Monday the Federalist Society hosted a teleforum on the debt ceiling with Senator Mike Lee, David Rivkin of Baker Hostetler, and Professor Richard Epstein. The call featured an interesting debate between Rivkin and Epstein on Section 4 of the 14th Amendment, also known as the Public Debt Clause. Unfortunately, the sound quality on Epstein’s line was poor. Fortunately, as one of his former students, I have some experience in trying to follow him while only being able to catch every other word or so.
Rivkin took the position that the United States is “constitutionally incapable of default,” relying on the Public Debt Clause and Perry v. United States, 294 U.S. 330 (1935). As a consequence, he maintained, bond investors should be reassured that there will be no default in the event that the debt ceiling is not raised.
It is important to recognize what Rivkin is not saying here. He is not saying that default is factually impossible. If I am a bond investor (which I am, come to think of it), and Jack Lew decides not to write me a check when my interest payment is due, then there is a default on the bond (at least as I understand the meaning of the term). Lew’s failure to write me a check may be illegal or unconstitutional, but I still don’t have the check, and I can’t deposit the Public Debt Clause in my bank account.
What Rivkin is saying is that I can go to the Court of Claims and get a judgment against the United States in the amount of whatever money I am owed under the bond. But even if that is true, the ability to go to the Court of Claims and get a judgment is worth considerably less than the check from Jack Lew. The former involves time, money, and uncertainty, and if/when I get the judgment, I still don’t have something that I can deposit into my bank account.