Can the US legally repudiate debt?

[RioRico]

@Ravenman

Sure, if we are willing to ignore the plain language meaning of the Constitution and laws, many things are possible.

I mean, I can put together an argument that if I kill (insert name of some very odious person) I shouldn’t be subjected to murder charges because that person is so bad he shouldn’t be considered a human. And if some crack pot judge agrees that the person doesn’t qualify as a human, I’m home free. It’s not like the US hasn’t tinkered with the definition of human before.

But clearly, that would be a perversion of the plain meaning of the law, don’t you agree?

The tale is told of Judge Roy Bean, the Law west of the Pecos, facing a cowboy charged with shooting a vaquero. Judge Bean retired from his court (saloon) to chambers (his back office) with a fresh bottle to consider the case. He emerged hours later and proclaimed, “Boys, I done read every page of the Texas law books, and I can’t find anywhere that says it’s illegal to kill a Mexican. Case dismissed. Defendant buys a round for the house.”

It’s long been fairly legal in the US to assault and/or murder non-whites, to dehumanize them, to confiscate their property and valuables. Driving wages down and/or prices up has the same effect as confiscation, just taking longer. If the US effectively repudiates any debts, I doubt rich pale folks will be the ones who suffer.

[Corry_El]

@Ravenman

Can you name any legal scholars who agree with your assertion that the context of the 14th Amendment could allow the United States to pay back less than promised on legally issued bonds?

This direct question hasn’t been argued often. However in the 2011 debt ceiling debate, where the 14th amendment question was somewhat different (would the amendment obligate the executive branch to unilaterally borrow to meet govt bills if Congress refused to do so?) it was touched on obliquely.

Seth Barrett Tillman in “Amendment XIV and Federal Pension Obligations: A
Response to Professor Michael McConnell” basically gave the side of the argument you doubt exists.

Amendment XIV and Federal Pension Obligations: A Response to Professor...

“The purpose of Section 4 is no secret. The United States fought a horrific war to put
down a rebellion seeking to undue by bullets what had happened at the ballot box – the federal election of 1860, and also seeking to block the enforcement of federal law
within the complete territorial boundaries of the United States. One side, the national
authority, won that war; the other side, the slavocracy, lost. The winners were not about to subsidize the losers, nor should they have. The winners decided that those who loaned money to pay for insurrection would not get paid back. … The Congress that proposed Amendment XIV had some cause to be concerned about that issue. The
United States racked up a huge bill and borrowed (what then seemed to be) vast sums… The winners also feared that when members (eventually) returned to Congress from states that had been in rebellion, those members might support reneging on the debt.”

and

" But nothing in Section 4 overturned or limited Congress’ traditional monopoly in
regard to authorizing federal debt."

and

“nothing in Amendment XIV suggests – even remotely – that when the United States Treasury lacks sufficient funds, federal debt (with or without pension obligations) must be paid first or ahead of other government obligations”

back to my comments:
‘lack of money’ being a political construct, lack relative to taxes the Congress is willing to levy, and other ways it wants to spend the money it does raise.

It seems perhaps you want to debate the issue, rather than the meta-issue of whether there’s any difference of opinion on this, which I believe there is. Also, I think there might be a lack of generalization. One needs I believe to be sure to abstract the question from Trump verbal diarrhea comments on ‘making a deal with the debt’ (like many such comments of his, no sign markets take it at all seriously) or Obama’s standoff with Congress over the debt ceiling in 2011 which again was the related issue directly debated extensively recently.

Instead imagine a future US govt being charged very high interest rates because of prolonged fiscal profligacy. The body politic in general, as in lot of countries in the past, decides that’s ‘unfair’. There isn’t ‘enough money’ to pay those high interest charges (without big tax increases Congress refuses to pass, because voters refuse to accept them). Printing money to pay them would cause more negative side effects from accelerating inflation than it’s worth. So Congress adopts the principal that it can partially pay debt service even though it has not cut all other spending to zero first. I don’t see how anyone can predict with high certainty that would be found unconstitutional as ‘questioning the validity of the debt’ in the relevant context of the 14th amendment. But it would certainly be a default as far as rating agencies were concerned. I believe one would just have to wait and see what courts decided in such a situation, again not that it’s a likely ‘if’ necessarily.

[Ravenman]

@Corry_El

This direct question hasn’t been argued often.

I disagree. There’s ample examination of the issue. As far as I can tell, there’s a literal consensus that the 14th Amendment prohibits default, contrary to your wild bank shot scenario.

Seth Barrett Tillman in “Amendment XIV and Federal Pension Obligations: A
Response to Professor Michael McConnell” basically gave the side of the argument you doubt exists.

This paper literally does not touch on anything you have argued. The paper responds to a very specific question, of what happens when there are competing legal demands on a treasury that is empty. The scenario we are discussing is whether the USG can simply decide not to fulfill legal debts as a matter of preference.

back to my comments:
‘lack of money’ being a political construct, lack relative to taxes the Congress is willing to levy, and other ways it wants to spend the money it does raise.

I don’t think you understand the context of the discussion for which that paper was written… and I’m starting to question whether you understand fiscal matters at all.

Revenues go into the Treasury. If we are running a deficit, at some point revenues must increase, otherwise the Treasury will run out of money. Congress must act to prevent this from happening, either by raising taxes, authorizing more debt, or cutting expenditures. If Congress chooses to do nothing, the Treasury will be empty, and therefore there is a fiscal crisis in which there are many demands on the Treasury but no money to fulfill those legal requirements. That’s what the discussion you linked to is about, how to manage a multitude of legal demands when they can not all be rationalized.

This has nothing to do with the USG arbitrarily choosing to default on legally issued debt - which is breaking the law as a matter of choice.

I just don’t think you have established that default is an option that anyone but you considers to be a legal one.