The Chamber of Commerce, the largest business group in the nation, warned President Biden on Friday of the potentially disastrous economic effects of invoking the 14th Amendment to avoid the country defaulting on its debts.
“It is the Chamber’s view that attempting to invoke so-called ‘powers’ under the 14th Amendment would be as economically calamitous as a default triggered by a failure to lift the debt limit in a timely manner,” wrote Neil Bradley, the Chamber’s chief policy officer, in a letter to the president.
Bradley argued the president acting unilaterally to issue new debt above the debt limit is not supported by the Constitution and “ignores negative economic consequences that would occur if the administration attempted to issue such debt.”
He also said the letter sent earlier this week from Sen. Bernie Sanders (I-Vt.), Sen. Tina Smith (D-Minn.) and several other senators to Biden that suggested he prepare to use the amendment, led him to write the letter Friday.
Bradley noted that in the letter from the senators, they “omitted a foundational clause” of Section 4 of the 14th Amendment and replaced it with an ellipsis, therefore not including that the validity of the public debt is “authorized by law.”
Additionally, the Chamber said the Treasury Department attempting to borrow money above the statuary limit would ignore the powers enshrined in the Constitution. The business group said if the U.S. were to sell treasuries to cover debt, a significant interest premium would be included, and those costs could be a significant drag on the economy.
“Simply put, there is no alternative to reaching a bipartisan agreement to raise the statutory debt limit,” Bradley wrote.
The Chamber has backed spending caps as part of a debt ceiling deal and has called for lawmakers to ensure the deal includes permitting overhauls, a top priority for the organization. Top business lobbying groups overall have called for a debt ceiling compromise between the White House and Republicans.
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If the president were to invoke the 14th Amendment, it would likely lead to uncertainty hanging over the already-fragile financial system and risk a default being tied up in the courts.
The president said last week there have been discussions about whether the 14th Amendment can be invoked, but he acknowledged it would have to go to the courts. Floating the option could be used as leverage and put pressure on Republicans to strike a deal ahead of the June 1 default deadline.
The letter from the Chamber comes as Biden is in Japan for the Group of Seven summit. Speaker Kevin McCarthy (R-Calif.) on Friday said debt limit talks had broken down and that the White House was simply not willing to accept spending cuts at the levels Republicans are insisting upon.
