Morning Examiner: Obama administration may just ignore the debt limit

A once-fringe solution to the Obama administration’s debt limit bind has filtered all the way up to the president’s inner circle. Treasury Secretary Tim Geithner suggested late-last month that section Four of the 14th amendment may authorize him to just ignore the debt limit entirely. Geithner told an audience in May:

I think there are some people who are pretending not to understand it, who think there’s leverage for them in threatening a default. I don’t understand it as a negotiating position. … can I read you the 14th amendment? … ‘The validity of the public debt of the United States, authorized by law, including debts incurred for the payments of pension and bounties for services in suppressing insurrection or rebellion’ — this is the important thing — ‘shall not be questioned.’ So as a negotiating strategy you say: ‘If you don’t do things my way, I’m going to force the United States to default–not pay the legacy of bills accumulated by my predecessors in Congress.’ It’s not a credible negotiating strategy, and it’s not going to happen.

Geithner has made it clear in earlier letters to the Senate that he considers all federal government obligations (Social Security payments, ethanol subsidy payments, interest payments on Treasury securities, etc.) completely equal. According to Geithner’s logic, a failure to pay California millions of dollars for their high-speed rail project would be the same as missing interest payments to bond holders. So, even though the Treasury Department could easily pay the $29 billion in August interest payments with the estimated $172.4 billion it will receive in revenue, thus avoiding default on the public debt, Geithner appears to be arguing the 14th amendment allows him to pay all of the federal government’s bills regardless of where Congress set the debt limit.