Lawsuit filed against Treasury Secretary Janet Yellen challenging debt limit law as congressional standoff threatens default

Attorneys representing a federal government employees' union sued Treasury Secretary Janet Yellen over the constitutionality of the debt limit, which caps the amount the federal government can borrow to pay for congressionally approved spending.

The move comes amid tense negotiations over raising the debt ceiling as the administration counts down to when it will no longer be able to pay the nation's bills, known as the X-date. Those bills include those due on the country's debt — and default on the public debt could have disastrous consequences for the national economy and financial system, experts warn.

The National Association of Government Employees, which represents nearly 75,000 employees working in agencies across the federal government, is seeking an injunction that would prevent the Biden administration from suspending operations of the federal government because it has reached the debt limit and an order declaring the statute unconstitutional and unenforceable. 

"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," the union's National President David Holway said about the suit filed Monday. "The debt ceiling has become a political football for certain members of Congress. If Congress will not raise the debt limit as it has nearly 80 times before without condition, it leaves no constitutional choice for the president." 

House Republicans, who want to slash spending in exchange for raising the debt limit, and Democrats, who want the debt limit raised without conditions, have made little progress in negotiating an agreement.

The complaint argues the president must ensure the federal government does not default on its debt, pursuant to the 14th Amendment, which states that the validity of the public debt "shall not be questioned." The president still must find the money to meet its obligations to public debt holders should the debt limit be reached, either through borrowing or by cutting or spending enough to meet debt payments, the suit claims, but the president does not have the authority to cut or suspend programs authorized and funded by Congress under the Constitution.

It also argues the law establishing the debt limit is unconstitutional because it requires the president to decide and seeks suspension of the law until Congress decides which bills should be paid, under its constitutional authority.

Failure to pass legislation to raise the debt limit, the lawsuit argues, will mean "members will suffer irreparable injury from layoffs, furloughs, and loss of employment that are taken without any legitimate authority by the President."

In:
• Debt Ceiling
• Janet Yellen
• National Debt

Sarah Ewall-Wice

CBS News reporter covering economic policy.

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