OPINION: This article may contain commentary which reflects the author’s opinion.
President Joe Biden attempted to own his Republican opponents in a Twitter post earlier this week as the White House and GOP-controlled House remain at odds over what to do about the approaching debt limit and initially wound up in some trouble on the platform.
“America is not a deadbeat nation. We have never, ever failed to pay our debt. But MAGA Republicans are engaged in reckless hostage-taking by threatening to force America into default. It’s dangerous and wrong,” Biden wrote.
A short while later, Twitter posted several articles that appeared to fact-check the president under the line: “The United States has defaulted on its debt multiple times.”
The community notes message, however, has since been removed, but not before Biden’s text was mocked by users online.
“Seeing all the Twitter Context is even better than the ratio,” one user wrote.
“How does that fact check taste?” another asked.
“Fact checking is fun when it’s not manipulated by dystopian propagandists,” another wrote.
It’s likely that the fact check was removed because they may be some confusion as to what actually constitutes a debt ‘default.’
According to CNBC: “The U.S. has defaulted on its debt just once before, in 1979. A technical bookkeeping glitch resulted in delayed bond payments, an error that was quickly rectified and only affected a small number of investors, the Treasury said.”
But in an October 2021 column for The Hill, Alex J. Pollock, who served as the principal deputy director of the Office of Financial Research for the U. S. Treasury, claimed the U.S. has actually defaulted four times:
- The default on the U.S. government’s demand notes in early 1862, caused by the Treasury’s financial difficulties trying to pay for the Civil War. In response, the U. S. government took to printing pure paper money, or “greenbacks,” which during the war fell to significant discounts against gold, depending particularly on the military fortunes of the Union armies.
- The overt default by the U.S. government on its gold bonds in 1933. The United States had in clear and entirely unambiguous terms promised the bondholders to redeem these bonds in gold coin. Then it refused to do so, offering depreciated paper currency instead. The case went ultimately to the Supreme Court, which on a 5-4 vote, upheld the sovereign power of the government to default if it chose to. “As much as I deplore this refusal to fulfill the solemn promise of bonds of the United States,” wrote Justice Harlan Stone, a member of the majority, “the government, through exercise of its sovereign power…has rendered itself immune from liability,” demonstrating the classic risk of lending to a sovereign. In “American Default,” his highly interesting political history of this event, Sebastian Edwards concludes that it was an “excusable default,” but clearly a default.
- Then the U.S. government defaulted in 1968 by refusing to honor its explicit promise to redeem its silver certificate paper dollars for silver dollars. The silver certificates stated and still state on their face in language no one could misunderstand, “This certifies that there has been deposited in the Treasury of the United States of America one silver dollar, payable to the bearer on demand.” It would be hard to have a clearer promise than that. But when an embarrassingly large number of bearers of these certificates demanded the promised silver dollars, the U.S. government simply decided not to pay. For those who believed the certification which was and is printed on the face of the silver certificates: Tough luck.
- The fourth default was the 1971 breaking of the U.S. government’s commitment to redeem dollars held by foreign governments for gold under the Bretton Woods Agreement. Since that commitment was the lynchpin of the entire Bretton Woods system, reneging on it was the end of the system. President Nixon announced this act as temporary: “I have directed [Treasury] Secretary Connally to suspend temporarily the convertibility of the dollar into gold.” The suspension of course became permanent, allowing the unlimited printing of dollars by the Federal Reserve today. Connally notoriously told his upset international counterparts, “The dollar is our currency but it’s your problem.”
The GOP-controlled House has passed a bill that raises the debt ceiling but also calls for significant cuts in spending. Democrats who control the Senate have responded by complaining that the cuts are too deep, while the White House has said President Joe Biden won’t sign the bill in its current form, The Associated Press reported.