Skip to content
Search

Latest Stories

Top Stories

Default? Financial crisis? Political theater?

Default? Financial crisis? Political theater?
Getty Images

David Butler is a husband, father, grandfather, business executive, entrepreneur, and political animal. To learn more about his current entrepreneurial effort go to www.yourtrueview.com.

Once again, the U.S. government approached a legislatively mandated debt ceiling, as politicians and media members alike decried “default” and “financial crisis.”


The Republicans are holding government spending hostage, arguing we must reduce our deficits. The Democrats are claiming that government spending is too important to be subject to such draconian controls. Though the concept has been rejected by every prior administration since the debt ceiling was established in 1917, the current administration seriously considered the position that the 14th Amendment to the Constitution allows the president to ignore the legislatively created ceiling. Some even argue that the 14th Amendment makes any debt ceiling unconstitutional. It seems the administration only rejected that path due to concerns about a long, drawn-out court battle that would create financial instability.

The tentative agreement announced by Biden and McCarthy over the Memorial Day weekend suggests there will be no default. There will be no financial crisis. But there is plenty of political theater. And the 14th Amendment does not make the debt ceiling unconstitutional, but rather makes defaulting on our debt unconstitutional.

Sign up for The Fulcrum newsletter

So, what does that amendment really say? Adopted in 1868 as one of the post-Civil War Reconstruction Amendments, it is also one of the wordiest, addressing issues such as citizenship and civil rights, apportionment of representatives, and some other issues.

Section 4 briefly addresses the public debt as follows: “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.”

The second sentence looks back in history not forward and is not at issue here. It simply states that the federal government was not responsible for paying anything for the emancipation of slaves, whether by reason of Lincoln’s war-time emancipation proclamation or by adoption of the 13th Amendment, and that debt incurred by the Confederate states to fund their civil war efforts, much of which was borrowed from large British and French banks, would never be paid.

The first sentence looks not just back towards the debt incurred by the federal government prior to and during the Civil War, but also looks forward to any and all debt, including pensions (certainly including Social Security obligations and possibly Medicare payments as well). The key provisions of this are that the debt must be “authorized by law” and it “shall not be questioned.”

“Authorized by law” means that the amendment only applies to that debt that has been approved in a congressional bill and signed by the president. That is what “law” is. It does not say that the president can create additional debt by executive order, or by ignoring limits established by Congress. This language is arguably a nod to Article I, Section 8 of the Constitution, specifying that Congress shall have the power “To borrow money on the credit of the United States.” The president has no power to borrow without Congressional approval.

Congress could theoretically pass an omnibus type of bill that says that any debt created by Congressionally approved laws (that is laws that result in expenses that exceed revenues), shall be considered valid public debt of the United States. Problem solved. No more debt ceiling. But they have not done this since the debt ceiling legislation was first established in 1917 to make it easier to borrow money in support of our involvement in the First World War (prior to that Congress had to approve every time the government borrowed money).

“Shall not be questioned” means that the federal government is obligated to pay those debts that have been authorized by law. So how can we interpret that? Absent a complete breakdown of society and the federal government, the debt must be paid. The interest must be paid, pension-related obligations such as Social Security must be paid, and as treasury bonds, notes, and similar obligations mature, they must be repaid (whether from current revenues or by selling new security instruments). The government has no choice, and as the executive officer of the government, the president must ensure that the Treasury Department pays these obligations regardless of the circumstances.

In other words, the government cannot default on its debt absent a complete failure by the president to carry out his executive duties. So why all the cries about default and a financial crisis? Because most politicians are prone to political theater at the expense of doing their job in a rational way. No politician – Republican, Democrat, or other – should be fear-mongering about a financial crisis. And the executive branch, regardless of party, should be prepared to meet the government’s obligations under these circumstances. They should also be reassuring both citizens and the global financial community that the U.S. will always pay its debt obligations.

Some may claim that without raising the debt ceiling we will run out of money and be unable to pay our bills. But the amendment says the public debt must be paid, including debts incurred for payment of pensions (which clearly includes Social Security obligations and other federal government pension arrangements). It does not say that other government expenditures must be paid, even if those expenditures are driven by a legislatively approved program. And there is plenty of money to pay the public debt.

Making sense of federal government income and expenses can be a daunting task and different sources will provide different numbers. But here are some reasonable estimates. In 2023, the federal government is expected to have monthly revenues of approximately $400 billion. Interest payments on government debt securities will be at least $30 billion and perhaps as much as $40 billion per month.

According to the Social Security Administration, the government paid over $111 billion in benefits in December 2022. With benefit increases this year the average will likely be around $120 billion per month. There are also several billion dollars per month spent on government pensions, including veteran retirement programs. But this still leaves at least $230 billion per month. If we treat Medicare as part of the public debt (and estimate it at $70 billion per month), then we have $160 billion per month available for non-debt expenditures. The problem of course is that the government is on track to spend over $240 billion on all those other programs each month. This includes other healthcare costs (Medicaid, CHIPS, and Affordable Care Act subsidies), national defense, a broad range of social services, transportation, foreign aid, and other general government expenses. Absent an increase in the debt ceiling, it is the responsibility of the president and his administration to decide which programs to cut, suspend, or delay, and which positions to furlough, to ensure that our debts can be paid.

So yes, there would be pain. There would be complaints. There are also politicians that fear voter backlash. And for this reason, an agreement will be reached. But let’s demand more than fear-mongering and political theater. Let’s demand they do their job in a responsible manner. They should not threaten us and the international financial community with default. Instead, they should acknowledge that the U.S. will never default on its debt and that avoiding default while the issue is worked out may be painful to some. If they cannot do that, they do not deserve our vote.

Read More

The Psychology of Politics

An illustration of people and their unique minds.

Getty Images, Carol Yepes

The Psychology of Politics

Have you ever wondered why so many otherwise reasonable people are completely bananas about politics? We all know plenty of normal and decent folks who spout wacky political views. But it’s not just our neighbors who’ve gone mad. All over the country, Americans pick and choose the facts they want to believe, champion policies they don’t understand, hold contradictory views at the same time, admire immoral politicians, loathe decent ones, and so on.

What’s going on here? And why does it seem to be getting worse?

Keep ReadingShow less
Addressing Economic Inequity Among Domestic Violence Survivors

A person holding a stack of dollar bills that are flying away.

Getty Images, PM Images

Addressing Economic Inequity Among Domestic Violence Survivors

The 2024 film, “Anora,” about a young woman victimized by sex trafficking, recently won five Oscars at the Academy Awards. Perhaps, it is a signal of more awareness and less stigma surrounding the pervasiveness of domestic violence at all levels of society.

The ongoing lawsuits between actors Blake Lively and Justin Baldoni claiming sexual harassment and violence threat allegations around their film, “It Ends With Us,” about a relationship scarred with domestic violence, demonstrates the thin line between real life and on-screen adaptations.

Keep ReadingShow less
Congress Avoids a Shutdown But at What Cost?

Senate Minority Leader Chuck Schumer (D-NY) speaks to reporters at the U.S. Capitol on March 14, 2025 in Washington, DC.

Getty Images, Tasos Katopodis

Congress Avoids a Shutdown But at What Cost?

On March 14, the GOP-led Senate passed a stopgap spending bill to keep the federal government running until September 30. The bill’s passage was made possible by Senate Minority Leader Chuck Schumer’s last-minute reversal—shifting from opposing the measure and advocating for a shorter extension to allowing the bill to advance. His decision was purely tactical: he feared Democrats would be blamed for a shutdown.

Schumer’s move provided the necessary votes to overcome procedural hurdles, effectively thwarting a Democratic filibuster. While Republican support for Trump’s budget was unsurprising, the Democratic leadership’s decision to go along was a stunning concession. It handed the Trump administration a significant victory while further eroding Congress’s budgetary authority, shifting more spending power to the executive branch.

Keep ReadingShow less
Ben Folds Upcoming Tour: Offers His Fans a Time to Reflect

Ben Folds performs on stage with the West Australian Symphony Orchestra at Perth Concert Hall on January 28, 2021 in Perth, Australia.

Getty Images, Matt Jelonek

Ben Folds Upcoming Tour: Offers His Fans a Time to Reflect

In February, Ben Folds resigned as artistic adviser to the National Symphony Orchestra, shortly after President Donald Trump took charge of the John F. Kennedy Center for the Performing Arts. “Given developments at the Kennedy Center, effective today I am resigning as artistic advisor to the NSO,” Folds wrote on Instagram on February 12. “Not for me.”

While Folds is not overtly political, he has used his music as a platform to encourage dialogue and understanding within his audience. He has the opportunity to do so in his recently announced 2025 concert tour, which includes the “Paper Airplane Request Tour,” where members of the audience can request songs by sending paper airplanes to the stage.

Keep ReadingShow less