Fiscal cliff close call renews cries to end debt limit leverage

WASHINGTON — The agreement President Joe Biden struck with House Republicans to raise the debt limit aims to avert a catastrophic default on the nation’s debt. But the brinkmanship that brought the United States within days of being unable to pay its bills has renewed calls for the Biden administration to stop the debt ceiling from continuing to be a political tool.

After declaring this year that he would not negotiate spending cuts in exchange for raising the debt limit, Biden did exactly that. The deal includes spending caps and scales back some of the president’s policy priorities in exchange for suspending the debt limit for two years.

The bill, which the House is expected to bring to a vote today, has reopened the door to the debt limit being a perpetual point of leverage that allows the party in the minority — in this case, Republicans — to use the borrowing cap to extract legislative concessions.

That has raised questions about whether there is a way to preclude another episode like this one — by abolishing the debt ceiling or using the 14th Amendment to render the statutory limit unconstitutional.

Biden opted against challenging the constitutionality of the debt limit this time around but suggested last week that he had the authority to do so and hinted that he might try to use it in the future.

The president said Sunday any discussion about whether to invoke the 14th Amendment was not imminent. “That’s another day,” he said.

Invoking the 14th Amendment has been floated as a potential solution to avoiding future debt limit fights because it includes a clause stating that “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.”

Some legal scholars say that clause overrides the statutory borrowing limit, which is set by Congress and can be lifted or suspended only with lawmaker approval.

The Biden administration has been studying whether it could use the 14th Amendment to circumvent Congress on the basis that it would be a violation of the law for the federal government not to pay its bills on time.

When and how Biden might try to carry out that legal test could affect how his legislative agenda holds up in a potential second term and how future presidents navigate budget negotiations when a party in the minority appears willing to risk a default.

The Justice Department signaled this week that the Biden administration preferred to keep its legal thinking on the matter private.

This month, the National Association of Government Employees union filed a lawsuit in a district court in Boston challenging the constitutionality of the debt limit statute and seeking to prevent the federal government from suspending certain operations if the debt limit were breached.

A federal judge had asked the Justice Department to respond to the lawsuit by Tuesday and explain in writing its position about whether the 14th Amendment required the president to keep borrowing to pay bills regardless of the statutory debt limit.

However, after the agreement was reached, department lawyers asked for a hearing that was scheduled for today to be postponed.

The judge, Richard Stearns, agreed to postpone it indefinitely and allowed the Biden administration to avoid laying out its legal rationale.

That move disappointed some progressive groups that have been pushing the administration to invoke the 14th Amendment to defuse the debt limit fight.

“The question of if and how the debt ceiling can be legally applied is pertinent not only to the current mess, but also to the one a Biden-McCarthy deal has set up for early 2025,” said Jeff Hauser, director of the liberal Revolving Door Project.

On Tuesday, Rep. Jason Smith, R-Mo., who is chair of the House Ways and Means Committee, made clear that his party planned to continue using the borrowing limit as leverage.

“The debt ceiling ought to be the mechanism that forces parties to the table to negotiate ways to address Washington’s spending habit,” he said.

Despite studying the merits of invoking the 14th Amendment, Biden administration officials have expressed concerns that using it to circumvent Congress would set up a legal fight that could sow uncertainty, rattling financial markets and the economy, even if the federal government appeared to be paying its debts.

Shalanda Young, the White House budget director, demurred Tuesday when asked about doing away with the debt limit and said that her only focus was getting the bill to Biden’s desk and avoiding a default.

A White House spokesperson declined to comment on how Biden might test the 14th Amendment question in the aftermath of the debt limit fight.

Laurence Tribe, an emeritus law professor at Harvard University, said it was too late for Biden to seek guidance from the courts even if the administration issued a legal opinion through the Office of Legal Counsel arguing that the debt limit was not constitutional.

“I don’t think there is a judicial solution that lies ahead because the only time that courts can get involved is when it’s a live issue,” Tribe said.

Although this debt limit standoff appears to be resolved, future fights are lurking. The agreement suspends the borrowing cap only until January 2025, leaving open the possibility that Biden will have to face the threat of default early if he wins a second term.

For that reason, the government employees union intends to pursue its case and give the courts an opportunity to consider its merits.