Judge postpones showdown over 14th Amendment debt powers

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A federal judge in Boston has postponed a hearing scheduled for this week in a lawsuit that a government workers’ union filed in a bid to confirm President Joe Biden’s authority to ignore the debt limit by invoking the 14th Amendment.

In a court filing on Monday, Justice Department lawyers cited the Sunday announcements by Biden and House Speaker Kevin McCarthy of a deal to lift the debt ceiling and argued that the development undercut the urgency of the legal dispute.

Last week, with a potential default looming by June 1, U.S. District Court Judge Richard Stearns ordered the government to respond in writing to the suit by Tuesday. He scheduled arguments for Wednesday in Boston on the union’s request for a preliminary injunction requiring Biden and Treasury Secretary Janet Yellen to continue to pay employees’ salaries and other debts even if the $31.4 trillion debt cap was exceeded.

However, Stearns said in a brief Monday order that the hearing would be put off indefinitely.

“In deference to the efforts of the executive and legislative branches to resolve the current impasse over the debt ceiling statute, the court will postpone the hearing on [the union’s] motion for a preliminary injunction scheduled for this Wednesday, May 31, 2023, pending any further order of the court,” Stearns wrote.

The judge’s action followed an unusual Memorial Day holiday filing by the Justice Department that appeared aimed at trying to avoid staking out a clear position on the main legal question in the case: whether the 14th Amendment’s language about the national debt authorizes or even requires the president to keep paying U.S. government financial obligations in the face of a statute that seeks to set a limit on the total debt outstanding.

While some liberal lawmakers and other activists urged Biden to publicly embrace the 14th Amendment argument and declare that he could ignore the debt limit, he took a more nuanced position, saying earlier this month that he was considering claiming such a power in the future but that a court battle over the issue now would create uncertainty and could be economically damaging.

As the debt limit negotiations with Republicans intensified on Friday, Deputy Treasury Secretary Wally Adeyemo flatly ruled out using the 14th Amendment to try to navigate through the current crisis.

In urging Stearns to put off the Tuesday legal deadline and Wednesday hearing, Justice Department lawyers also noted that Yellen said last week that the latest data led Treasury officials to conclude they could reshuffle federal balance sheets to keep paying U.S. government bills and salaries through June 5, the so-called X-date.

“Because the X-date is now estimated to be June 5, and because Congress may pass legislation this week raising the Debt Limit, Defendants submit that proceeding on the current schedule would be unnecessarily burdensome and would waste both the parties’ and the Court’s resources,” Special Counsel Brad Rosenberg and other lawyers from Justice’s Civil Division wrote. “Indeed, the relief that Plaintiff seeks may be counterproductive in light of the agreement in principle that has been reached.”

Stearns issued a second order on Monday that postpones the Tuesday deadline for the Justice Department to respond to the union’s legal arguments.

Attorneys for the union pressing the suit, the National Association of Government Employees, indicated that it opposed postponing the deadline or the hearing, according to the government’s filing. Spokespeople for the union did not immediately respond to messages on Monday seeking comment.

During a videoconference in the case last week, Stearns, an appointee of President Bill Clinton, initially told lawyers for the union that if the matter was as urgent as they contended, then Biden should take some unilateral action to avoid it. However, the judge later agreed to set a hearing on the eve of what then appeared to be the date the government would have to stop paying all its bills.