united-states debt fourteenth-amendment
How is the 14th amendment relevant to the debt ceiling?
<p>My understanding is:</p>
<ul>
<li><p>The 14th amendment says that any debt the United States has taken on must be honored.</p>
</li>
<li><p>Previous legislation by Congress prohibits the government from borrowing more than a certain amount of money.</p>
</li>
</ul>
<p>So far so good. I could probably understand the argument that the US government has the constitutional authority &amp; duty to print any money needed to service the current debt. But I don't understand how the 14th amendment could possibly allow an increase of the <em>debt ceiling</em> as some are claiming.</p>
<p>How could the obligation to service <em>existing</em> debt (by printing money, presumably) possibly confer the authority to take on <strong>new</strong> debt? What is the legal reasoning that would reach this conclusion from that premise?</p>

<p>Congress passes, and the President signs, a legal binding budget for the Federal Government that in broad strokes dictates &quot;we will spend $6.2 Trillion dollars&quot;.</p>
<p>They pass this budget, knowing full well that estimated Tax Receipts (how much money the Government takes in) will only be about $4.4 Trillion.</p>
<p>The gap (deficit) of $1.8 Trillion must be borrowed, creating debt.</p>
<p>The problem is that the Budget is legally passed and describes $1.8T to be financed, even though the Debt Ceiling limits that.</p>
<p>The question is which one takes priority?  The Constitutionally mandated Budget, or the Congressionally created Debt Ceiling?</p>
<p>The 14th Amendment seems to indicate that the fulfilling the Budget has a higher priority than the Debt Ceiling construct.</p>

<p>The federal government doesn't have the authority to print money.  Under the <a href="https://www.law.cornell.edu/uscode/text/12/414" rel="nofollow noreferrer">Federal Reserve Act</a>, Congress granted that power exclusively to the Board of Governors of the Federal Reserve System (&quot;the Fed&quot;).</p>
<p>So if the government needs dollar bills to make payments on outstanding bonds, and doesn't have enough from tax receipts or other such income, the only place to get them is from the Fed.  The Fed can in principle print as many as it likes, but it doesn't give them away for free; it will only give them to the government in payment for something of value, and normally that &quot;something&quot; is bonds.  So the government can only &quot;print more money&quot; indirectly, by issuing more bonds and selling them to the Fed: i.e. taking on more debt.</p>
<p>(The government does retain the authority to mint coins, and there is a frequently raised suggestion that the government could &quot;print more money&quot; by <a href="https://en.wikipedia.org/wiki/Trillion-dollar_coin" rel="nofollow noreferrer">minting a trillion-dollar coin</a>, and selling <em>that</em> to the Fed instead of bonds.  I won't go into that here, but suffice it to say there are a lot of potential legal objections.)</p>
