Court sets hearing to consider suspending debt limit law as unconstitutional

A federal judge late this month will hear arguments involving the debt limit law and whether it is unconstitutional and should be suspended.

The hearing, set for May 31 at 2 p.m. before U.S. District Judge Richard Stearns, will come hours ahead of when the Biden administration warns the federal government could run out of funds to pay its obligations.

The case is unrelated to negotiations between the White House and House Republicans to reach a deal to avoid a default.

Treasury Secretary Janet Yellen told lawmakers on Monday that will occur by “early June, and potentially as early as June 1” if a deal is not reached.

The National Association of Government Employees (NAGE) earlier this month sued over the law that sets the nation’s debt limit, arguing it presents separation-of-powers issues. Yellen and President Biden were named as defendants.

If the limit is reached, NAGE contends Biden would be forced to take over Congress’s spending authority by deciding which payments to prioritize over others. It also would effectively amount to a line-item veto, the union argues, which the Supreme Court has previously rejected.

Stearns, an appointee of former President Clinton who sits in Massachussetts’s federal district court, at next Wednesday’s hearing will hear arguments about the union’s motion to suspend the law as their case proceeds, court records indicate.

Meanwhile, Biden and Speaker Kevin McCarthy (R-Calif.) met at the White House for roughly an hour on Monday evening as their negotiations continued following the president’s return from Japan.

Both sides called the meeting “productive,” but they are far apart on a number of sticking points.  

Those philosophical differences present the possibility of a major court showdown on the eve of the administration’s deadline, although House Republicans are signaling growing skepticism that the June 1 deadline is really set in stone.

The Justice Department, which will represent Biden and Yellen at the hearing, has not yet responded to the merits of the union’s legal arguments.

Biden has also said he believes he has the authority to use the 14th Amendment, which states the validity of the public debt “shall not be questioned,” to unilaterally address the debt ceiling. The union’s lawsuit notes that theory but focuses its argument elsewhere.

“Plaintiff does not challenge the principle that Congress may limit the indebtedness of the United States or even require a default, notwithstanding the Fourteenth Amendment, and does not seek or ask this Court to resolve that controversial question,” the union wrote in court filings.