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Why Is Everyone Talking About the 14th Amendment?

Until about two weeks ago, the 14th Amendment to the Constitution had never come up in conversation during my closer-to-four-than-three decades of work on the federal budget and Congressional budget process.

I’m not exaggerating for effect when I say never: It absolutely wasn’t mentioned. In fact, none of the federal budget experts whom I rely on for information, analysis and support — including many of the biggest and most esteemed names in the business — was even aware that the 14th Amendment was applicable in any way to what we do.

That all changed last week when the amendment suddenly became the hot topic among federal budgeteers. Speculation about what it meant and how it could be used by the White House rapidly changed what could happen in the impasse over increasing the federal debt ceiling, which the Treasury Department says will be needed by Aug. 2.

The 14th Amendment is one of three ratified after the Civil War to guarantee individual rights by prohibiting slavery (13th), defining citizens to include all those born in the United States (14th) and guaranteeing all citizens the right to vote regardless of race (15th).

But it was the heretofore largely unknown Section 4 of the 14th Amendment that set federal budget hearts fluttering and minds racing last week. Section 4 states, “The validity of the public debt of the United States, authorized by law … shall not be questioned.” In most situations that would seem self-evident, which is why federal budgeteers were largely, if not totally, unaware of the provision.

But as concern mounted last week about lawmakers’ willingness to act before the government’s cash situation becomes critical, more attention was paid to Section 4 and the notion that it might make a statutory increase in the debt ceiling unnecessary and irrelevant. A number of Democratic leaders reportedly said the amendment supersedes any legislative limits and allows (or even requires) the Treasury to borrow so that, in the words of Section 4, existing bondholders would not question the validity of the U.S. debt.

If this interpretation of the 14th Amendment is correct, the political implications are obvious and far-reaching: The White House will have a self-executing way around the debt ceiling impasse.

I’ll leave it to those with a legal background to interpret the very limited case law on the topic. I’ll also let the lawyers hash out whether lawmakers have standing to ask the courts to intervene if the president uses the 14th Amendment to borrow in the absence of a legislative increase to the debt ceiling.

Those two questions may be beside the point in any case. The debt ceiling impasse is as much a political problem as a legal issue, and the White House’s use of the 14th Amendment to justify borrowing would likely result in a political, rather than a legal, response.

At the very least, there would be fire-and-brimstone speeches from House and Senate Republicans and GOP presidential candidates denouncing the president and Treasury secretary for borrowing without Congressional approval. Efforts to block President Barack Obama’s agenda, including all nominations, would be likely, and fiscal 2012 appropriations, which absolutely require Congressional approval, would be jeopardized.

But the most extreme response might also be the most likely in the current political environment: a threatened or actual impeachment in the House of the president, Treasury secretary or both. This is not idle speculation. A number of people I communicated with this past week thought that the president invoking the 14th Amendment to justify federal borrowing would lead to impeachment proceedings in the House, even if there is little chance that the Senate would ever vote to convict.

There are two ironies in the 14th Amendment scenario.

It would be the second time in the past 16 years that Congressional Republicans’ misunderstanding of the debt ceiling would thwart their attempt to use it to force a president’s hand. In 1995 and 1996, the Newt Gingrich-led GOP devised a strategy to force President Bill Clinton to agree to big budget changes. Republicans had relied on the long-held and almost mystical belief that an increase had to be enacted by the time the debt ceiling was reached, but that ended up not working when Treasury Secretary Robert Rubin showed that the assumption was wrong.

Having learned from that situation, Congressional Republicans now assume that the truly important deadline is when the cash actually runs out. Based on the 14th Amendment, that, too, could prove to be completely wrong.

Second, Republican “birthers” have been relying on the 14th Amendment to argue that Obama is not eligible to be president. The irony of the White House using that same amendment to frustrate Congressional Republicans would be unmistakable.

Stan Collender is a partner at Qorvis Communications and founder of the blog Capital Gains and Games (capitalgainsandgames.com). He is also the author of “The Guide to the Federal Budget.”

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