A labor union representing nearly 75,000 government employees has filed for an emergency injunction, asking a federal judge to take immediate action to prevent an economically catastrophic default by ordering the Treasury to continue paying the government’s bills. Treasury Secretary Janet Yellen has warned that if Congress does not raise the debt ceiling, the government could run out of money to pay its bills as early as June 1.
So far, the White House and congressional negotiators have been at an impasse in reaching a deal to stave off default.
President Joe Biden met with House Speaker Kevin McCarthy Monday evening in yet another attempt to work out a deal. Biden and McCarthy each called the meeting “productive,” but no deal was reached, CBS News reported. McCarthy said he planned to speak with Biden every day until an agreement is reached.
Progressive Democrats in the House and Senate have urged Biden not to cave to House Republicans’ “hostage-taking” by agreeing to budget cuts that would hurt poor and working people, while the GOP rejects doing anything to increase revenue by closing tax loopholes for the wealthy. They want Biden to invoke the 14th Amendment to the U.S. Constitution, which states that "the validity of the public debt ... shall not be questioned."
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The Biden administration has been reluctant to do this fearing that declaring the debt ceiling unconstitutional would lead to a pitched legal battle with an uncertain outcome before the conservative-majority Supreme Court. That would result in uncertainty which could roil markets and harm the economy. The administration has also expressed concern that courts might not be able to act on any litigation before the X-date for default.
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But there actually was a lawsuit filed in Boston by the National Association of Government Employees on May 8 in the U.S. District Court for Massachusetts. The National Association of Government Employees sued Yellen and Biden to try to stop them from complying with the debt ceiling statute, which it claims is unconstitutional.
The location for the filing was no accident because both the district and the appellate court are loaded with Democratic appointees. The case was assigned to U.S. District Court Judge Richard G. Stearns, a Clinton appointee.
I made several attempts to reach a spokesman for one of the law firms representing the National Association of Government Employees, but did not receive any response. There were no further developments reported about the case until last Friday, the National Association of Government Employees filed for an emergency injunction, seeking a speedy ruling to avert a default. The injunction begins by stating:
Plaintiff, National Association of Government Employees, Inc. (“NAGE”), by and through its undersigned counsel, hereby moves this Court on an emergency basis for an Order of Preliminary Injunction declaring the Debt Limit Statute, 31 U.S.C. 3101(b), in violation of the separation of powers and the Presentment Clause as set forth in Articles I and II of the United States Constitution, and enjoining Defendant Janet Yellen, in her capacity as United States Secretary of the Treasury, from limiting the borrowing of the United States pursuant to the Debt Limit Statute.
David Dayen, executive editor of The American Prospect, wrote a long thread on Twitter on Friday detailing the arguments raised in the request of the emergency injunction. In an article published Monday, Dayen explains that National Association of Government Employees’s argument is “that the debt ceiling statute effectively forces the president to use a line-item veto, which has already been ruled unconstitutional. It gives the president excess power.”
In a press release announcing the lawsuit, the National Association of Government Employees said:
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.”
There’s always the question of whether the plaintiffs have standing. Dayen explains that Yellen’s extraordinary measures taken so far to ensure the federal government stays under the debt ceiling included “suspending investments into NAGE employee retirement plans” and “there is active and ongoing harm, which will get worse if the ceiling is hit.” Federal employees could be furloughed, ordered to work without being paid, etc. in case of default.
There’s another interesting aspect to the case. Dayen notes the defendants are Yellen and Biden, who each were served with a summons on May 16, and have until June 6 to respond. Dayen writes:
“That’s after Yellen’s projected X-date, but they could certainly file earlier. And it would be absurd for them not to: Biden’s entire objection to "invoking the 14th Amendment," whatever that means, is that it would take too long. Here’s an opportunity with an active lawsuit to get the kind of clarity they’re seeking before the X-date is reached.
So what could Biden do? He could file a response offering no defense on the constitutionality of the debt ceiling, or even agreeing that it’s unconstitutional. That would leave Judge Richard Stearns to have to rule on the injunction, when there is no real argument between the parties. He could seek an "intervenor," someone with standing to argue in the stead of the president and Treasury secretary, but since they are the only ones who can actually harm the plaintiffs—by failing to execute appropriations, and by furloughing or firing employees—it’s not clear who the intervenor could be.”
Jeff Hauser, executive director of the anti-corruption Revolving Door Project, in a statement Monday, urged Attorney General Merrick Garland to file papers supporting the National Association of Government Employees’s request for an emergency injunction as soon as possible.
“NAGE’s argument is sound, and indeed, has been all but endorsed by the President himself. Garland has no reason to defend the nonsense which is the debt ceiling, besides a vague sense of formality and tradition driven by elite political etiquette. The cost of prioritizing tradition for tradition’s sake would be irreparable harm to the U.S. and global economies, caused by a first-ever U.S. default as soon as June 1—or else complete capitulation to the ultra-MAGA faction of the House Republican caucus that marionettes Kevin McCarthy.”
“While President Biden may be willing to keep channels open until the very last minute with nihilistic, bad-faith Republican lawmakers, the Justice Department’s obligation is to the Constitution, which is unequivocal: the president cannot pick and choose what congressionally appropriated obligations to meet, and the debt of the United States shall not be questioned.”
The decision on issuing an emergency injunction rests on the shoulders of Judge Stearns, who actually could decide whether or not the U.S. defaults on its debts on June 1.
Attorney Miles Mogulescu, writing for Common Dreams, did a little digging into Stearns’ background. Mogulescu wrote that Stearns began his career working for liberal Democrats. In 1972-73 he was special assistant to Sen. George McGovern who ran for president on an anti-war platform. From 1975-76, Stearns was a speechwriter for Tip O’Neill who at the time was lieutenant governor of Massachusetts and later was a legendary speaker of the House. From 1979-80 he was director of delegate operations for Sen. Ted Kennedy’s presidential campaign.
A Rhodes scholar, Stearns roomed with Bill Clinton at Oxford. In 1993, he was reportedly President Clinton’s top choice to replace William Sessions as FBI director. Stearns withdrew from consideration after facing criticism for his liberal leanings and opposition from then-Attorney General Janet Reno.
It may or may not be determinative to Stearns, but in 2011 when President Obama faced a Republican threat of default if he didn’t agree to budget cuts, Stearns’ Oxford roommate, former President Clinton, said that if he were still President—"if it came to that"—he would raise the debt ceiling using powers granted under the 14th amendment of the Constitution. "I think the Constitution is clear and I think this idea that the Congress gets to vote twice on whether to pay for [expenditures] it has appropriated is crazy," Clinton said in an interview with The National Memo columnist Joe Conason. Obama didn’t listen to Clinton’s advice and cut a debt reduction deal with Republican Speaker of the House John Boehner, which many believe slowed the recovery from the 2008 economic meltdown, and may even have helped Trump become president.
Mogulescu said Stearns doesn’t seem to have ruled on any significant constitutional issues such as abortion, gun regulation, climate change, or voting rights. He likened Stearns’ judicial philosophy to that of former Supreme Court Justice Stephen Breyer, “a moderate liberal and opponent of originalism/textualism.”
“If Judge Stearns approaches constitutional interpretation similarly to Justice Breyer, he might be inclined to overrule the Debt Limit law as a ‘collective suicide pact,’” Mogulescu concluded.
So there actually is litigation challenging the constitutionality of the debt ceiling that could act as a deus ex machina to end the GOP’s hostage-taking should Biden choose to avail himself of it.
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