I saw a reference to the 14th amendment in the news today. What could that have to do with the US debt ceiling crisis? Could somebody explain please.
It's a disturbing development -- someone is floating the idea that the executive has the ability to issue debt without the consent of congress to measure the public's reaction.
Why disturbing? Because people are using language like this:
The president, moreover, can move quickly, but court cases take time. “At the point at which the economy is melting down, who cares what the Supreme Court is going to say?” Professor Balkin said. “It’s the president’s duty to save the Republic.”
The implication to your personal finances is that we continue to live in interesting times, and you need to be aware of the downside risks that your investments are exposed to. If your portfolio is built around the idea that US government obligations are risk-free, you need to rethink that.
Section Four of the amendment reads:
The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.
In other words, if President Obama wants to, he could unilaterally invoke this provision and go ahead and get the money he needs.