There has been a lot of talk recently about the possibility of Obama using the 14th Amendment to somehow declare the debt ceiling unconstitutional.
I believe this is an incorrect reading of the 14th Amendment, the meaning of which I think is pretty obvious. However, this doesn't mean there may not be another Constitutional option to avoid a debt ceiling crisis.
The applicable part of the 14th Amendment (Section 4) says, in part, the following:
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.
This would suggest the following: The United States is constitutionally obligated to pay off it's debts.
Some have now tried to argue that this means that the debt ceiling is unconstitutional and that the United States has the obligation to pay for any money appropriated by Congress. I think this is an incorrect reading of the 14th Amendment.
To see why, one has to ask the question: what, exactly, makes up the "public debt of the United States." Public debt appears to have a pretty specific definition, that is to say debt that the government issues in order to pay it's bills. In the United States, debt is issued mostly via T-Bills, T-Notes, and T-Bonds. This would suggest that the "public debt" ONLY includes debt already incurred by the federal government, and the 14th Amendment simply says that the United States is constitutionally obligated to pay back those debts.
Proponents of the 14th Amendment Solution, however, have a much more expanded definition: they are essentially arguing that any money appropriated by Congress - even if it hasn't been spent yet - falls under the definition of "public debt." There are several problems with this assessment, however:
1) There is no guarantee the money will actually BE spent. An agency may find they don't need the money (or all the money) or Congress may later remove the funding before it is spent.
2) There is no guarantee that the funding will be financed using debt. Maybe Congress will raise taxes to cover the difference, or some other form of income will be raised to cover the costs.
3) The issue confuses legal debt - as issued by the Treasury department - with the promise to fund a program. It would be like saying that failing to pay your credit card interest and failing to give your brother some cash after promising to do so are the same thing. In the first instance, you have already have debt and failing to pay it off results in a default. In the second instance, you haven't actually incurred any debt, you just broke the promise to pay. There may be other unpleasant consequences, but there is no "default" per se. This isn't an insignificant difference.
In short, it would be akin to saying that your credit card gets charged merely by promising to pay for something, not with the actual payment, and then saying that we have a constitutional obligation to pay off the credit card, even though we haven't even actually spent the money in the first place yet. To me, this is just simply twisting oneself into a pretzel to try to get the 14th Amendment to say something it doesn't actually say.
The problem is made worse by the liberal use of the term "default." In the debt ceiling crisis, there are really two types of default: there is a default on the promises the US Congress made when it passed a budget (again, akin to not paying your brother money you promised) and then there is the technical default - the United States failing to pay interest on it's debt. The market may very well be worried about either of those defaults, but the plain meaning of the 14th Amendment would only seem to apply to the latter type of default.
There is also one more problem with this interpretation: Article I, Section 8, Clause 2 gives Congress the power to "borrow money on the credit of the United States." It would seem that an implicit part of the power to borrow money on the credit of the United States would also be the power to limit the credit limit of the United States itself. However, those arguing in favor of the 14th Amendment solution argue that the debt limit is unconstitutional. In other words, they are saying that Congress cannot set it's own credit limit. That argument appears to be absurd on it's face.
Having said all of this, does that mean there is no constitutional solution? There, in face, may be one, though creating a constitutional crisis should be the last resort anyone should take.
Take Article I, Section 8, Clause 2 again and put it together with Article I, Section 9, Clause 7 ("No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law"). And then consider the following: Does it make sense for Congress to be able to pass a budget with deficit spending on the one hand, but then refuse to actually authorize the borrowing needed to fund that same budget on the other hand?
It would seem that the power to appropriate in conjunction with the power to borrow would seem to create the situation where by the very act of passing an unbalanced budget, Congress implicitly authorizes the borrowing authority required to pay for that budget.
Indeed, up until the 1920s and 1930s, the Congress extended new borrowing authority as needed as part of each budget. The borrowing authority and the budget were ultimately separated in the 1930s in order to give the Treasury Department more flexibility, with the debt ceiling as we know it being created in 1939.
Normally, extending the debt ceiling has required a separate vote in Congress. However, again, it would appear to be inconsistent that Congress could authorize deficit spending in a budget, but then refuse to authorize the actual debt from being issued.
And this is where, I think, if any constitutional option can be taken, where it could be made: the determination that, by passing an unbalanced budget in the first place, Congress implicitly increased the debt ceiling to cover that budget.
There are still issues with this. The historical need to include additional borrowing authority as part of the budget, as well as the fact that the authority to authorize borrowing is it's own separate power in the Constitution would lead credence to an argument that the Congress indeed has the authority to appropriate funds but refuse to pay for them if they don't authorize the debt, but I find this constitutional argument much, much more sound than the 14th Amendment solution.
Slight Update:
Some people are trying to argue that the phrase "authorized by law" in the 14th Amendment supports their argument. I don't agree. The 14th Amendment specifically says the "public debt...authorized by law." This means it applies to the approved borrowing authority, not to approved appropriations (unless you use my constitutional interpretation above. But if you do that, the 14th Amendment is no longer needed as part of this debate)