Is the federal debt limit unconstitutional?
Because of the potentially catastrophic consequences of defaulting on the national debt, some government workers and legal experts have offered this solution: Just don’t pay attention to the debt limit. It shouldn’t even exist.
A labor union that represents about 75,000 public-sector employees is suing Treasury Secretary Janet Yellen and President Joe Biden over the constitutionality of the federal debt limit, even though these officials want to see the limit raised as soon as possible.
But it is up to Congress to raise the debt limit, and House Republicans are demanding steep spending cuts before giving their consent. Last week, Yellen warned that the U.S. could default on its obligations as soon as June 1 if Congress fails to lift or suspend the debt ceiling.
The debate centers on the amount of money the government can borrow to pay its existing obligations, a vast range of commitments that include military salaries, Social Security benefits, Medicare services, tax refunds and interest on the debt it has accrued.
Many experts say the consequences of defaulting would be dire but unpredictable. It could mean a delay in federal workers’ pay as well as Social Security and food assistance benefits, along with a downgrade of the country’s credit rating, which could make it more expensive for the U.S. Treasury, businesses and consumers to borrow money.
Treasury debt is a widely held asset, and because it is used as collateral in transactions, a drop in their value could mean people have to put up more collateral or cancel their dealings, reported Catherine Rampell, a Washington Post columnist and frequent “Marketplace” guest. These effects and others could be so extensive as to cause a “systemic shock,” Rampell wrote.
In January, the Treasury reached the debt limit, which stands at $31.4 trillion, but since then Yellen has taken what she calls extraordinary measures to pay the government’s bills.
The National Association of Government Employees has entered the controversy with its lawsuit. The union argues that the debt limit is unconstitutional because it gives the president the ability to end or limit government spending to meet its debt obligations. However, doing that goes beyond the scope of a president’s powers, the union says, because that spending has already been approved by Congress.
“This litigation is both an effort to protect our members from illegal furloughs and to correct an unconstitutional statute that frequently creates uncertainty and anxiety for millions of Americans,” NAGE National President David Holway said in a news release.
The lawsuit cites the 14th Amendment to the Constitution, noting that it “requires the President to meet obligations to the holders of federal debt.” Having a debt limit thus “puts the President in a quandary.”
The 14th Amendment, which was added after the Civil War, is notable for providing all people “equal protection of the laws,” a clause that’s been used to protect people against discrimination based on their race or gender, among other characteristics.
But there’s another part, Section 4, that states the “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.”
NAGE is among many political players who’ve been talking about the amendment. In fact, its use as part of a potential solution is being weighed at the highest levels of government. At a news conference Tuesday, Biden said he has considered invoking the 14th to resolve the debt ceiling. “But 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,” he said.
However, he added that he would take a look at it “months down the road” and judge whether it could succeed in court.
Rebecca Zietlow, a professor at the University of Toledo law school, said she thinks the debt limit does violate the 14th Amendment. Once the country has agreed to take on debt and make expenditures, questioning it is unconstitutional, she said.
After the Civil War, members of the Reconstruction Congress were concerned that representatives from the Confederate states might “repudiate the U.S. national debt,” especially debt that was incurred fighting the war, Zietlow explained.
Refusing to pay the national debt would damage the country, which is what Section 4 of this amendment sought to avoid, Zietlow explained.
“That’s exactly what the members of Congress are threatening to do right now — refuse to pay debts that they’ve already incurred. But in fact, they’ve passed legislation and told the president to spend this money through the appropriation bills,” she said. “Now they’re saying, ‘We’re gonna stop the president from spending this money,’ which could not only really harm our nation’s economy, but of course at this point harm the world economy.”
Anita Krishnakumar, a professor at Georgetown University Law Center, said it’s “very fair” to make the argument that not paying the national debt violates the Constitution. But if you’re borrowing money to pay the debt without Congress’ approval, she said you may be violating Article I, Section 8 of the Constitution. She said this part of the nation’s governing document gives Congress the power to borrow money — not the president.
Even though Biden said the 14th Amendment could come into play, Yellen said during a televised appearance Sunday that invoking it could lead to a “constitutional crisis.”
Krishnakumar hopes congressional holdouts soften their stance and raise the limit so we don’t have to get to that point. Congress has always ended up raising the limit, she noted, although we came close to defaulting in 2011.
“I wish [Congress] just wouldn’t even use it as leverage in political gamesmanship to try to get the president to accept some of their policy preferences,” she said.
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