Mulvaney: 14th Amendment ‘doesn’t really solve the problem’

Former Trump White House budget chief Mick Mulvaney said Monday that invoking the 14th Amendment to avert a federal default would do more harm than good.

In an interview with NewsNation’s “The Hill,” Mulvaney said the likely interest rate spike and legal uncertainty to follow a 14th Amendment maneuver would damage the economy.

“It doesn’t really solve the problem,” Mulvaney said. “There’s a lot of good conversations going on. I don’t really think the 14th Amendment is going to get either side very far very quickly.”

President Biden has said he would reluctantly invoke the 14th Amendment — which declares that the U.S. debt “shall not be questioned” — if he’s unable to reach a deal with Republicans to raise or suspend the debt ceiling.

Progressive Democrats are ramping up pressure on Biden to invoke the 14th Amendment and circumvent Republican demands. But doing so would be an unprecedented test of constitutional law that could send tremors through financial markets, according to legal and financial experts.

Mulvaney said that borrowing costs would likely spike as investors loose faith in the ability of the U.S. to pay its debts. A jump in interest rates could slow the economy into a deep recession, particularly after the Federal Reserve’s rapid run of rate hikes.

“If you try something here at the last minute that’s untested, legally in the courts, who’s going to give you low interest rates for that? If I lend you money on an untested piece of debt, I’m gonna want a much much higher interest rate because it might be illegal to do so,” Mulvaney said.

Treasury Secretary Janet Yellen warned Monday that the U.S. would “very likely” default in early June and as soon as June 1.

Speaker Kevin McCarthy (R-Calif.) held a roughly hourlong meeting with Biden on the debt ceiling Monday night. He said the latest conversation was “productive,” but that the two sides still don’t have an agreement on how to avoid default.