Debt default fake news

The Media is reporting that: 1) Treasury Secretary Janet Yellen said the government has an “X-Date of June 1st where the government could become unable to pay bills on time—and a failure to pay holders of U.S. government debt could trigger a severe recession”; 2) “President Biden and Speaker McCarthy to meet Monday (5/22) in a last-ditch effort to avoid a default on sovereign debt”; 3) “without a debt ceiling increase, the U.S. will default for the first time in history;” 4) “Biden reiterated that he is considering whether he can circumvent Congress altogether by issuing debt under the 14th Amendment.” All the above is misinformation.
If you follow the U.S. Constitution, you see there is no crisis regarding the Debt Ceiling as Congress authorizes public debt with priority status, borrows the money, and the Treasury pays the public debt on a priority basis. Rather simple.
Article I, Section 8 states: “Congress has the power to pay Debts, to borrow Money;”
Article II, Section 3 states: “The President shall take care that the Laws be faithfully executed”.
The 14th Amendment, Section 4 states: “the validity of the public debt, authorized by law, shall not be questioned.” Section 5 states: “Congress shall have power to enforce, by appropriate legislation, the provisions of this article”.
Therefore, the Biden Treasury cannot repudiate debt held by the public as issued in Treasury bonds and notes. In practice, this means the Treasury must prioritize debt repayments once statutory federal outlays exceed federal revenue. We are not even close to that situation as for March-April our Revenue was $952B and our Interest payments were only $129B. For the U.S. to default on its contractual debt obligations Mr. Biden and Ms. Yellen would have to intentionally violate the law by paying the entire $952B of revenue on other obligations such as entitlements (Medicaid, SNAP, SSI, etc.) rather than the $129B of interest on the public debt.
It should now be obvious that there is a huge difference between debt obligations which the Constitution gives priority to, and other obligations. Congress may have approved new spending on entitlements, defense, healthcare, etc., but those appropriation obligations do not have priority over debt obligations in the event the government runs out of money (i.e., deficits). Furthermore, the 14th Amendment does not give the President the power to issue new debt to finance those deficits. Only Congress has that Power under Article I.
So why all the needless drama about the U.S. default? There have been partial government shutdowns during previous budget disputes during the Obama Administration where the public debt was timely paid—and Biden and Yellen were involved. If the Biden Treasury defaults on our public debt it would be intentional.

Steve Gardes is a Certified Public Accountant (CPA) and Certified Valuation Analyst (CVA) with over 40 years of public accounting experience.