14th Amendment Option May Be Legit, Says Leading Senate Republican

WASHINGTON -- Sen. Chuck Grassley (R-Iowa) said on Thursday that the Constitution may trump the debt ceiling, allowing the administration a way out of the default impasse.

Negotiators are considering gutting the social safety net in exchange for a vote to lift the debt ceiling. Grassley, in a conference call with local reporters, said that there may be another way out.

"There's one thing that hasn't been talked about yet, and I haven't checked on the constitutionality of it -- and I read the Constitution, but I don't remember reading this -- but in the 14th amendment, there's something that says something about the debt of the United States government shall be honored," Grassley said, according to a recording of the call. "The 14th Amendment includes a public debt clause that insists the obligations of the government 'shall not be questioned.'"

"So people are looking at the fact that maybe the debt ceiling bill that Congress presumably has to pass for the government to borrow more maybe is contrary to that constitutional provision, and that the administration may take out [loans] on their own -- just to borrow money -- and say that they can ignore the law," he said.

Grassley said that he was personally supportive of the debt ceiling, because it focuses attention on spending, but that if its existence was unconstitutional, there was nothing he or his colleagues could do. "I think it's a discipline that Congress uses effectively from time to time, maybe not to cut down on the amount of spending but to have a refresher course," he said. "It's a good discipline, so it bothers me if the Constitution provision would trump it, but that would be up to the courts to say. But who's going to argue against the Constitution? It's the basis of our government; it's the law of our land, and everybody has to abide by it."

"The Constitution trumps the law, obviously," he said.

Some House Republicans, meanwhile, are threatening to impeach the president if he goes the 14th Amendment route.

Tea Party Sen. Mike Lee (R-Utah) argued Thursday that the 14th Amendment does forbid default, but merely requires the Treasury Secretary to pay debt service obligations, not all debts.

"Treasury Secretary Timothy Geithner is mistaken," Lee said. "Instead of saying what Mr. Geithner has insisted that it says, what it actually says is that the secretary of the Treasury lacks the authority -- the executive branch lacks the authority -- to disregard outstanding financial obligations, such that a default would be unconstitutional ... That would mean that under Section 4 of the 14th Amendment, the Treasury Secretary has to make sure that the debts are paid first. He lacks the discretion, under Section 4, to withhold those funds and send them elsewhere because he has to honor the debt obligations of the United States."

The Treasury Department has repeatedly said such a solution is unworkable and that there won't be enough money coming in to cover the debts. And picking and choosing which debts to pay would be similar to implementing a line-item veto, which has itself been ruled unconstitutional.

Earlier Thursday, Bruce Bartlett, a former adviser to Presidents Ronald Reagan and George H.W. Bush, was an invited guest at a Democratic hearing called to discuss the debt ceiling. Bartlett has been an outspoken proponent of invoking the Constitution to end the impasse.

In a testy exchange with Rep. Barney Frank (D-Mass.), Bartlett and the former Financial Services Committee chairman tangled over whether President Obama could choose to simply ignore the debt ceiling.

Frank said that he could not, arguing, "I think that for the president to announce that the government has to ignore the debt limit would be a terrible mistake and it would cause a great crisis in our democracy."

Moreover, he said, were Obama to invoke the 14th Amendment, the Tea Party Republicans who are refusing to vote to raise the debt limit would not face any consequences for their obstruction. Those lawmakers, Frank said, are behaving with "total irresponsibility."

Barlett, in response, said that no course of action post-default would be a good, legally sound option.

"The language says 'the debt of the United States shall not be questioned' -- that is a much broader statement [than others imply it is]," Bartlett said. "You have a situation where the president must violate the law; the question is which law?"

The administration would be acting illegally if it were forced to choose what obligations to pay, Barlett explained, because the treasury does not have the option to prioritize between debts and various appropriations that Congress has already approved. Yet to invoke the 14th Amendment would violate the law of the debt ceiling.

Frank maintained that the latter move would have drastic political consequences, although he pointed out that it would likely placate the "anti-debt people."

"The anger in the country, the political bitterness and the vitriol, would be amplified enormously and you'd let people off the hook for their irresponsibility," Frank said.

Bartlett, who advised both Reagan and Bush on economic policy, said he no longer identified with the Republican Party, which he said was struggling in the grip of the increasingly powerful Tea Party.

"I honestly think the Republicans have [been gripped] by insanity, and the people who have known this, have kept their mouths shut for years," Bartlett said, adding that he doubted there were any "leaders" left in Congress who could articulate "traditional, sensible, conservative Republican policy."

Bartlett also knocked down the Tea Party-supported idea of a balanced budget amendment, saying that would put the no-tax hike pledge backed by Grover Norquist into law and take important economic tools away from the government.

Toward the end of the hearing, Barlett said that should Congress fail to reach an agreement by Aug. 2, the president would have to revisit the idea of invoking the 14th Amendment, arguing that since so much of the nation's debt is owed to other countries, the debt limit would become a national security issue.

"I certainly would not advise the president to act until the last possible moment," Bartlett said.

Elise Foley contributed reporting