What Is the 14th Amendment and What Does It Mean for the Debt Ceiling?

The very phrase “debt ceiling” sounds austere and restrictive, as if it’s a lid on government spending. In fact, this cap on US government borrowing affects only the ability to pay existing bills, not to approve more spending. The issue still has the potential to roil financial markets, since a failure to raise the ceiling could eventually result in a first-ever default on some of the government’s obligations. With Treasury Secretary Janet Yellen warning of “an economic and financial catastrophe that will be of our own making,” the debt ceiling has become a subject of political brinkmanship. President Joe Biden has even considered invoking the US Constitution’s 14th Amendment — which guarantees the validity of public debt — as a way to solve the issue.

The US is getting perilously close to the current federal debt limit of nearly $31.4 trillion, at which point it could lose the ability to meet all payment obligations. Yellen says that moment — the X-date, as it’s known — could arrive by June 1. Since mid-January, her department has been using so-called extraordinary measures — such as withholding regularly scheduled contributions to a federal employee retirement fund — to keep paying debts and delay the reckoning. Once those measures are exhausted, the options get more dire.