President Biden and Treasury Secretary Janet Yellen notified a federal judge in Boston Monday that, at least for now, they will resist an attempt to get the courts to provide a temporary way out of the looming economic catastrophe if the nation hits the government’s debt limit.
A federal employee labor union recently asked U.S. District Judge Richard G. Stearns to block enforcement of the debt ceiling law until Congress passes specific new directions to the White House on what bills it can pay or fail to pay once the limit has been reached.
The lawsuit was filed by the National Association of Government Employees, attempting – for the first time in history – to use the Constitution’s 14th Amendment to prevent the nation from running out of money without any power to borrow more. That Amendment mandates that the national debt “shall not be questioned.” It was ratified after the Civil War.
The President and Secretary Yellen have not yet filed a formal response to the lawsuit, but their lawyers joined Monday with attorneys for the employee union in a joint request that the Boston judge hold a hearing to work out a schedule for the new lawsuit. Judge Stearns promptly set a hearing-by-Zoom for Tuesday morning.
In that request, the lawyers said that the White House and Treasury will oppose a plea by the union last Friday to issue an emergency order that would prevent temporarily any enforcement of the law that sets a debt limit on the national government of $31.4 trillion. The Treasury has estimated that the nation may reach that limit as soon as June 1.
President Biden’s economic advisers have calculated that, if the debt limit goes into effect and remains in effect for a “protracted” period – that is, into the July-September quarter – the nation will be pulled immediately into a “sharp recession,” putting some 8.3 million Americans out of work and causing the stock market to drop by 45 percent, with a drastic impact on retirement accounts and other financial activity.
The White House opposition was not explained in the brief joint letter, but it would not be a surprise if the White House wants to try negotiation with Republican leaders of the House of Representatives and would regard court action in coming days as an interference with those ongoing talks – which, so far, have produced no agreement on averting the impending crisis.
The President over the weekend said that he was not opposed to the idea that he might have to act himself, under the 14th Amendment, to stave off a default but he said nothing at the time about the Boston lawsuit. That lawsuit could provide a pause in the effect of the debt ceiling, but its aim is not to help negotiations but rather to allow the government to continue to do new borrowing despite the debt limit until Congress did pass explicit new directions on government borrowing and spending.
The lawsuit argued that the debt limit, as currently written, is unconstitutional because it functions to force the President into deciding for himself which bills to pay, or not, in order to avoid going over the limit. The President, the complaint said, has a constitutional duty to carry out the laws Congress acts, but has no power to decide alone which to enforce or not.
If the President made those choicies, the complaint added, that would mean that Congress had transferred its legislative power to the head of the Executive Branch, in violation of the constitutional “separation of powers.” He must await bills from Congress on what to spend or borrow.
It is not immediately clear why a court’s suspension of the debt limit, along with temporary permission for continued borrowing to pay the bills in the meantime, would infringe on the President’s powers as head of the Executive Branch. One possible argument, though, is that the 14th Amendment gives the President the unilateral power to go on borrowing and paying bills, essentially ignoring the debt limit law in order to assure that the nation’s obligations to pay its debts is not “questioned.”
Under the normal rules governing the Boston lawsuit, the government would be due to file a formal response by June 6. But that date might be moved up, after the Tuesday hearing with the judge.