Some Friday Mythbusting

Update/correction for the record at the end of the article

Caption: Liberty Bonds, where all this trouble started.

Image credit: Found it here



There seems to be a meme going around, possibly started by Democratic politicians, that President Harry S Truman once ignored the federal debt ceiling while in office. Taylor Marsh repeated this meme today:

Since Pres. Obama has refused to use the power of the presidency and the U.S. Constitution, invoking the 14th Amendment as Truman did, he once again turned to begging the American people to keep calling, emailing and even tweeting Congress.

Obama: Keep those phone calls, emails and tweets comin’ into Congress

One of her supporting writers wrote in a comment that he hadn't ever heard of Truman doing such a thing. I hadn't either, so I did a little Internet searching, and here's what I found out.

First, the reason there's a debt ceiling can be traced back to a bill authorizing Liberty Bonds, according to the Congressional Research Service (CRS):

The statutory limit on federal debt began with the Second Liberty Bond Act of 1917,8 which helped finance the United States’ entry into World War I. By allowing the Treasury to issue long-term Liberty Bonds in addition to more commonly used short-term debt instruments, the federal government held down its interest costs.

The Debt Limit: History and Recent Increases (PDF, page 2)

As for what happened when Truman was President, according to Politifact:

In 1939, Congress eliminated those separate limits and set up the first aggregate limit covering nearly all public debt. During the presidency of Franklin D. Roosevelt, the debt ceiling was raised annually between 1941 and 1945 to pay for the costs associated with World War II. The limit was increased to $65 billion in 1941.

Soon after the debt limit was increased to $300 billion in April 1945, Truman became president. The debt ceiling was reduced to $275 billion in June 1946, and the Korean War was primarily financed by higher taxes, not increased debt.

The debt ceiling would not increase until 1954, when Dwight D. Eisenhower was president.

"It just went down and stayed down," said Bill Galston, a senior fellow in governance studies at the centrist-to-liberal Brookings Institution, referring to Truman’s presidency.

New Jersey Sen. Richard Codey claims “every president has raised the debt ceiling” during Fox News interview

If Truman "ignored" the debt ceiling, it appears to have been by raising taxes to pay for a new expenditure, rather than by selling bonds. That's what the CRS report says, too:

The debt ceiling was raised to accommodate accumulating costs for World War II in each year from 1941 through 1945, when it was set at $300 billion.15 After World War II ended, the debt limit was reduced to $275 billion. Because the Korean War was mostly financed by higher taxes rather than by increased debt, the limit remained at $275 billion until 1954.

The Debt Limit: History and Recent Increases (PDF, page 2)

After a slump that lasted a year or two, the economy started booming after the end of World War II. Revenue was undoubtedly higher, and there was no more need for new debt, since the war was over.

That guess is borne out by the government's own records, which show these debt levels for the years that Truman was President:

Outstanding Federal Debt During the Truman Administration

Year	Debt ($ Billion)
1945	258.7
1946	269.4
1947	258.3
1948	252.3
1949	252.8
1950	257.4
1951	255.2
1952	259.1
1953	266.1

[data source Treasurydirect.gov, 1900-1949 and 1950-1999]

As you can see, the debt never reached $275 billion.

Of course, there's another reason to think that Truman never ignored the debt ceiling, and that is to consider what would have happened if he had. If he had ignored the debt ceiling, it seems almost certain that either Congress would have impeached him, or someone would have contested his action in court. For an example of how the latter worked, consider the Youngstown Steel case:

Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952), also commonly referred to as The Steel Seizure Case, was a United States Supreme Court decision that limited the power of the President of the United States to seize private property in the absence of either specifically enumerated authority under Article Two of the United States Constitution or statutory authority conferred on him by Congress. It was a "stinging rebuff" to President Harry Truman.

Wikipedia: Youngstown Sheet & Tube Co. v. Sawyer

In that case, Truman relented after the Supreme Court handed down its verdict. If a similar process had happened, then there would either be court precedent that various politicians would be discussing that says President Obama isn't allowed to do this, or there would be no debt ceiling.

Which means that if Truman had successfully ignored the debt ceiling, Washington, DC would be all aflutter about some other made-up crisis that needs to be resolved by screwing the average American.

So, what do you think Jamie? I think this one's been busted.

Afterword (and UPDATE): This argument having apparently been scotched multiple places, the idea is now that Truman invoked the "spirit" of the Fourteenth Amendment, which is the one most relevant to the debt ceiling, to seize Youngstown Steel. As you can see from the Wikipedia quote above, that wasn't the principle argument of the case. In fact, the Fourteenth Amendment isn't mentioned at all in the Supreme Court decision in that case, while Article II (see the quote above) is.

I cannot fathom that argument.

The basic argument isn't about the Fourteenth Amendment. What is clear in the case of Truman and Youngstown Steel, and is not in the case of Obama and the debt ceiling, is that Truman found a legal excuse to do what he felt he needed to do. Obama has so far refused, even though I think his case is more solid than Truman's. The Fourteenth clearly says that the government cannot ignore its financial obligations, whereas the argument that the President has powers under Article II to do whatever he thinks Congress sounds like an excuse for a power grab.

By the way, I am not a lawyer, constitutional or otherwise.

UPDATE: Removed the row in the table for 1954, since that would have been Eisenhower's first budget year. The debt was only $271 million, but it wasn't Truman's.

UPDATE 2: Taylor Marsh says here that she was not arguing that Truman had ignored the debt ceiling, only that he had invoked the 14th Amendment somewhere, possibly the Youngstown Steel case. As I've mentioned, that particular case didn't mention the 14th, either.

Anyway, that's what she says, and the quote certainly doesn't explicitly mention the debt ceiling in that context. Sorry for any confusion I've caused in that regard. However, this is certainly a meme that's been making its way around the Internet, as I've seen from various Internet search hits that land here.

(The first comment, from "anonymous", is also from Taylor.)

UPDATE 3: This may be where this all started:

“If that’s what lands on his desk, a short-term lifting of the ceiling, the debt ceiling, he should put it on his desk next to an executive order,” [Rep. James] Clyburn said at a press conference. “He should sign an executive order invoking the 14th Amendment to this issue.” The Associated Press reported that he was applauded when he suggested the idea at a caucus meeting earlier in the day.

“I believe that something like this will bring calm to the American people and will bring needed stability to our financial markets,” Clyburn added, noting that President Harry Truman did it once during his presidency after Congress was unable to pass a bill to raise the debt ceiling.

Obama urged to invoke 14th Amendment as debt ceiling deadline nears

At least, it helps to explain my own confusion...