The Debt Ceiling Is Unconstitutional, Enforcing It Is Arguably Treasonous.
A careful reading of the Constitution makes amply clear that “debt ceilings” are unconstitutional. The “debt ceiling” was invented by Congress in 1917 and is nowhere mentioned in the Constitution. It is a political, economic, and financial complication, a needless hurdle which violates the Constitution in letter and spirit. Its enforcement by an obstructionist and economically illiterate Congress periodically undermines the smooth functioning of our government and even the financial stability of the nation. It derives from a misunderstanding of economics, specifically about the effects of budget deficits, the very misunderstanding which led to the austerity policies of the 1930’s which turned a recession into the Great Depression. The Eurozone repeated the U.S.’ mistakes of the 1930’s by adopting the same austerity policies from 2010 until 2020, causing the worst economic crisis in European history. The QE experiment implemented by the Federal Reserve since 2010, saving us from another Great Depression, should by now have made everyone understand how flawed mainstream economic theories on budget deficits have been.
The Constitution’s 14th Amendment, Section 8 states: “The validity of the public debt of the United States, authorized by law, including debts incurred for the payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” Clearly, the Constitution requires the public debt of the United States to be rock solid in terms of its being serviced; therefore “debt ceilings” are unconstitutional since they can end up undermining the absolute integrity of our federal debt. Furthermore, “debt ceilings” serve no valid economic or financial purpose.
Article I, Section 8 of the Constitution states: “The Congress shall have the power… to borrow money on the credit of the United States”. Therefore, Treasury bonds issued to finance our government’s expenditures are clearly authorized by the Constitution, and their “validity shall not be questioned”, as stated in the 14th Amendment. “Debt ceilings” are not envisioned nor authorized by the Constitution.
Article III, Section 3 of the Constitution states: “Treason against the United States shall consist only in levying war against them or in adhering to their enemies, giving aid and comfort.” How can undermining the integrity of our federal debt and the smooth functioning of our government not be considered undermining our national security and “giving aid and comfort” to our enemies? It should finally be understood that any politician enforcing an unconstitutional “debt ceiling” is probably engaging in treason by undermining our national security. It cannot be excluded that some of our politicians wanting to enforce “debt ceilings” might actually be, consciously or subconsciously, influenced by enemy nations. (The same could apply to politicians who discourage masks and vaccination against Covid, thereby acting against public health, a treasonous behavior which also amounts to reckless or intentional manslaughter. Foreign enemy influence could also apply to those involved directly or indirectly with the seditious insurrection of January 6 when the Capitol was stormed by a violent mob, as well as to those who claim the 2021 election was “stolen” without producing any valid evidence, a sign of contempt for legality and an incitement to insurrection and sedition.)
It should therefore be clear that using a “debt ceiling” to politically control federal spending is not only unconstitutional but also treasonous when it undermines the smooth functioning of our government and our national security. Furthermore, “debt ceilings” in no way serve the economic or financial interest of the nation, being based on flawed mainstream economic theory, i.e., that budget deficits necessarily cause inflation and high interest rates, and that federal debt is necessarily passed on to future generations. In any case, the controlling factors are 1) federal spending is determined by bills passed by Congress, and 2) any federal debt incurred to finance that spending must always be guaranteed. That is what the Constitution states.
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N.B. Republicans and Democrats alike do not understand that their concerns about federal debt necessarily having negative effects are mistaken. They have not learned from the Great Depression, which was caused by politicians mistakenly thinking that federal indebtedness had to be reduced even during times of high unemployment and recession. The have not learned that fiscal and monetary austerity in times of unemployment and recession only leads to much larger budget deficits.
Republicans and Democrats have also not learned from our ten-year experience with QE financing of federal debt by the Federal Reserve. They fail to realize that QE financing, essentially freshly printed money, was absolutely necessary to save us from a repeat of the Great Depression. They also fail to understand that Treasury bonds held by the Fed at maturity are actually only “virtual” debt, not “real” debt, since the Fed can cancel them or indefinitely roll them over as they mature when the economy is not strong. Thus, they are not necessarily passed on to future generations.
They are also mistaken to believe that QE is inherently inflationary, ignoring that over the past 10 years of enormous QE financing, inflation has remained at historic lows. They fail to understand that just as budget deficits are not inherently inflationary, the same goes for QE. Budget deficits and QE are inflationary only when they cause excess aggregate demand, the situation of “too much money chasing too few goods”, a situation which ordinarily happens only in a booming economy when there is no unemployment and no excess productive capacity. So long as there is unemployment and excess production capacity, QE and budget deficits will not produce inflation. The current uptick in inflation is due not to QE and budget deficits, but to temporary global supply disruptions caused by the Covid crisis, as Fed Chairman Jerome Powell has correctly explained.
If all the above were understood, the Biden administration would not be proposing a big increase in taxes to finance its two infrastructure bills, thereby jeopardizing their passage in Congress by alienating all Republicans and even some Democrats. Biden would instead confidently use QE-financing by the Federal Reserve for the two infrastructure bills, knowing that as the economy becomes strong and heads to full employment, the budget deficits will shrink dramatically, just as they did at the end of Clinton’s second term, even turning into a budget surplus to everyone’s surprise. (That budget surplus was not because of minor Clinton tax increases and minor government spending cuts, but only because of 1) lower interest rates due to Federal Reserve easing to counter a weak economy; 2) a much stronger economy due to a housing recovery following Fed easing and the end of the S&L crisis; 3) a capital spending boom due to the explosive growth of laptops, mobile phones, and the internet; 4) huge Y2K investments in hardware and software; 5) huge increases in tax revenues due to strong growth in business profits and personal income; 6) much lower unemployment.) Just think of all the tax revenues lost over the past 50 years due to multiple periods of high unemployment and recession, and of all the public spending required for unemployment and welfare expenditures. That has been the biggest factor accounting for increased national indebtedness. It is of crucial importance for Democrats and Republicans to understand the following: Simply avoiding recessions and high unemployment through the use of timely QE-financed tax rebates and infrastructure projects, would lead to the gradual elimination of all outstanding federal debt, quite possibly much faster than most would imagine.
© Edward Sonnino 2021
October 5, 2021
Independent Self-Funded Write-In Candidate for New York City Mayor 2021
