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US Presidential Candidate Donald Trump has announced a plan intended to reduce the national debt: Convince bondholders to accept less than they are contractually owed. (NY Times article on it here.)

In order for such an offer to be at all attractive to bondholders, there must be an implicit threat that the bondholders may not be paid (at least not in full) if they do not accept an offer for less than the original contract.

Yet, section IV of the 14th Amendment to the US Constitution says "The validity of the public debt of the United States... shall not be questioned." The last paragraph of Article II, Section 1, states that any President must take an oath swearing that he‡ "will to the best of [his] ability, preserve, protect and defend the Constitution of the United States."

As a candidate, Trump says his opponent "wants to abolish the 2nd Amendment." How does his own debt-reduction plan fit in with the 14th?


Gendered language original, not meant to imply anything.


Here's a related question, with a focus on the debt ceiling rather than proposed actions of a businessman-president.

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    Seems like your question is "can a president threaten to not pay bondholders?", regardless of whether Mr. Trump is actually proposing that. If so, I think the discussion of Trump is just a distraction from the legal question. – user3851 May 8 '16 at 20:41
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    Can you explain how the 2nd amendment is relevant? – user6726 May 8 '16 at 21:45
  • @Dawn The discussion mentions Trump to point out that it is an "actual" issue very relevant to current consideration, not just some so-unlikely-it'll-never-happen hypothetical; this is a serious proposal by one of the few people most likely to be the next POTUS. User6726: The candidate's attack on an opponent for allegedly wanting to disregard one amendment is evidence of the large weight he publicly puts on wanting to make sure none are disregarded and helps motivate why "how does this fit in with the 14th" is an important question, even in the candidate's own issue-framing. – WBT May 9 '16 at 3:31
  • But in any case, to be clear, is your legal question: can a President threaten that bondholders will not be paid? – user3851 May 9 '16 at 3:36
  • @Dawn basically yes. And I do see folks on this site getting chastised for presenting hypotheticals (or even real-life situations) that just seem too unlikely to possibly be true. | Suppose that in exchange for valuable consideration, Sam contracts to pay you a fixed sum of $100 and that payment is all that's left for mutual contract performance. If the contract says you'll get $100, why would you accept $80 unless you think you won't even get that much otherwise, especially when other mechanisms exist for making charitably-motivated donations to help someone out? – WBT May 9 '16 at 3:40
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Here's a constitutionally plausible answer: he isn't going to threaten to not repay bondholders, thereby not implicating the 14th Amendment.

All I said is that if interest rates go up, we'll have a chance to buy back bonds at a discount, which is standard [...] Certainly I'm not talking about renegotiating with creditors.

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As a hypothetical question, here's a hypothetical answer: appoint key people to positions that trade Treasury bonds elsewhere in the federal apparatus. The Social Security Administration buys (until 2034?) Treasurys and holds $2.79 trillion as of 2014. Appoint an administrator, offer $1 for the lot, then pardon the administrator for all the federal laws and dereliction of duty that the administrator just committed.

Similarly, Trump is on record calling for a partisan replacement of Janet Yellen. The Federal Reserve is the market maker in Treasurys, and if it cared (for some reason...) to play fast and loose or just stupid with it's balance sheet and charge to maintain price stability, well, it can pay what it likes for Treasurys.

Finally, while its sideways to the "take it or leave it" Trump bluster I believe the trillion dollar coin is technically legal, and Obama didn't pursue it because of a preference to maintain the spirit of the current currency system. Trump could coin 14 of these, creating $14 trillion in seignorage and leave the U.S. debt free at full 1:1 payoff at a stroke.

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