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The President Is Already in Litigation Over the Debt Ceiling

On today's X-Date: The White House and its allies are acting like they
must avoid a legal battle over the debt ceiling. Too late.

 

 

Evan Vucci/AP Photo

By David Dayen

**** At one point, House Speaker Kevin McCarthy did
say that there would need to be an agreement in principle to end the
debt ceiling mess by the end of this past weekend in order to have
enough time to ferry it through Congress before the X-date. Well,
you're in for the shock of your life: The weekend passed, and
there's still no agreement. If anything, the parties are further apart
than before.

A brief recap: On Thursday, after McCarthy started to make positive
noises <[link removed]> about a
deal, the House Freedom Caucus demanded that negotiations stop
<[link removed]> and that
the Limit, Save, Grow Act, the conservative wish list that the House
barely passed last month, be the final offer. Within 24 hours,
Republicans stopped the negotiations, then restarted them
<[link removed]>,
then stopped them
<[link removed]>
for most of the weekend, and finally restarted them Sunday night
<[link removed]>
in advance of President Biden's return to Washington and a meeting
with McCarthy today.

Throughout this weekend of fits and starts, the White House leaked that
they offered significant spending freezes
<[link removed]>
on both defense and nondefense discretionary spending, amounting to a
$1.1 trillion cut over ten years, which Republicans rejected because
they want higher defense spending. A Saturday statement
<[link removed]>
from the White House press secretary emphasized closing tax loopholes
and further drug price reform (Maybe work on the initial reform so it
isn't useless
<[link removed]>!),
which the president reinforced on a couple of
<[link removed]> occasions
<[link removed]>.
Meanwhile, Republican demands have gotten more extreme
<[link removed]>,
including stiffer work requirements for SNAP and border security
measures that weren't even in Limit, Save, Grow.

In other words, Republicans are showing to their base (MAGAs) that
they're fighting to get everything they can, while Democrats are
showing to their base (centrist op-ed writers) that they're really
responsible, that they have made concessions and are prepared to make
more. This dynamic is the inevitable by-product of the corner that the
White House has boxed themselves into.

Administration officials have dismissed
<[link removed]>
executive actions to deal with the debt ceiling. After spending months
promising not to negotiate, they have completely reversed themselves,
and said that only a bipartisan agreement will prevent catastrophe. And
they've positioned themselves as the reasonable party in case that
catastrophe emerges. That combination incentivizes Republicans to make
more and more extreme offers. They're not pretending to be the
reasonable ones, and they know the White House has offered themselves no
avenue of escape outside of accepting their terms. It's just a
horrible negotiating position that the president willingly adopted,
aided by the worst cohort of self-loathing Democrats
<[link removed]>.

**Read all of our debt ceiling coverage here**
<[link removed]>

Click to Support The American Prospect <[link removed]>

Now that reality has dawned that a compromise really isn't all that
likely, Biden is again talking about the 14th Amendment, but in a
bizarre way. "I'm looking at the 14th Amendment as to whether or not
we have the authority. I think we have the authority," Biden said at a
press conference at the G7 meetings in Japan. "The question is, could it
be done and invoked in time that it would not be appealed, and as a
consequence past the date in question and still default on the debt.
That is a question that I think is unresolved."

This is not how the law works. The president doesn't go to a court and
say, "I invoke the 14th Amendment," the way that Michael Scott once
said, "I declare bankruptcy
<[link removed]>." You can't get a court
to issue an advisory opinion (the president's lawyers at the Office of
Legal Counsel can, and actually have, but their advice has been hidden
from the public
<[link removed]>
since 2011). If you're the president and you want to keep borrowing
money after the debt ceiling is hit because you think you are legally
bound to do so by the Constitution, you just keep borrowing money until
somebody stops you.

Somebody, of course, would try to stop the president. In fact, this has
been the administration's response to increasingly bold calls from
Democrats (like 66 members of the Progressive Caucus
<[link removed]>)
to use the 14th Amendment to keep paying bills. Ezra Klein essentially
mainlined the White House's argument
<[link removed]>
on Sunday: They fear that if they try to use executive action,
Republicans will sue, and the conservative Supreme Court will get a
crack at deciding it, at which point notions of legality matter less
than raw political power. And if they shoot it down, then the White
House would shoulder the blame for their power-aggrandizing tactic,
losing the cloak of reasonableness they have clung to throughout this
crisis.

All of this is well and good in the context of a debating salon or
tabletop game or something. But the idea that this situation could
proceed without litigation ended on Friday afternoon, when the National
Association of Government Employees finally filed for an emergency
injunction
<[link removed]>
in their case alleging that the debt ceiling is unconstitutional. As I
wrote last Friday
<[link removed]>,
this finally forces the federal judge in the case to make a speedy
ruling; before Friday, the case had sat dormant for 11 days.

I did an X-Date story a while back
<[link removed]>
about the case, and a long thread on Twitter
<[link removed]> on Friday
afternoon about the new motion; you can check them both out. NAGE's
argument <[link removed]> 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. Because Janet Yellen's extraordinary
measures to stay under the borrowing limit included suspending
investments into NAGE employee retirement plans, there is active and
ongoing harm, which will get worse if the ceiling is hit.

But the important thing to say here is that notion of litigation is no
longer theoretical. There is a case, and the plaintiffs are seeking
quick-action relief. Anyone spinning out a scenario about what

**might** happen if the debt ceiling statute's constitutionality is
challenged is just being ignorant. It's being challenged in federal
district court in Massachusetts right now.

[link removed]

Which brings us to the interesting part, involving the

**defendants** in the case: Janet Yellen, and Joe Biden. They were
served with a summons on May 16, and now have until June 6 to respond.
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.

That might offer a way out of the White House's political box. "The
best way to shift the defaults would be for DOJ to acquiesce in this
lawsuit," argued Jeff Hauser of the Revolving Door Project. "An
unopposed complaint doesn't necessarily demand injunctive relief be
granted, but it feels like a good chance, and a ruling there would alter
the calculus and shift the onus to the GOP."

Option B is for Biden to keep finding a way with McCarthy to harm
beneficiaries of government services and the broader economy, a year and
a half before his re-election. For some reason, Biden sees that as
preferable to a pitched legal battle. Well, it's too late: That legal
battle has already been joined.

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