Mariam Zuhaib/AP Photo
Treasury Secretary Janet Yellen testifies at a House Ways and Means Committee hearing, March 10, 2023, on Capitol Hill.
Finally, they are discussing it.
The New York Times reports that the Biden administration, faced with the Republican Party intention to hold the global economy hostage over the debt ceiling, is considering whether the whole thing is unconstitutional.
The words of the 14th Amendment make the strongest argument: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” One wonders how the framers of the amendment could have made their intentions clearer without being clairvoyant.
Benjamin Wade, the Reconstruction-era Ohio senator who played a critical role in the provision’s enactment, laid it out: “I have no doubt that every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.”
Some commentators have raised separation-of-powers issues: Can the president simply ignore a duly enacted statute? And furthermore, will markets accept unilateral executive action if they are not sure it is valid? This uncertainty led President Obama to reject the tactic (unwisely, in my view) the last time the GOP threatened to blow up the economy.
Both questions can be addressed, because we already have a remedy in place. It involves suing Janet Yellen.
A bond is a contract between a lender and debtor. The lender provides money now in order to be paid back with interest later. Secretary Yellen’s announcement on May 1 makes one thing crystal clear: The federal government will break that debt contract, because the debt ceiling statute, by denying the necessary borrowing capacity to cover debts, forbids the Treasury from honoring its contracts.
This scenario is not speculation; it is literally the position of the law as it stands today. If nothing changes, the federal government will not honor its debts to bondholders. That means that it is time for a lawsuit against the Treasury, arguing that its refusal to pay the debt violates the Constitution.
Who would have “standing,” that is, the legal right to bring the case to court? The answer is straightforward: anyone who holds federal government debt and would therefore be owed money by the Treasury. The Court’s standing doctrine makes this clear. It insists on concrete and particularized, actual or imminent injury-in-fact, causation of the injury, and redressability by court action. All three are present here. If I hold a T-bill, and the Treasury says it will not pay me on June 1, then I have all concrete and imminent injury necessary to bring a suit. That injury is caused by the debt ceiling. And it can be redressed by finding that ceiling unconstitutional, enabling the executive to pay the government’s debts.
It’s one thing to have the president simply ignore the debt ceiling statute. The markets might get skittish because of legal uncertainty. But if a court declares the ceiling unconstitutional, that’s a different story. If anything, that would increase certainty and thus stability. With a favorable ruling, markets would know that Republican hostage-taking is over.
In moving ahead with the suit, progressives should beat conservatives at their own game, and choose a venue most likely to support them. Progressives have no judicial district as lawless as the single-judge districts in Texas that Republicans have repeatedly used, nor should we want one. But there are two clear possibilities: the Northern District of California headquartered in San Francisco, where every judge is either an Obama or Biden appointee, or the District of Massachusetts in Boston, where seven of the nine active judges are Democratic appointees, even the GOP judges are well regarded, and every active member of the appeals court is a Democratic appointee.
Unlike, say, Matthew Kacsmaryk, the Texas judge who recently attempted to ban mifepristone in a comically bad opinion, all these judges are respected professionals, and will not simply give plaintiffs the win for ideological reasons. They will, however, carefully consider a serious legal claim, and the constitutional argument certainly is that.
Such litigation might also get an interesting assist: Since the defendant in this case is the U.S. Treasury, one might genuinely wonder what sort of defense Treasury will present. If the Justice Department’s Office of Legal Counsel writes an opinion stating that the debt ceiling is unconstitutional—as it should—one wonders whether it would present much of a defense at all.
House Republicans, of course, will scream, and will try to intervene. It isn’t clear that they could: They themselves might not have standing under current doctrine, because Congress often does not have standing to defend federal statutes. If they do not, they will have no one to blame but themselves. Restrictive standing rules came from the conservative legal movement. But progressives should not necessarily oppose House intervention: The constitutional argument against the debt ceiling is strong, and progressives should not be in the business of kicking litigants out of court.
Assuming, however, that both the district and circuit courts follow the constitutional text and history and strike down the debt ceiling, wouldn’t the Supreme Court simply do the Republican Party’s bidding and overturn the other courts? They might. But they might also be reluctant to destroy the full faith and credit of the United States. The GOP’s billionaire contributors do not want a market meltdown. Neither does Harlan Crow.
If the Supreme Court does overrule the lower courts, it will be clear for all to see who is responsible for the ensuing catastrophe. The House GOP’s entire strategy has been to crash the economy while avoiding blame. A nakedly partisan Supreme Court judgment would block that path.
No legal strategy is foolproof, and litigation cannot solve the basic problem of a lawless Republican Party bent on destruction. But given the House GOP’s eagerness to take the world economy hostage, the best tack here is simple: take away the terrorist’s gun.
