The support on Capitol Hill for what was once a fringe legal theory is growing by the hour as the debt ceiling talks head into their final days.
On Thursday, a group of of 11 progressive senators led by Sens. Tina Smith (D-MN), Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) released a new letter to President Biden calling on him to prepare to cancel the debt ceiling by invoking the 14th amendment.
“We write to urgently request that you prepare to exercise your authority,” they write, adding that Republicans have made it "seemingly impossible" to reach a deal.
Thursday’s action in the Senate comes in addition to growing support across Capitol Hill on the issue. The head of the Congressional Progressive Caucus — Rep. Pramilla Jayapal (D-WA) — recently said that the vast majority of the 101 Representatives in her group support invoking the 14th Amendment over giving concessions to Republicans.
The increased adoption of an idea that could roil markets is a reflection of growing Democratic anxieties that the White House could be preparing for deep compromise as ongoing direct negotiations with representatives of Speaker Kevin McCarthy continue.
Republicans have rallied behind a plan that calls for repealing wide swaths of Biden’s legislative wins since taking office in return for an increase in the government's borrowing authority.
Speaker McCarthy is holding the economy hostage because he wants to kick moms and kids off health insurance and food assistance. That cannot be tolerated.
President Biden should be ready to "break glass in case of emergency" and invoke the 14th Amendment to prevent default.— Senator Tina Smith (@SenTinaSmith) May 17, 2023
One group is still not publicly on board: Congressional leaders. Both Senate Majority Leader Chuck Schumer (D-NY) and House Minority Leader Hakeem Jeffries (D-NY) have largely evaded the issue in recent days and pushed for the bipartisan negotiations to continue.
A 154-year-old amendment at issue
The debate over invoking the Civil War-era amendment to solve a debt-ceiling crisis stretches back for years and centers around a line that reads: "the public debt of the United States, authorized by law...shall not be questioned."
That provision was written in the context of the Reconstruction amid fears that Confederate states would default on their debts. Nevertheless, a growing number of legal scholars say it could be invoked by Biden today to overrule the 1917 law that created the debt limit.
After being dismissed for years, the movement gained a high profile backer two weeks ago when influential Harvard Law School professor Laurence Tribe announced a change of heart after opposing the idea during the 2011 debt ceiling standoff.
Other lawmakers - including historically bipartisan dealmakers like Sen. Angus King (I-ME) - are not yet signing on to formal efforts but have expressed openness, as Biden has, to the idea that the law is indeed unconstitutional.
1. The 14th Amendment says the debt of the United States shall not be questioned; a default questions the debt big time, and so is unconstitutional.
— Sheldon Whitehouse (@SenWhitehouse) May 17, 2023
Biden has confirmed that his administration has studied the 14th amendment and specifically mentioned Tribe's endorsement, saying the maneuver “would be legitimate” as a means to end the debt ceiling standoff.
Debating different options to defuse ‘this ticking bomb’
But the issue for Biden — and why the move still is seen by a long-shot by many — is that it would immediately be the subject of lawsuits that would likely end up at the Supreme Court. Treasury Secretary Janet Yellen has described what could follow as a constitutional crisis.
Even if the White House were to eventually prevail, weeks or months of chaos would almost surely roil the markets.
How this current crisis is resolved matters to markets, says Oppenheimer Chief Investment Strategist John Stoltzfus. A bipartisan deal would be far preferable for stability as opposed to “one of these things where they get into a whole constitutional argument.”
Moody's Analytics Chief Economist Mark Zandi recently said the 14th amendment is a likely recipe for a recession. Yet he remains open to the idea, saying if Biden wins it would forevermore take "a very significant weight off the economy."
“The best way to resolve this at this moment would be for Speaker McCarthy to be reasonable,” added Sen. Chris Van Hollen (D-MA) in a Yahoo Finance Live interview Thursday morning. He did not sign Thursday's letter but says Biden should explore all options, including the 14th amendment as a plan B, if that doesn’t prove to be the case.
Van Hollen is behind another effort to end the debt ceiling and wants to pass a law later “during a period of relative calm." One way or another, he said Thursday, the ceiling needs to go.
“The question is why do we continue to have this ticking bomb within our code and my view is we should defuse it before one day it actually explodes and does a huge amount of damage to our economy,” he said.
This post has been updated.
Ben Werschkul is Washington correspondent for Yahoo Finance.
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