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
“A social system is a code of laws which men observe in order to live together. Such a code must have a basic principle, a starting point, or it cannot be devised. The starting point is the question: Is the power of society limited or unlimited?
Individualism answers: The power of society is limited by the inalienable, individual rights of man. Society may make only such laws as do not violate these rights.
Collectivism answers: The power of society is unlimited. Society may make any laws it wishes, and force them upon anyone in any manner it wishes.”
Tony C:
We can argue about the death penalty but the idea of punishment in the law is to protect individuals from other individuals. The same can be said for declaring war [for its proper purpose], it is for the protection of individuals.
In a free society, dedicated to individual rights, the majority cannot take away the rights of the minority. Since work is part of life the majority is not entitled to take the life of other individuals. That is why we have the Constitution. You cannot vote to turn the Constitution into a road map for tyranny.
You are the simple minded savage with delusions of tyranny/statism. And you are too feeble minded to see it.
kderosa:
“Society is not an entity, it is just a conceptual abstraction.”
zactly right
Tony C.,
I must say good job as well. Although I’ll miss the caustic wit of Buddha in his absence, it is good to see that the battle against Libertarian economic ideologies (and I think their dangerous closeness to fascism as Buddha was so fond of pointing out) is in good hands. However, I must agree with Mike S., that although they are pearls you are casting them into a distinctly porcine environment.
Tony C.,
The arguments you’ve made and backed with facts are impressive and I’m finding them very informative. However, “it” can’t overturn them, so mis-characterizes and belittles them in a juvenile manner. “It” isn’t worth your efforts, but I do enjoy and agree with your information and the premises you’ve drawn from them.
As for the venture capitalist: Bullshit. Venture capitalists buy stock in a company, the typical exit strategy is to go public, but of course at that point he has not realized any profit. Even if the alternative exit strategy; being bought by a bigger fish, is realized; there are ways to prevent the realization of profit until the VC can do that on his own terms. Whenever he DOES realize his profit, he is not going to be taxed on it until the end of the year. So the obvious strategy for the VC is to do precisely what I suggested in the first place: Arrange the timing to sell the startup or go public so that his profits are realized in January, spend it on other startups (business expenses) throughout the year, and come December 31st, voila: No taxable income. At least, under what you are calling “MY” tax scheme, IMO business expenses should NOT be taxed. Startups burn money in expenses, so make it a Chapter S, pass the expenses through to the VC based on their percentage of ownership, and he need not pay any income taxes on it. If the startup is successful, they can convert to a Chapter C later, and the VC equity will translate just fine.
@KD: Of course I can give a right to the government I do not possess myself; I give them the right to put people to death after a trial that I do not personally have, and do not want any other individual to have. I give them the right to maintain an army, and to declare war on other countries, and to control the border, all of which are rights I do not have and do not want any other individuals to have. I give them the right to set rules for building safety, food safety, drug safety and road safety, and to engage in inspections and testing to ensure those standards are met, and I do not want any individual to be able to compel a company to disclose its records, materials, or the recipe for their best-selling commercial food item.
I am a private citizen, you are a private citizen, what we can compel each other to do is limited. Your analogy is so simplistic that it is stupid: I am not suggesting that a gang of people can rob you, I am suggesting that a sufficient majority can dictate rules, which we shall call laws, as long as the rules apply equally as much, or more so, to themselves as they do to you.
If everybody but the psychopathic killers votes to outlaw murder, they are outlawing it for themselves as much as they are outlawing it for the pyschopathic killers. If 75% of people vote to be taxed in order to fund universal health care, I have no problem compelling the 25% (you) to pay the same tax they voted for themselves.
I reject your notion that you owe nothing to the society you choose to live in, just as I reject the notion that you owe everything to the society you choose to live in. I think the answer is somewhere in the middle, and that is the position you cannot wrap your poor little head around. All you can deal with is extreme positions, that is why you constantly and stupidly deploy them. What I believe in, which is NOT the political system in the USA, and is NOT socialism, and is NOT communism, is super-majority direct Democracy, which can theoretically include safety net programs and governmental control of critical services and insurances.
@TonyC,
If by “Sweden works fine” you mean that Swedes make considerably less income as do U.S. citizens, especially Swedish-Americans, you’d be right. You appear to be arguing for “poor but happy,” the socialist dream/reality. Of course, more Swedes want to come to the US than the other way around. Part of this Swedish impoverishment is because no one has an incentive to work hard and earn, since it’ll mostly be taxed away anyway. Another disincentive in your plan. At one point Sweden was a capitalist country with a high entrepreneurship (ending by the 50s), then they instituted the welfare state and went into period of decline which they have just started to reverse, by lowering the corporate tax rates. The exact opposite of what you advocate as the road to prosperity.
You are assuming extreme investing conditions. If I invest in a company that is doing well, but then want to switch over to a company that is doing better, I cannot under your high tax system. I will effectively lose my capital. Thus, you system incentivizes me to misallocate resources and reduces efficiency.
Also, why would a venture capitalist ever want to invest his capital under your system? How will he get his capital out of the one risky winning venture. under your system he gets one winner before his capital gets taxed away.
Businesses started offering health insurance as a way to get around WWII era wage controls. Now it is ensconced in the tax code. If you want to get businesses out of the health insurance business, just change the tax code. same with the employer’s portion of medicare and SSI, get rid of it and put the burden back on the individual. That solves the problem that you raise.
Society is not an entity, it is just a conceptual abstraction. Society cannot take action or have objectives. Only individuals can act and do things.
I can dictate what I will pay for goods and services because no one is forcing me to buy goods and services. if I don’t like one landlord’s rules or prices I can move. Unlike with taxes which you are compelled to pay by threat of violence. So, in that sense taxes are confiscatory, whereas payments to landlords are not.
@TonyC, let me get to your second part first.
Let’s say you ask me to pay for your medical insurance, giving lots of good reasons why I should. And I refuse for whatever reason. Does that give you the “right” to forcefully extract my property from me to pay for your healthcare?
Assuming your answer is no, how does getting a bunch of like-minded people to forcibly extract my property from me through government any different? Can you properly delegate a right to government that you do not have yourself in the first place?
“The problem is all men are only created equal in terms of their individual rights, they do not have a right to a car or a house or universal health care.”
Says who? YOU? Who gave you the right to decide what MY rights are? Nobody. Who gave you the right to veto the rights of others? Nobody. What makes your interpretation of human rights any more valid than mine? Nothing.
When it comes down to physics your choices, like mine, are simple in this society. Comply with majority rule or try your luck elsewhere. Some level of majority, by virtue of force, decides upon the rights of everybody, and you are compelled by force to either accede to those rights, leave the society, or be incarcerated by the society for your refusal.
It is always the majority, not everybody even believes you have the right to life or property or freedom of speech or freedom to choose your religion (if any), those are also simply majority points of view. Even the Constitution is expressly just a majority view, every bit of it can be stricken or changed by sufficient majority (and less than 100%).
You don’t HAVE the power to decide what our rights are and what cannot be a right, if we decide that universal healthcare is a right, it becomes one, and if you don’t like that, tough shit. Feel free to move to Yemen or some other lawless, taxless wasteland.
(Except of course the police do not threaten you with violence, they threaten you with criminal fraud, trespassing, etc, and the violence will only occur if you continue to refuse the demands of society that you behave responsibly).
@KD: “I’m still waiting for you to cite an example of a country …”
Sweden works fine: It has been in existence longer than the USA, there is no evidence it is dissolving or will go bankrupt, it has happier people, better educated, and in better health. Second, despite the existence of Sweden, my arguments do not depend upon the existence of a real world example. Third, Sweden has a 57% personal income tax rate, so even if I am wrong about the corporate rate (and I do not think I am), it is obvious to anybody that the NET tax rate is the only one that could in any way discourage investors from continuing to invest; and in Sweden, the net rate is the larger of the two rates, which is at least 57% on large incomes.
You do not deny that logic (although it would be hilarious if you did), which means you are just deflecting because you cannot answer my arguments on higher taxes improving the economy, period. You are wrong, there is no fault with the example of Sweden. You are trying to change the subject because you cannot win the original debate. You are a liar that will say anything to avoid admitting you are wrong; this is not a principled stand on Sweden, it is what a coward or child does.
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As to what happens when you disinvest… Nothing. Sell your shares, let the company go bankrupt, what’s the difference? You don’t forfeit any capital. You pay taxes on your INCOME, but if the company was failing you quite probably have no income from your investment, so there is probably no tax on what you recovered. In fact there is a probably a loss, which I believe should count as a business expense, and is therefore 100% deductible from any profits you have taken. That is pretty much the scheme in place right now.
Why would I think that should be different? Half the businesses I have been involved in or funded have failed, and they should fail if they aren’t selling enough to sustain themselves. A business is a bet, it works or it doesn’t, or even if it works for a few years (as some of mine have) it can stop working.
As both an employer and an employee I feel the same about jobs: Employers do not become the legal guardians of their employees, and are not responsible for their financial future by virtue of hiring them. I think all work agreements are temporary and conditional upon the employer’s need for those services, even if that need is open-ended, as it is in a “permanent” full-time position.
In my personal opinion what employers owe employees is all legally required safety measures plus prudence beyond those; prompt payment, and a merit-based culture of work without favoritism or victimization.
That is the reason I believe in a financial safety net, it encourages capitalism and competition. This is ALSO proven in Sweden.
My business successes have more than paid for my business failures, and I believe that should be generalized to society as a whole: The business successes (those with income) should cover the fallout of the business failures.
Having a more robust financial safety net than we have would make people more willing to take risks, either as entrepreneurs themselves or with startups. It would increase innovation and competition, because if the small startups earning essentially NO profit were relieved of the financial responsibility of health care and social security and Medicare and unemployment, and (as in my personal finances) the big winners covered for the small losers, then the risks of starting up or working for a startup are reduced and their numbers would increase.
The big winners do not have to fork over ALL of their income, which is the rail you will undoubtedly jump on. As with Sweden, people are willing to risk big pay cuts, but they aren’t willing to risk starvation, no medical care and homelessness or bankruptcy. The USA has more people that want to be entrepreneurs per capita, but Sweden has more actual entrepreneurs per capita, and more successful entrepreneurs per capita. Why? Because giving it a shot in Sweden is not as risky as giving it a shot in America; so in America there are many more people that fail to pull the trigger on what would be a successful venture, just because they cannot risk everything. In Sweden, complete failure does NOT risk everything. The kids are still schooled, the health care is still in place, unemployment lasts long enough to find another job, and the government will assist you in that effort if you want.
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Taxes are not “confiscatory” any more than the rent on an apartment is “confiscatory.” You cannot just squat in an empy apartment and refuse to pay when the owner demands rent. You cannot live in a free society (which is your choice, in the USA, Europe, Canada, Sweden, and many other free countries) without helping to pay the costs of that society; those costs are largely determined by each society; and if you choose to live there, you pay the rent, in the form of taxes on your income. Just like the apartment, you don’t get to dictate the terms or the services the landlord will provide, and you don’t get to dictate how he spends your rent.
That is no more confiscatory than the apartment landlord bringing the police in to threaten you with violence if you do not pay up.
Otteray Scribe:
I thought that Social Security was a trust fund from which individuals draw upon retirement or disability. You mean it is also borrowed money? WTF?
But if it is borrowed money then Obama can still pay, he just has to cut other programs which are actually discretionary spending.
It seems to me the president has put himself in a rather tenuous position. Why are subsidies to GE and farmers more important than Social Security payments? Or why is funding Obamacare when most people already have health insurance more important than payments to recipients of Social Security?
Obama has put himself in check mate. It should be fun to watch. But never underestimate the rubber knees and spine of Boehner and the old flea bitten dogs currently occupying leadership positions in this congress.
They have a chance, right now, to destroy Obama politically. Lame duck him, cut him off at the knees. But they are pussies.
I am beginning to wonder if this has not been a strange sort of Kabuki all along. Just a little while ago, Obama came out with bare knuckles.
http://www.cbsnews.com/8301-503544_162-20078789-503544.html
Details from McConnell’s office:
It’s pretty clear what has happened, McConnell’s plan is designed to force President Obama to assume nearly all of the responsibility for raising the debt ceiling. No more lack of written plan by the Obama Administration.
Mike/OS,
I think the question is whether this is an indication of DNC backbone or the GOP’s survival instinct kicking in? Given how voting tends to skew older in this country and how many in the GOP’s demographic are older people who may be reliant on Medicare/Medicaid, I’m just as likely to attribute this change to GOP fear as I am to DNC backbone.
OS,
This is an interesting development. I wonder though is Boehner can get some of his crazies to go along and if the teabaggers will allow their congressman to get away with this. Perhaps we are seeing some Democratic backbone, but I’ll fully believe it when I see the details.
At the top of the page: “Democratic members have raised a novel argument under the Fourteenth Amendment that the refusal to raise the debt ceiling is unconstitutional.”
Mike Spindell:
I am more than willing to give you a social safety net if you give me an environment of low taxes and limited regulations. No one on the right or the left would go for that because it would impact their power base and their level of control.
If you let the wealth creation of capitalism work, you can have your safety net. The problem is leftist elites do not want a free society. They use that Marxist/Socialist egalitarian/equalitarian bullshit for power. And people like Geoff Imhelt on the right use government to increase their profits.
The problem is all men are only created equal in terms of their individual rights, they do not have a right to a car or a house or universal health care.
What was the original topic of this thread?
OK, people. You can stop arguing the constitutionality of the issue that is the subject of the topic at the top of this thread. It is over and the issue is moot. Box Turtle McConnell was the first to blink. Headline should read: “McConnell Caves”
Below are links to two different takes on the same story. Not surprisingly, the bloggers at RedState.com are having apoplexy.
http://www.dailykos.com/story/2011/07/12/993947/-McConnell-waves-white-flag-on-debt%C2%A0ceiling?via=blog_1
http://tpmdc.talkingpointsmemo.com/2011/07/the-big-blink-mcconnell-proposes-giving-obama-authority-to-raise-debt-limit-alone.php?ref=fpa