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The Ingenious Lawsuit That Could Break the Debt Ceiling Impasse

A union that’s already endorsed Joe Biden for 2024 is suing him and Janet Yellen. Here’s why.

House Speaker Kevin McCarthy and President Biden in the Oval Office
Anna Moneymaker/Getty Images
House Speaker Kevin McCarthy and President Biden met in the Oval Office on Thursday.

President Joe Biden and House Speaker Kevin McCarthy had an unproductive meeting Tuesday over raising the debt ceiling. “I didn’t see any new movement,” McCarthy told reporters. Translation: “I’m not ready to raise the debt limit.”

It looks pretty hopeless. But as of Monday, we have an ingenious idea about how to resolve this impasse. It’s been put forward by the National Association of Government Employees, or NAGE, which represents 75,000 federal workers, including civilian employees in the Air Force, Navy, Defense Logistics Agency, Environmental Protection Agency, Commerce Department, and Department of Veteran Affairs.

NAGE’s gambit is a long shot, but if it works it will require Biden to ignore the debt ceiling and carry on business as normal. The twist is that NAGE, which was the second national union to endorse Biden in 2020 and which, as recently as May 1, re-endorsed him for 2024, is suing Biden and his Treasury secretary, Janet Yellen, in federal court. It’s an unusual way to show affection. But NAGE is arguing that the executive branch is barred by the Constitution from lifting a finger to plan contingencies should the debt limit be reached (possibly as early as June 1). That’s because Congress never directed it by statute to do so. And because it never did that, the debt limit itself is unconstitutional and unenforceable.

McCarthy doesn’t want to raise the debt ceiling without making huge budget cuts unacceptable to Biden, to the Democratic Senate, and to McCarthy’s own House caucus, which narrowly passed McCarthy’s draconian debt ceiling bill only on his explicit promise that it would never, ever become law. I suggested last week that Biden should present McCarthy with some minor spending concessions as a down payment on budget negotiations to commence after passage of a clean debt ceiling bill. Should McCarthy tell Biden to pound sand, I advised, Biden could give a prime-time TV speech saying Congress refused to pay its own bills, in violation of the Fourteenth Amendment’s proviso that “the validity of the public debt … shall not be questioned” and that he, Biden, was powerless to resolve this because he doesn’t have power of the purse. Only the deadbeat Congress has that.

Biden didn’t follow my advice, but NAGE came up with a better strategy similarly focused on Congress’s power of the purse. The lawsuit asks the court to order Yellen and Biden to stop making contingency plans in the event that the so-called “x-date” arrives and to ignore all this debt-limit nonsense entirely—not because that’s sound governance (though it is) but because doing anything else would be an unconstitutional power grab, akin to what Richard Nixon tried in 1973 and Donald Trump tried (by withholding military aid to Ukraine) in 2019.

Perhaps you remember the impoundment crisis of 1973. It wasn’t as memorable as the Watergate scandal, but for budget dweebs it was just as important. The situation was the opposite of what we face now, with the president accusing Congress of being spendthrift and Congress saying the president lacked the constitutional authority to withhold (“impound”) appropriated funds. President Richard Nixon unilaterally decided, among other things, to suspend funding for subsidized housing and community development programs, to eliminate certain farm programs, to pare back some disaster aid, and to withhold expenditures required under the 1972 Clean Water Act.

Nixon wasn’t the first president to impound funds, but he impounded more than his predecessors did, and by 1973 Congress was getting pretty fed up with the “imperial presidency” (Arthur Schlesinger Jr.’s book of that title would be published in November of that year) and with Nixon himself (the Senate’s Watergate hearings would begin in May). To fight back, Congress drafted the Impoundment Control Act, which became law the following year. Weakened by Watergate, Nixon signed the bill just a few weeks before he resigned to avoid impeachment. Nearly half a century later, in 2019, Congress would impeach President Donald Trump partly for conditioning release of an appropriation for Ukraine military assistance on that nation’s willingness to investigate Hunter Biden. (Trump was acquitted in the Senate, just as he was after his second impeachment in January 2021.) The Impoundment Control Act had cleared up any ambiguity about whether the president had the power to second-guess congressional appropriations. He did not.

The genius of the NAGE lawsuit, which was filed in U.S. District Court in Boston by a team of attorneys that includes occasional New Republic contributor Thomas Geoghegan, is that it doesn’t question “the controversial proposition that Congress can limit the indebtedness of the United States.” In that respect this lawsuit is quite different from any last-resort legal action the Biden administration may attempt if no debt agreement is reached. In that event, Biden will argue that Congress can’t limit indebtedness because that conflicts with the Fourteenth Amendment.

The NAGE lawsuit sidesteps that question. It says: Go ahead, Congress, and limit indebtedness if you want—but if your method requires the president to clean up after your mess, tear it up and start over. The 1982 debt ceiling law as amended over the past 41 years is unconstitutional and unenforceable, the lawsuit says, “because it necessarily confers on the Defendant President the unchecked discretion to cancel or curtail the operations of government approved by Congress without the approval of Congress.” Nixon didn’t have that power; Trump didn’t have it (in the end he backed down); and now Biden, much as NAGE admires him, doesn’t have it either. Because he lacks that power, he must pay the debt-ceiling law no heed.

Why does NAGE have standing to sue? Because when the government runs out of money it can’t pay its employees. Already, the Treasury Department, as part of its bag of “extraordinary measures”—tricks to delay reaching the debt ceiling—has suspended investments in NAGE members’ retirement funds. If the debt limit isn’t raised, the lawsuit says, NAGE members will be furloughed, laid off, or perhaps required to work without pay, as happened to government employees during the 35-day government shutdown in December 2018 and January 2019. (Unlike in the current situation, the lawsuit says, during a shutdown the executive branch possesses the power to make contingency plans—“essential workers” and all that—because it’s explicitly granted in the 1884 Anti-Deficiency Act. Government shutdowns may be stupid, but they aren’t unconstitutional.)

Whether this lawsuit will succeed is anybody’s guess. It was filed only two days ago, and Geoghegan, who’s a friend, followed his usual practice when I asked him about it and declined to talk. Harvard’s Laurence Tribe, who is not a lawyer on the case, told the Associated Press that its progress will depend in part on which District Court judge in Boston is assigned the case. “It could move extremely quickly,” he said. “It’s quite hard to predict.”

But it’s very hard to argue with NAGE’s logic. If Congress doesn’t raise the debt ceiling, that’s Congress’s problem, not Biden’s. You want power, Speaker McCarthy? You’ve got it; your problem is you don’t want the responsibility that goes along with it. The NAGE lawsuit invites us to think of Congress as a body that’s not merely able but obliged to govern. You don’t like how the president spends the taxpayer’s money, Mr. Speaker? Then pass a budget, for Chrissakes, and stop playing childish games.