If President Biden and the Republican House do not find a way in the next few weeks to avoid a global economic collapse over the national government’s debt, the courts might have a solution.
In a new lawsuit filed last week in federal court in Boston, a group of private lawyers have put forth a legal claim that seems to have several promising features:
• It does not seek to blame either of the other two branches for the debt default that may be imminent, and tries to avoid the appearance of interfering from the outside.
• It is based upon the roles that the Constitution clearly assigns to the Executive and Legislative branches, and shows respect for both.
• It keeps the solution entirely within the bounds of the Constitution itself, steering clear of a variety of financial gimmickry being suggested by some advocates and academics.
• It would use the courts to apply pressure on the other branches to work out a solution for the default threat, before such a threat became a reality.
• It could head off the political grievance that would arise if the President were to act alone with a workaround that upstaged Congress’s primary power over federal finances.
• It is crafted as a short-term solution that can be achieved without the usual delays that court cases often involve.
• And it has found someone with a genuine stake in the ongoing impasse and thus has a right to sue to try to end the threat because of a risk of serious harm.
The other two branches are expected to file with U.S. District Judge Richard G. Stearns in Boston their reactions to the lawsuit, which was filed by lawyers for a federal labor union, the National Association of Government Employees. Those workers face at least a temporary prospect of payless furloughs or layoffs if the government stops paying its bills.
The threat or a crisis over the national debt is simple to describe but appears to be far from easy to resolve.
Here is the current situation:
The national government, by early next month, is expected to hit the $31.4 trillion ceiling that it can borrow to pay off its prior spending promises. If a solution is not reached by then, default on paying the debt will mean not only at least a temporary loss of many benefits, but a spreading financial catastrophe in the markets and around the world.
This threat has arisen quite often in the past, and a way out has usually been found, albeit after a scary approach to default and, last time, a downgrading of the Treasury’s credit rating. This time, with default now seeming to be near, President Biden and GOP leaders of the House are barely speaking to each other about the potential crisis, and each seems to be waiting for the other to give in.
The Republican-controlled House has passed a bill to raise the debt ceiling – but only temporarily – while demanding nearly $5 trillion in reduced spending over the next ten years. The President has vowed a veto if that bill is passed, but Senate leaders say the bill has no chance of approval in that chamber.
In recent days, talks at the staff level apparently have gone ahead, but there is no public assurance of progress toward a solution.
The new lawsuit is built upon the constitutional mandate – the separation of powers between the government branches – that President Biden might violate were he to act alone to avert a crisis.
One unilateral action that government aides apparently have pondered is for the President simply to ignore the debt limit law, and go ahead borrowing more to pay the government’s bills. While the President has insisted publicly that he has no plans to adopt any constitutionally questionable tactic, in an apparent attempt to keep the pressure on Congress to raise the government borrowing limit, a failure to get an agreement with Congress may soon leave no choice.
The Boston lawsuit, in summary, involves a plea for the court to declare – as a temporary measure – that the debt limit law is invalid in its present form because it will have the effect of transferring the constitutional power of the purse – deciding spending priorities – from Congress to the President in the face of a potential default.
It does not challenge Congress’s authority to have set a ceiling on federal debt, as Congress has done for 106 years, although it notes that the idea is controversial as a constitutional matter because there is wording in the Constitution that promises that the government will always pay its debts.
That is in the 14th Amendment, adopted after the Civil War, which declares that “the validity of the public debt of the United States…shall not be questioned.” That provision has never before been invoked as a basis for challenging the debt ceiling law.
Although the lawsuit stresses the constitutional power of Congress to direct how federal revenues are to be spent, it argues that the debt ceiling as it currently stands – together with the 14th Amendment admonition to honor the debt — will inevitably push the President into unilateral action to stave off default.
The President, it points out, is required by the Constitution to “take care that the laws be faithfully executed,” so reaching the debt ceiling will force him to make choices that are supposed to be the responsibility solely of Congress.
The filing declares: “The Debt Limit Law has placed the President in an impossible position, without legislative permission or constitutional authority as to how to proceed. Under Article II of the Constitution, the President is obligated to executive all the laws, without exception, and may not be placed by Congress in a position where the President has to determine what laws are of continuing force and require payment, once the limit on total indebtedness is reached.”
The lawsuit goes on to suggest a temporary way out of this dilemma: the court should bar the debt ceiling law from operating until Congress specifies “the priorities for continued spending by the President…once the debt limit is reached.”
In addition, according to the lawsuit, the Treasury Secretary should be allowed to continue borrowing “until there is a revision [of the debt ceiling law] to prevent the President from usurping the prerogative of Congress.”
Two constitutional violations are claimed while the debt law remains as presently written: the separation of powers between Congress and the President, and discrimination among the recipients of spending that would be cut off or suspended when no more borrowing can occur to cover federal bills.
Because the Boston case does not ask Judge Stearns to settle, in a final way, the constitutionality of the debt limit law, seeking only what would amount to its temporary suspension, the case could move along swiftly.
However, if it were to be bogged down in legal maneuvering, by either the White House or the House GOP, a decision might not come in time to push the two sides into serious negotiations.