The case has been assigned to U.S. District Court Judge Richard G. Stearns, a Clinton appointee, the Associated Press reported. Stearns began his career working on Sen. George McGovern’s 1972 presidential campaign, and later became a special assistant to the South Dakota senator.
This lawsuit was filed with little fanfare while attention on the debt ceiling fight remains focused on Washington. Stearns is in a position to issue a temporary emergency injunction ordering Yellen to continue making payments even if the debt ceiling is reached.
The lawsuit cites the 14th Amendment to the U.S. Constitution, ratified in 1868, which states:
“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
On Friday, Biden said he is not yet ready to invoke the 14th Amendment to avoid the U.S. defaulting on its debts, which Yellen says could come as early as June 1. Biden is scheduled to meet Tuesday at the White House with the top Republicans and Democrats in the House and Senate in an effort to resolve the debt ceiling impasse.
House Republicans, under Speaker Kevin McCarthy, passed a bill by the slimmest of margins that would raise the debt limit but also impose $4.8 trillion in spending cuts over the next 10 years. Biden wants the debt ceiling increased with no strings attached, arguing the House GOP bill would slash programs that millions of Americans depend on.
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The White House says a debt default would result in “severe damage to the economy” with a potential loss of 8 million jobs and a 6.1% drop in GDP.
In a press release announcing the lawsuit, National Association of Government Employees President David J. Holway said the “litigation is both an effort to protect our members from illegal furloughs and to correct an unconstitutional statute that frequently creates uncertainty and anxiety for millions of Americans.” Holway added:
“The Debt Ceiling has become a political football for certain members of Congress. If Congress will not raise the Debt Limit as it has nearly 80 times before without condition, it leaves no constitutional choice for the President.”
“Congress’s failure of will to act is not justification to violate the Constitution. But it is the reason this case had to be filed to protect the American public, federal employees, and our Constitution.”
The lawsuit says the National Association of Government Employees is seeking an order declaring the Debt Limit Statute unconstitutional and unenforceable. It states:
“Nothing in the Constitution or any judicial decision interpreting the Constitution, allows Congress to leave unchecked discretion to the President to exercise the spending power vested in the legislative branch by canceling, suspending, or refusing to carry out spending already approved by Congress.”
The union’s press release stated:
As described in the complaint, pursuant to the Fourteenth Amendment, the President must ensure the federal government does not default on its debt. Should the debt limit be reached, the President still must find the funds to meet its obligations to holders of the public debt, either through borrowing or by cutting spending enough to meet debt payments. However, cutting programs that have been authorized and funded by Congress is not an authority available to the President.
The complaint alleges that the Debt Limit Statute is unconstitutional because it puts the President in a quandary, as it would require him to exercise discretion in deciding which programs Congress has authorized should continue being funded and which programs should not. The Constitution requires that funding appropriations be determined by Congress, not the President.
The lawsuit seeks suspension of the debt ceiling statute “until Congress determines the priorities and order of payments that the President should take, in order to meet the limit set on total indebtedness.”
“Until Congress revises the Debt Limit Statute to give such guidance, there is no constitutional means by which the President can comply with it,” the press release said.
Zasloff wrote that a bondholder would have standing to file a lawsuit claiming that the U.S. failing to pay off its debts is unconstitutional and that Yellen as Treasury secretary should continue to make debt payments if the ceiling is reached. Chicago labor lawyer Thomas Geoghegan, writing in The New Republic, said that millions of people besides bondholders “have the concrete injury necessary for standing to challenge the Debt Limit Statute.” It turns out that Geoghegan is among the lawyers who filed the lawsuit on behalf of NAGE.
Zasloff suggested that any lawsuit challenging the constitutionality of the debt ceiling should be filed in a district where liberals might have an advantage. He specifically mentioned the District of Massachusetts in Boston, where seven of the nine active judges are Democratic appointees, and every member of the appeals court for that district is a Democratic appointee. Zasloff raised the possibility that Yellen as the defendant might not even bother offering a defense to the lawsuit since the Biden administration basically agrees with the plaintiffs’ argument. It also isn’t clear whether House Republicans would have standing to intervene in the case.
Laurence Tribe, a constitutional law professor at Harvard University, told The AP that “it is possible that the Treasury Department would welcome the suit” because it expresses the view that “the ceiling is not a permissible bargaining tool for Congress to employ because it simply threatens to destroy the economy and hold the president hostage.” Tribe said it’s up to the judge to determine how fast the lawsuit may advance through the legal system. ”It could move extremely quickly,” he said. “It’s quite hard to predict.”
In an essay published Sunday in The New York Times, Tribe expressed support for the idea that the debt ceiling is unconstitutional.
Geoghegan questioned whether the case would even reach the Supreme Court. If a plaintiff were to sue and win a declaratory judgment, or even a preliminary injunction, from a district court, the Biden administration could simply decide not to ask for a stay or file an appeal and accept the decision.
And even if Republicans managed to get the case to the Supreme Court, there’s no guarantee that the conservative majority would allow the country to default on its debt. Zasloff wrote that the court might “be reluctant to destroy the full faith and credit of the United States. The GOP’s billionaire contributors do not want a market meltdown.”
So could a Democratic-appointed judge give Republicans a taste of their own medicine by ruling against the debt ceiling, effectively disarming the House GOP hostage takers? Stay tuned.
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