With the deadline looming for lawmakers to come together in agreement in making a U.S. Debt Deal to raise the debt ceiling beyond the current $14.29 trillion limit. Since the U.S. government reached this limit back in May, the U.S. Treasury has had to take special measures to continue paying its debts.
Without the passage of a debt deal that raises the limit, some have predicted that the United States will finally default on its debts, leading to financial markets at home and abroad to take a hit, currency to take a fall and the return of a recession.
Republican lawmakers including Speaker of the House John Boehner have been calling for the deficit to be reduced my making heavy spending reductions and have left the option to reform broken entitlement programs and the tax code. Democratic lawmakers and President Obama have sought lighter spending cuts, however they wish to raise taxes too to generate revenue and reduce the deficit, something Republicans have said is off the table.
With a U.S. debt deal needing to be made in the next couple of weeks and limited progress being made with Democrats refusing to eliminate tax increases as a requirement, many fear a default is well on its way. However Obama may have other plans.
“The validity of the public debt of the United States, authorized by law … shall not be questioned,” so reads a clause in the 14th amendment of the United States Constitution. Some legal experts, with Timothy Geithner following suit, have claimed that this will allow Obama to bypass raising a debt ceiling and continue borrowing money to pay off its debts. If that is found to be the case, than the very concept of a debt ceiling will have been deemed unconstitutional.