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The Vanishing 14th Amendment Case

Plaintiffs claiming that the debt ceiling is unconstitutional didn't
file a motion for immediate relief. Therefore, the case has sat dormant.

 

 

Francis Chung/POLITICO via AP Images

By David Dayen

**** Democrats are frustrated; that much is clear.
They've seen the White House kick their House and Senate leaders out
of the debt ceiling negotiation room. They see the president hinting at
some form of strengthened work requirements
<[link removed]>,
most likely for Temporary Assistance for Needy Families, which could end
up the sacrificial lamb
<[link removed]>
in the talks. Even if that gets stricken from the deal amid a left-wing
backlash
<[link removed]>,
the "victory" would be only Obama-style spending caps that could be
debilitating to the macroeconomy
<[link removed]>,
among other things.

That's why you see Democrats urging the White House to not play along
with this hostage negotiation and take extraordinary action. Eleven
senators (Sanders, Smith, Warren, Markey, Merkley, Hirono, Welch,
Blumenthal, Reed, Whitehouse, and Fetterman) have now asked Biden
<[link removed]> to "exercise
your authority under the 14th Amendment of the Constitution, which
clearly states: 'the validity of the public debt of the United States
... shall not be questioned.'" Initially, there were five senators on
that letter. Fetterman issued his own solo statement
<[link removed]> along similar
lines today, as did Warren
<[link removed]>. Sen. Angus
King (I-ME), who is not exactly on the left side of the caucus, also
urged a 14th Amendment option. "I think there's some very strong legal
arguments. The 14th Amendment is pretty explicit," he told Semafor
<[link removed]>.

Let's face it: The administration is cool to this idea. I've heard a
couple opinions as to why. But the big one is that invoking the 14th
Amendment action would lead to a court battle, and the same financial
chaos from a default would then happen, only with a shift in the blame
game, with the White House being accused of taking a legally risky long
shot with the U.S. economy in the balance.

The thing is, the 14th Amendment option

**is** in court, right now. There's a complaint
<[link removed]>
and a docket
<[link removed]>
and everything. If that case could be decided ahead of time, there would
be no legal chaos. But the plaintiffs in that case appear to have
neglected to file in such a way that would lead to rapid action, which
some have called a form of legal malpractice.

Let's look at what White House officials are saying about the 14th
Amendment option. Their first rebuttal is bizarre: Apparently, some
people in the White House have said that the 14th Amendment only lets
the executive make debt payments, and

**not** other ones. The example given was that it wouldn't help with
Social Security payments.

**Read all of our debt ceiling coverage here**
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First of all, that's a terrible example. Social Security is an
off-budget vehicle with a dedicated, weekly funding source that is not
at all tied to the debt ceiling. There is even surplus cash, legally
required to go to Social Security, sitting in a trust fund in the form
of bonds. "The money from the designated tax would presumably not be at
issue," said economist Dean Baker. "With the bonds, it seems the 14th
Amendment absolutely would say that the money would be paid." In
addition, a 1996 law allows the government
<[link removed]>
to pay down the Medicare and Social Security trust funds until the debt
ceiling is increased.

Because the Treasury sends the actual payments, the only issue might be
if their staff is furloughed
<[link removed]>
and nobody can run the computers, though much of the functions of those
payments are automatic.

Second, arguing that Social Security was just used as a (poor) example
of how the 14th Amendment only protects debt service and not all the
other payments depends on a tortured reading of the word "public debt,"
Baker said. "Arguably every legal commitment to spend creates a debt.
For example, if a payment is due to a military contractor, that is a
debt. Certainly, that is how it is seen in bankruptcy law." Also, the
whole point of the 14th Amendment idea is that if public debt must be
repaid, then the president can keep borrowing and repay that debt.
Therefore, money would be available for other obligations.

The White House is not a monolith, but a place where thousands of people
work, and there are lots of opinions, not just one. So it's probably
best to just take the words of the president himself
<[link removed]>.
Last week, he said that, while he was considering the 14th Amendment,
"the problem is it would have to be litigated. And in the meantime,
without an extension, it would still end up in the same place."

In other words, if the president, faced with the impossible task of
violating the Constitution or violating federal law, sides with the
Constitution, and invokes the 14th, then conservative groups sue him
over doing so, running to their pet courts in Texas to get an
injunction, and we hit the debt ceiling anyway, with all the attendant
chaos. I've heard arguments that this would at least partially exempt
House Republicans in the post-default blame game.

It would be good, then, if there were already a case working through the
courts, arguing that the debt ceiling statute is unconstitutional
because, when reached, it forces the president to break the law.
Fortunately, there is just such a case, and it was filed on May 8.

I wrote last week
<[link removed]>
that the National Association of Government Employees, which is
affiliated with SEIU, filed that case, arguing that their members were
at risk of being furloughed or fired if the debt ceiling was hit. There
are arguments as to whether, because the government might have other
options (minting a trillion-dollar coin, or selling "premium bonds" with
no face value), the debt ceiling statute truly creates this dilemma on
the executive branch.

[link removed]

But it would be good to know that answer now! That way, the legal
murkiness would be lifted, and everyone could have a sense of the
options. The quickest way to do this would be for NAGE to seek a
temporary restraining order or preliminary injunction. That would force
Judge Richard G. Stearns to take rapid action, which is necessary, with
the debt ceiling just days away from being reached.

Inexplicably, the plaintiffs did not file a motion for a TRO or
preliminary injunction. As a result, this case-which could clear up
the legal quagmire that Biden says is preventing him from invoking the
14th Amendment-has seen no action
<[link removed]>
in the week and a half since it's been filed, with less than two weeks
to go until the X-date.

I asked Thomas Geoghegan, one of the attorneys in the case, why they
didn't file for fast-moving relief. "As a general rule our firm does
not comment on ongoing cases in which we are counsel," he responded.

Maybe NAGE doesn't think it could win such a case until the debt limit
was hit; anticipatory rulings aren't often the judiciary's thing.
But there is real chaos going on in financial markets right now as a
result of the failure to raise the debt ceiling. One-month Treasury bill
yields have skyrocketed
<[link removed]>;
anyone trying to trade that bond will have to give up more for it,
causing a real financial loss.

That's why I've felt that a government bondholder is a better
plaintiff
<[link removed]>
for this case. But NAGE could have simply

**become** a government bondholder by purchasing a one-month Treasury
bill. That would have generated the current financial loss. This path
was also not taken.

It was initially promising that someone was thinking ahead enough to
file a case that would force a decision on the 14th Amendment and the
constitutionality of the debt ceiling statute before the looming X-date.
But by failing to do so properly, the case has become far less relevant.
That's a shame, because it's taken an arrow out of the quiver of a
president who has put himself in a terrible negotiating stance.

However, there's one last thing to consider: The defendant in NAGE's
case is actually the president, along with Treasury Secretary Janet
Yellen. They have not responded to the complaint. If this were a
president who wanted to eliminate the legal uncertainty around the 14th
Amendment, he could use the opportunity to file his own opinion that the
debt ceiling is unconstitutional, and offer no defense at all.

At any rate,

**some** response would be satisfying. The clock is ticking.

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