The Supreme Court has upheld birthright citizenship in a landmark ruling. The 5-4 decision confirms that the Fourteenth Amendment guarantees citizenship to anyone born on US soil. For the markets, this is a complex signal.
On one hand, it removes a massive legal uncertainty that could have triggered constitutional chaos. On the other, it cements a policy that imposes long-term fiscal costs. The US already faces unsustainable entitlement spending.
Birthright citizenship adds millions of new claimants to the welfare state. The Court's decision is principled but economically reckless. Expect bond vigilantes to start pricing in higher risk premiums on US sovereign debt.
