is telling. According to Francis Newton Thorpe, a legal scholar who wrote about the debt clause in his 1901 work “The Constitutional History of the United States,” “repudiation, or diminution in value, or any distrust of its [the national debt] obligation, would affect most disastrously the lives and fortunes of the Northern people and would injure our national credit abroad.”
Congress still can address the debt ceiling in the coming weeks, and negotiations are ongoing. There is also no guarantee that the Supreme Court, or any court, would agree to take this issue on, as it may be seen as a political issue best left to the legislative branch. NCSL and its Big 7 state and local government national association partners have called for bipartisan solutions to the debt limit issue. In addition, NCSL has called on Congress and the administration to consider sustainable and long-term fiscal reforms that will stabilize the economy.
For more, read NCSL’s statement addressing the nation’s fiscal challenges and a statement from state and local government associations calling for a bipartisan solution to the debt limit issue.
Susan Frederick is the senior federal affairs counsel in NCSL’s State-Federal Relations Program.