The United States Debt Ceiling
Based on the United States Constitution Amendment 14 Section 4, the Debt Ceiling should be unconstitutional.
“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.”
Everything You Should Know About the Debt Ceiling
Prior to establishing the debt ceiling, Congress was required to approve each issuance of debt in a separate piece of legislation. The debt ceiling was first enacted in 1917 through the Second Liberty Bond Act and was set at $11.5 billion to simplify the process and enhance borrowing flexibility. In 1939, Congress created the first aggregate debt limit covering nearly all government debt and set it at $45 billion, about 10 percent above total debt at the time.
Authorization, Appropriation, Taxes
Budget Process: Authorization vs Appropriation
Legislative Process 101—Authorization vs. Appropriation
Federal Taxes and Tax Collection
Congress is responsible not only for raising the revenue to cover its spending, but to create the infra-structure to collect authorized taxes.
From 1998-2001, the Federal Government ran a cumulative surplus of ~$0.56B
Note that Social Security is a government annuity system that collects ~$1,000B per year which is only held as United States Treasury Bills or US Debt.
In a New York Times guest opinion essay, Stanford Law Prof and Senior Fellow at the Hoover Institution Michael W. McConnell argues against the interpretation of Section 4 of the 14th Amendment. Presumably the Supreme Court may have to decide
Clearly there are significant economic consequences at stake.
Steve Rattner: Unprecedented market fears of U.S. default starts at 1:31