Democratic members have raised a novel argument under the Fourteenth Amendment that the refusal to raise the debt ceiling is unconstitutional. For full disclosure, I was asked about this argument weeks ago by members who believe that forcing the country to default would be not just catastrophic but unconstitutional. I will be discussing this topic today on CNN and tonight on Countdown.
The relevant language of the Fourteenth Amendment states:
The argument goes that Section 4 of the Fourteenth Amendment declares:
“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 argument goes that, by not lifting the debt limit, Congress is “questioning” “the validity of the public debt of the United States.” Under this logic, advocates are encouraging President Obama to simply pay the debts in accordance with the Constitution. That would be an extreme step that would add a constitutional crisis to an economic crisis.
The “authorized by law” clause could present an interesting debate since the debt ceiling is part of a federal statute — though conversely so is the obligation to pay things like social security.
The language is certainly written in absolute terms but it is not likely that a court would rule that it makes a failure to lift the debt ceiling unconstitutional. Congress can argue that it fully intends to pay its debts, but that there is a political dispute over how and when. They can argue that they were not challenging the “validity” of the debt but the priority in the payment. The United States will still be fully liable for the debt and the interest.
Of course, as with the Libyan War, the Administration could trigger the constitutional fight on the belief that no one will be able to get standing to challenge its payment of the debt.
Jonathan Turley
Well, kd, I guess if you cannot refute my logic, and you give up on nitpicking, your new tactic will be childish insult to redirect attention away from your failure to deliver.
@Roco: I suspect sour grapes; you insult people with high IQs because you know you aren’t among them, and so, to salve your ego, you have chosen instead to take tribal pride in your mediocrity.
Of course the dim-witted are too stupid to realize they are surrounded by the products of our pud pounding and owe their lives to us, that they are surrounded by tens of thousands of comforts and conveniences entirely due to the pud pounding of high IQ individuals that refused to give up on problems that others found intractable.
See, that is the difference between a high IQ individual and the likes of you. It takes years for us to run out of ideas, but it only takes you days, and if somebody hasn’t told you the answer by then, you throw up your hands and call it insoluble. Which it is, for you, because dim wits means you cannot come up with something original to save your life. I mean that literally and figuratively.
Was that an actually argument, Mesporon? Our boy’s all growed up. He’s strung premises together with conclusions. He’s made a real hash out of it unfortunately which I’m sure Roco will point out. And he almost did it like a big boy without any insults. Roco, I think calling him an empty headed, quote-spouting moron without an original thought finally did the trick. All that bluster about not caring was all a lie. He cares very much and now he’s trying to show off. Don’t go too hard on him, Roco, he’s got a delicate little ego in that mostly empty head of his.
Oops, make that “buy you” in the next to last sentence.
Roco:
“I believe regulation and taxation stifle growth, no way around it.
I guess what Tony C is trying to do is find some sort of middle road. Personally, from what I can see from experience, it does not exist.
People with high IQ’s spend a good deal of time pounding their intellectual pud in the Quixotic quest for market control. Which invariably leads to controlling individuals since an economy is nothing more than individuals.
For whatever reason people do not seem to understand economic control comes from political control and eventually there is no freedom.”
****************
It’s hard to list every fallacy besetting this little proffer, but let’s take just two. First, “regulation and taxation stifle growth , no way around it.”
Let’s look at the good old days of the 1950’s when regulation was at a low ebb and tax rates were low –not as low as today mind you — but low. It’s true we enjoyed the single highest year of growth in 1950 (17.2%) but also the lowest year of growth in 1958 (-10.4%). The US economy is the strongest in the world and has enjoyed average annual growth of 3.3%. During the 1990s, the national debt increased by 75%, GDP rose by 69%, and the stock market as measured by the S&P 500 grew more than threefold. This all in the bad old days of that regulating Bill Clinton. By 2000, however, it was evident a bubble in stock valuations had occurred, such that beginning in March 2000, the market would give back some 50% to 75% of the growth of the 1990s. The economy worsened in 2001 under deregulating Bush with output increasing only 0.3% and unemployment and business failures rising substantially, and triggering a recession that is often blamed on the September 11 attacks. An additional factor in the fall of the US markets and in investor confidence included numerous corporate scandals. Tax rates have receded since 2001 as has regulatory oversight. The economy has slowed and it has taken government spending to keep the economy going at any pace.
Second, “People with high IQ’s spend a good deal of time pounding their intellectual pud in the Quixotic quest for market control. Which invariably leads to controlling individuals since an economy is nothing more than individuals.”
This is pure conservative claptrap. Economies are not mere individuals as most educated folks know. They are structures composed of some individuals, a money supply, taxation rates, amalgams of capital in the form of funds, trusts, and corporations including banks, partnerships, and land holding interests all with both competing and complimentary interests as they go about the process of investing labor and capital to derive profits. There are many other components to be sure, but saying it is merely individuals at work is about as silly a sandbox analysis as you can get. That humans are composed mostly of water doesn’t mean they are equivalent entities. the fact is people with high IQs should be running the world’s biggest economy. In fact they should be running anything their intellectual merit justifies. Where have we gotten this idea that the average and downright stupid should run the show? Maybe from Glenn Beck, Sarah Palin, Michelle Bachmann and that whole cast of dumbed down Repubicons who think pandering is the same as leading. Anyone care to compare and contrast Everette Dirksen and this cast of buffoons looking to carry the Republicon banner? You can start with an IQ deficit of the current field of about 20 points and that’s comparing their aggregate to Dirksen.
Though I only promised two, let me say a word about this last line of Roco’s intentional talking point sophistry. It is not true that econmoic control comes from political control. As with most things about Roco, he’s got it exactly backwards. We should call him Ocor. Economic control leads to political control. This is a feature of our corporatist society that neo-cons know and play only too well. Give me several hundred million dollars and I can but you all the Boehners, McConnells, Cantors, and any other Republicon hack you can imagine.
Like I said Roco’s got the players right just in the wrong order.
High taxes do NOT impede heavy industry, they have no effect, because there is a TON (or several million tons) of expenses involved in starting a heavy industry and break even is way, way down the road. Years away.
Companies are taxed on INCOME, which is REVENUE minus EXPENSES, and big industry can be building a steel mill or factory for a YEAR before they have ANY revenue at all, and they can be writing off the expense of the factory with accelerated depreciation for years more. High taxes make no difference for the first three years at least, because the heavy industry is very capital intensive and is typically operating at a loss for that long. It takes time to get that machine going.
No, that is a pointless question, the corporate tax rate is actually just a contributing factor, as I said, because for YOUR philosophy the tax rate has to discourage PEOPLE from earning, and thus the NET tax rate is what counts. You claim a high NET tax rate on earned income discourages people from earning. The highest NET tax rate in the world is in Sweden. It works just fine as an example. If you don’t think Sweden is worse than the USA on taxes, then let us adopt their model: It would be an improvement! If you DO think Sweden is worse on taxes, then address the question: Why haven’t their earners given up? Why do they have more entrepreneurs than we do? Why are they happier than we are? As for growth, Roco, they beat us, didn’t they? Even with HIGHER taxes than us. If you want to emulate the country that did better, you would RAISE taxes.
kderosa:
I believe regulation and taxation stifle growth, no way around it.
I guess what Tony C is trying to do is find some sort of middle road. Personally, from what I can see from experience, it does not exist.
People with high IQ’s spend a good deal of time pounding their intellectual pud in the Quixotic quest for market control. Which invariably leads to controlling individuals since an economy is nothing more than individuals.
For whatever reason people do not seem to understand economic control comes from political control and eventually there is no freedom.
Roco: The thing about tiny Sweden that is different from the US is that it is Swedes and we are not. Swedes seem to tolerate that sort of nanny state stuff pretty well. Of course, according to TIMBRO, if Sweden were a state it would be the seventh poorest state, whereas Minnesota which has quite a few swedes is one of the richest states (See the fifth table in the Appendix )
Tony C:
from 2000 to 2006 Sweden had a growth rate of, on average, about 0.68% per quarter. Which is about 3% per year.
Kderosa:
doesnt that kind of support Tony C’s contention? 3% is pretty anemic and it would undoubtedly be higher if Sweden wasnt taxed at 57%/26%.
But people will still invest and business will still go on at a 3% annual growth rate.
Isnt a high tax rate one of the impediments to entry into an industry such as steel production or mining or heavy industry?
I haven’t even addressed your point yet because you got your example wrong. I don’t play those games. I’m just waiting for you to find a better example. Unless you want to stick with this one, weven though it contradicts your point?
Let me remind you what I asked before you got off point — “Where is this successful country with high corporate tax rates you favor?”
No, you brought it up because you think catching me in a mistake gives you points, even though you have lost the more important point, which is that your entire philosophy is bankrupt. But of course your information is wrong if you look at Sweden’s actual taxes; they have a 30% rate listed for private corporations, and the income tax is not the only tax corporations pay.
You have lost the war, you cannot refute my logic. You complain about people nitpicking over your typos, then nitpick yourself. What difference does it make WHAT the top corporate rate is, or if I misremembered a personal tax as a corporate tax? Isn’t the personal tax even MORE damning to your infantile argument? Your entire disproven philosophical argument was that HIGH TAXES, in general, would make people stop working toward efficiency and profit, that competition is NOT what drives efficiency and cost reductions, and on and on. You don’t know what you are talking about; at least my logic is right and the thrust of my argument is correct. THAT is why you nitpick, because it is all that is left to you.
tONY C:
I think you mean Norway, I dont think Sweden has any oil revenue.
@TonyC
Here’s why I brought it up:
TonyC – “Sweden, for one. They have a higher per-capita income, higher per-capita entrepreneurship, higher independently rated level of happiness and security, and their corporate tax rate is over 50%. ”
Because you did.
And why does that make a difference? Corporations aren’t living things, they aren’t incentivized or de-incentivized, the people that own them are. Will you now claim that corporations have emotions and people do not? It is typical of your backward thinking, at least.
The top individual tax rate in Sweden, for those that earn virtually all of their income over the marginal threshold, is essentially 57%. According to your incorrect theory of the world, PEOPLE should be discouraged by that tax rate to the point of giving up on earning, because the government takes 57 cents of every extra dollar they make. That does not happen in Sweden, even for the people there earning tens of millions of dollars every year: They keep striving to increase their income, and they succeed, and pay EVEN MORE tax dollars because of it.
Your theory is proven wrong by facts on the ground in Sweden. Technically it is proven wrong by facts on the ground in the USA, many millionaires in the USA go ahead and pay their income taxes, and do not stop trying to earn even more money next year. That is because they are SANE, and they realize that even if the government does get about a third of the earnings, the other two million out of every three is still TWO MILLION. You are nitpicking because you cannot refute the obvious; you have lost this argument, and the logic is unassailable. You cannot win it. Your claims are proven wrong, both by logic and by the reality of the 57% income tax rate in Sweden.
TonyC, Oh wait. You picked the wrong rates. I cited corporate rates, you are citing individual rates.
TonyC, 1980 are you kidding me? Sweden was floundering under those high rates of yours. Their economy was slowly killing itself under stagnation. That’s why they lowered rates and instituted other market reforms. Thanks again for giving me an example to prove my point.
See HERE, direct from the Swedish Tax Agency. On page 25: The highest marginal income tax rate for individuals in 2008 was 57%; in 1980 it was as high as 85%.
Also, income is taxed twice (as it is here) for corporate dividends, the effective rate for shareholders is 50%.
How this makes any difference to your argument is beyond me: Sweden is considered to have the highest taxes in the world; yet people have not stopped working there, and still pay those taxes. The richest earners in Sweden pay a marginal income tax rate of 57%, yet they stay in business and still keep earning. You can nitpick over meaningless numbers if you want, it proves nothing except that you cannot attack the main argument. In Sweden, like here, reinvested excess revenue is not taxed AT ALL, and even with a 57% taxation rate on earnings, people keep on earning and growing as much as they can. Your argument fails, in the country with the highest taxes on income on the planet. Corporation, private, I don’t care: 57% is 57% and people don’t quit earning. Your claims are proven wrong.
@TonyC, Sweden’s top corporate rate is 26.5% well below ours.Would you like to re-check the rest of your facts so I don’t have to.
P.S. So you are now on record as saying you do not think that competition for customers is what makes businesses strive for efficiency and cost reductions. That’s an interestingly idiotic position for a free marketer to make; it implies that a monopoly, with no competition, should be super-efficient and keep costs as low as possible. Most free marketers I know do not believe that in the least.
You ask, “Where is this successful country with high corporate tax rates you favor?”
Sweden, for one. They have a higher per-capita income, higher per-capita entrepreneurship, higher independently rated level of happiness and security, and their corporate tax rate is over 50%. Plus they have great nationalized health care. And no, they are not funded by their oil reserves, not a dime they get for the oil they sell is used to fund the government. That money goes into a sovereign wealth fund, whose capital cannot be touched for funding any government program; but the returns on the sovereign wealth fund can be so used; up to 4% of its total value each year, to fund what has not been funded by taxation.
You say, “No, profits do, and you are taking away those incentives through taxation.”
No I am not. Businesses are just like people; they work for a certain amount of take-home pay, or after-tax income. Only fools obsess on what their gross pay is, the sensible person looks at the benefit they have after expenses, which includes taxes. The restaurant also has to pay for food, which can be 1/3 of the cost of the meal, and labor, and electricity and insurance and pest control. It doesn’t resent those costs, and it doesn’t resent the sales tax, or income tax. The owner decides if it is worth it based on “excess revenue,” meaning what is left over after expenses, which INCLUDE the taxes. It is ridiculous to consider anything else. The taxes buy access (for customers to get to his restaurant) and a certain level of security (against thieves and crooked suppliers and extortionists and competitors that would be criminal if nothing constrained them).
They are a cost of doing business, just like the taxes out of my paycheck are a cost. I am not removing the incentives because I am not taxing their income 100%. If I do like Sweden and tax them 50% over a certain limit, then guess what? They will work for the other 50%, it has been proven by tens of thousands of businesses in Sweden (which, btw, also has millionaires and billionaires that willingly pay their taxes).