WASHINGTON -- Senate Majority Leader Harry Reid (D-Nev.) has privately told other Democrats, including President Obama, that if the administration used its constitutional and executive authority to continue paying its debts in the face of House Republican opposition, he would support the approach, according to a source familiar with Reid's message to the president.
The simplest escape route out of the debt ceiling impasse is for the president to direct the Treasury to find a legal way to pay its debts. The Treasury then has a variety of options. One gaining particular attention relies on a law that allows the Treasury to mint a coin of unspecified value and deposit it with the Federal Reserve. Those funds could then be used legally to pay debts.
"Reid has not dismissed any option," said the source close to Reid.
The 14th Amendment states that "the validity of the public debt of the United States, authorized by law ... shall not be questioned." Last month, White House spokesman Jay Carney told reporters that "[t]his administration does not believe that the 14th Amendment gives the president the power to ignore the debt ceiling -- period."
It would be possible, however, for that statement to be true and for the president to pay the debts by citing 14th Amendment powers. If the president went the route of the so-called "platinum coin," he could use the 14th Amendment to tell Congress that the constitution gives him no choice but to find all legal ways to honor the "validity of the public debt." The Treasury could legally mint a coin worth enough to cover debts for several years and deposit that coin with the Federal Reserve. The funds would not be used for spending that isn't authorized and appropriated by Congress, but only to pay debts. The president, therefore, would not be ignoring the debt ceiling, because there would be no new debt subject to the limit.
On Monday, Reid again raised the 14th Amendment with the president in a conversation about the deal struck between Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden. Reid noted that Obama would soon need to ask House Speaker John Boehner (R-Ohio) for a $2 trillion hike in the debt ceiling, and Boehner would likely demand drastic cuts. "What do you do? You already took the 14th Amendment off the table," Reid said, according to notes of the call.
The president assured Reid that he simply would not negotiate over the debt ceiling. He didn't elaborate.
"I'm not going to read out or confirm specific private conversations," a senior administration official told The Huffington Post Friday, "but the president has said many times, publicly and privately, that his lawyers have concluded that the 14th amendment is not an option."
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