Unable to secure even the Democratic votes necessary to raise the debt limit without reform, Democrats are increasingly hoping President Joe Biden will, in the words of one recent article, “invoke the 14th Amendment to pay the country’s bills after the debt limit is breached.”
Some Democratic commentators have acknowledged that the Supreme Court is unlikely to go along with such a novel interpretation of the 14th Amendment, but Rep. Jamie Raskin (D-MD) argues that doesn’t matter. He told Paul Waldman and Greg Sargent of the Washington Post that the case might never reach the Supreme Court because no one would have standing to sue.
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“This is a court that has been fastidious about upholding standing doctrine,” Raskin told Waldman and Sargent. It is unclear whether anyone has “standing to challenge the government paying bondholders and Social Security recipients and veterans.”
And it is true. It would be hard to find someone who was harmed by the Treasury Department simply paying Social Security recipients and veterans.
But this ignores how the Treasury Department would get the money to make these payments. It can’t just print more money. It would have to sell new bonds. And in so doing, current bondholders could definitely argue they were harmed.
If Biden ordered Treasury Secretary Janet Yellen to sell new bonds without congressional authorization, it would be clear that these new Biden Bonds were not “authorized by law.” A future president would be under no obligation to honor them.
These illegal Biden Bonds could then damage the value of existing legal U.S. Treasurys since the existence of illegal Biden Bonds would make it harder to buy and sell existing legal bonds. How would bondholders know which bonds were legal and which were illegal Biden Bonds?
People who own existing legal bonds would be harmed by the loss of value of their bonds, and this would give them standing to sue Biden in court to stop him from issuing more illegal Biden Bonds.
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Article 1 of the Constitution unambiguously gives the power “to borrow Money on the credit of the United States” to Congress. Article 2 of the Constitution does not give the president any inherent borrowing power, nor does the 14th Amendment.
Any bondholder who brought suit to stop Biden from selling illegal Biden Bonds would easily win.