Constitutional Debt
Mar 17th, 2010 by Timothy Pancoast
At the Monday meeting of the 9-12 Delaware Patriots up in Newark the subject of our national debt came up. It was suggested that our debts are illegitimate as they are based on fiat money and are not Constitutional. Further, it was suggested that since the debts were illegitimate we should be under no obligation to pay them back. I in turn stood up and suggested that they might be going overboard. Being an accounting student issues related to money are of particular interest to me. As the subject of debt is a topic covered in our Constitution the subject is doubly of interest to me. I will use this post to discuss some of my thoughts on the matter.
I personally am against debt. I have never had a credit card, nor have I taken out any loans. My lifestyle isn’t as grand as most because of my personal policy, but I have a lot less hanging over my head than some do. I do not think that our nation should be in debt either. I think it was wrong for us to incur much of the debt we have now. I also agree that the structure and vehicles we have been using to obtain our debt have a lot of negatives, and are perhaps even illegitimate. However, whether it should have or not, our nation did in fact incur debts. Those debts should be repaid. I believe it is possible for a debt to be Constitutional even if we now deem that the method or vehicle used to enter into it is not.
The subject of debt is covered by the Constitution in a number of places. I’d like to review some of them, the first being article 1 section 8.
“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow Money on the credit of the United States;”
Congress has the power to borrow money. They also have the power to pay those debts back. This indicates that, even if the methods used to obtain our current debt are illegitimate, debt itself is not illegitimate. There is a Constitutional route to incurring and paying back debt.
Towards the end of the Constitution our founders set a precedent concerning the payment of debts. It is found at the beginning of article 6.
“All Debts contracted and Engagements entered into, before the Adoption of this Constitution, shall be as valid against the United States under this Constitution, as under the Confederation.”
Our founders were establishing a new nation under the charter of the Constitution. As a new nation they could have wiped the slate clean. However, they recognized the debts of the old nation under the Articles of Confederation. After all, even though the nation was new it was comprised of the same states and citizens that incurred debts, under the old government. They didn’t pretend that the debts were invalid merely because the nation that entered into them no longer existed. The United States of America paid those debts back.
While there are several other areas of the Constitution that mention debt and qualify it the last one that I will cite is section 4 of the 14th amendment to the Constitution.
“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.”
This section reaffirms the validity of public debts and the nation’s responsibility for paying them back once incurred. However, it also indicates that there are some circumstances where the United States does not have an obligation to pay a debt. Basically that we will not pay debts acquired by those in the process of rebelling or fighting against the United States.
When looking at the debts the United States of America currently has we need to seriously look at what the Constitution says about debt. If the process used to enter into our current debt is illegitimate than we need to determine that, and immediately cease such activities. There are legitimate ways for our nation to obtain credit and we should use those Constitutional means whenever there is a situation that necessitates debt. However, to me it is apparent that our founders set a precedent that when Americans incur a debt they pay it back. America has a real debt. The tools used to enter into that debt may or may not be valid, and it is possible that they may be used to manipulate that debt, yet the fact that we do have a debt is not erased by that.
No matter what the circumstances, the debt we have today is a problem in size and scope. The solution is the Constitution. The way out of this debt may be long and arduous but if we will acknowledge it and follow the guidelines of the Constitution we can pay it off properly. Paying off our debt will help us return to the Constitution. Shrugging it off as illegitimate may seem like an effort to return to the Constitution, but it will more likely be a step past the Constitution.
I agree with you. The debt is constitutional. I can not see how it is not. No where in the constitution is there a requirement that the debt be in hard money. If people want to take debt not based on hard money, that is their decision, but the Constitution requires us to honor it with the full faith and credit of the government. Back in the day the full faith of the government was a statement of honor. Honor met something to the founders. We can not go back to their principles and forget the most basic ones. As the Marines say, honor above all else.
The debt may be constitutional, but the currency isn’t.
Article I., Section 8., gives the Congress the power to Coin money…
Article I., Section 10 states that No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts…
Okay, I have no problem with paper money, as long as it’s backed-up by metal, and can be exchanged at any bank for gold or silver coin; this way you don’t lose precious metal through wear or misplacement. However, our government (or, our courts) decieded that modern currency need not be backed-up by metal. Hence, we have the deficit problems of today.
It is a dream of any totalitarian government to totally control the money supply. With metals, they can’t. Metals can never be deemed worthless, and metals have value world-wide. This is why people in ancient lands, where governments change hands with frequency, that people wear their wealth on their wrists and around their necks- they may lose their houses, cattle and furnishings, but they can go anywhere in the world and survive with gold.
Don’t listen to the deadbeats. People are always trying to figure a way to weasel out of what they owe.
There have been legal challenges to the Income Tax and also the Federal Reserve. All have failed.
Personal opinion no matter how honorable does not rise to the level of law.
That issue aside, the debt is sinking the country little by little.
Mike Protack
The sad part is that the income tax likely did not pass and the certification is a fraud. The problem is that no court will go back 100 years and remake American government. That is not their job, it is ours.
the debt is sinking the country little by little.
Exactly why we had our little revolution in 2008. 14 months and counting. Got back most of the TARP money. Went from 700,000 lost jobs in January 2009 to losing 60,000 January 2010. Digging our way out slowly but surely from what happened between 2001 and 2009. Had a record $1.2 trillion deficit when the new administration took over. Got to get that under control. Will take years to repair what they did to us.
T123, The new President and leader of your so-called revolution has racked up a $2 trillion deficit since entering office. It looks to me like the revolution is succeeding in achieving exactly the opposite of what you claim it was about. We will see what things look like in 3 years, but something tells me we won’t be seeing a $2 trillion dollar surplus any time in the next 3 years. That is what it will take and at a sustained level to reverse our debt spiral and dig out. In this situation there is no they it is all us. They aren’t going to fix a thing. It doesn’t matter who They are as long as we put things of on them they can only break it further. We are the ones that will fix it if it is ever to be fixed.
Source for the $2 trillion dollar figure. http://www.cbsnews.com/8301-503544_162-20000576-503544.html
So Republicans want us to just hunker down and freeze in the dark until things somehow get better by themselves?
And Democrats want us to run around opening all the windows and doors durring a blizzard with sub-zero tempatures.
I think the American people want to take an honest look at the national debt and start working to get rid of it. America repealed slavery. It doesn’t make sence for us to turn debt into our new master after all we have been through, yet that is what is happening.
Tim, I don’t think there is that much to argue about. Except it’s wrong to think Republicans are more concerned about deficits than Democrats. Crunch any numbers you want, Republican Presidents ran up the biggest deficits. So why make it sound like we Republicans need to get the government out of the hands of these irresponsible Democrats. The Democrats got in because we were irresponsible.
The new President came in with an incredible historic systemic budget gap. Nothing like it ever before in modern times. It really is not fair to make it sound like Obama is bad because he has not cut the deficit. Half the reason we have the deficits is because revenue is way down. It’s not all spending. Who is not sick about this? I am. Do you have any ideas? Put taxes back to where they were before the Crash? Cut the military. Cut Medicare. We still have people who are crying because we are only building 190 F-22 fighters at $150 million each, they still want 500 of them. Don’t blame Obama yet. He is the solution, not the problem.
You are clearly more concerned about party stuff than the deficit because you keep bringing up party. Obama is not the solution. The Constitution is the solution and the American people need to use the solution to get out of this debt and all of the other messes we are in. When we look to another human being as the solution to all of our ills or even a party we are screwing ourselves and future generations.
We have the solution, we always have but whenever we try to leave it up to one person or a realtively small group of people to solve things for us the problems only get bigger. Don’t tell me that President Obama is the solution. He is only human, he can’t do it and for him or anyone else to pretend that he can is ludacris and deceptive.
In spite of the economy revenues really haven’t dropped much. Aside from February 09 which is a typically low month, (only 87 billion) receipts have been over 100 billion every month since President Obama entered office. What has changed in the extreme is outlays. They have been well in excess of 300 billion 7 out of 14 months that President Obama has been in the White House. October of 08 when the crash began was the only other month where outlays ever exceeded 300 billion in my lifetime, make that in the history of this nation. That tells me that President Obama is most certainly not the solution. You may still have room to debate to what extent he is part of the problem, but you haven’t a leg to stand on if you are trying to convince me that he is the solution to our economic woes.
“People are upset Obama hasn’t solved all the problems yet. C’mon, he’s only been in office one year…the man went to Harvard, not Hogwarts. – Wanda Sykes
It doesn’t bother me that he hasn’t solved all of the problems. It bothers me that he is making half of them worse than they would be otherwise.
The stimulus, however badly designed, kept GDP from crashing. The long slow recovery we are on now would not even have begun without ARRA. We’d still be on the downward slope.
What you and the teabaggers are so devoutly wishing for is a GDP crash and complete failure of the American economy, with the heat going off and food running out for millions of Americans. This is the real agenda of Republicans as enshrined in the Paul Ryan budget and health plan.
TARP is on Bush, by the way. Obama is the guy who got most of the TARP money back by holding the bonuses over their heads.
If we really wanted a GDP crash we would just stand by and let President Obama pass his health care take over and all of the rest of his agenda unimpeeded.
Look at the math and tell us what you think would happen if ARRA had not happened, or if government spending were sharply reduced as I am constantly reading here:
TARP was never a spending program. The money was always coming back. It was a loan program. I wrote about this at the time. TARP is not part of the spending problem except that this administration keeps wanting to find ways to spend it.
The problem isn’t party- the problem is an over-grown, debt-ridden, corrupt and obtrusive, unconstitutional government.
Read Article I., Section 8., of the Constitution (the powers of Congress) and Madison’s Federalist #41, and see the true ‘intent’ of the Founders…in the words of the Founders themselves, not some left-wing judge.
Rick, where does Marbury v. Madison fit in?