JURIST Guest Columnist Victor Sanchez Williams of the Catholic University of America Columbus School of Law discusses the constitutionality of the debt limit statute and why it needs to be eliminated …

Partisan conflict has brought our nation to the brink of catastrophic debt default three times since 2011. Markets are again on default watch after House Majority Leader Eric Cantor’s surprise primary defeat by Professor Dave Brat. Debt default-deniers across the country seek to “pull a Brat.” Chris McDaniel came painfully close in Mississippi’s ugly senatorial primary against Thad Cochran. Markets hate such uncertainty.

What is certain is that all of Uncle Sam’s accrued debts, loans and bills come due on March 15, 2015, when the most recent debt limit suspension ends. In a recent interview with CNBC’s Jim Cramer, Treasury Secretary Jacob Lew acknowledged that the bills were coming due. He decried the recent “terrible” debt limit fights and the partisans who “use our ability to pay our debt as a tool to gain leverage in a political debate.” Secretary Lew detailed the cost of debt ceiling conflict: “It hurt confidence … it hurt it internationally. It hurts the whole economy.”

Economic Patriotism

The Treasury Secretary is right about the dangerous cost of debt limit battles and more generally correct about the need for a “new economic patriotism.” That is exactly why I sued Jack Lew in February 2014, seeking a declaratory judgment to void the unconstitutional debt ceiling and an injunction to prevent its enforcement. The national debt is about our national honor. The United States timely pays all its obligations—Treasury debt interest, Social Security, Medicare, Medicaid, Veterans’ health care, etc.

The debt ceiling does exactly what the Constitution’s Fourteenth Amendment‘s Section 4 explicitly prohibits; the statute “questions” the “validity of the public debt of the United States.” The debt limit statute’s constitutional violation is patent; “this wolf comes as a wolf,” as stated by Justice Scalia dissenting in Morrison v. Olson. As with Tiberius’ “holding a wolf by the ears,” the national government and Treasury debt holders alike have come to fear the “catastrophic” consequences of the statute’s enforcement. The macro-economic harm of US debt default would last for generations. The Wall Street Journal has editorialized for a repeal of the debt limit statute.

“Absolute Expectation of Security” in Public Debt Holdings

Along with China, Japan, each of the 50 sovereign states, the House of Morgan, the Social Security Trust Fund and countless others (perhaps you), I owe US public debt. We hold this debt under a constitutional guarantee not only that these Treasury debt instruments will remain valid, but also that the “validity” of those securities will not be “questioned” by this nation’s government

Through TreasuryDirect.gov, I purchased a very modest amount of every available type and duration of Treasury bond, note, bill, TIPS, FRN, savings bond and Certificate-of-Indebtedness. A portion of my TIAA-CREF teachers’ retirement account is directly invested in Treasury TIPs and I have a spousal interest in a federal retirement TSP G Fund (which Treasury regularly raids to avoid a debt limit caused default as an “extraordinary measure”).

My lawsuit makes the novel argument that debt holders have an absolute expectation of 14th Amendment security in our Treasury investments. Unlike a reasonable expectation of Fourth Amendment privacy, this absolute expectation can never be “balanced” or excepted away. The debt limit statute facially breaches that constitutional security, causing debt holders actual and concrete harm (past, present and ongoing). The statute’s intended, contemporary operation subjects debt holders to Treasury’s repeated threats to arbitrarily enforce it, which results in as-applied harm (past, present and ongoing). Debt holders are also, separately, in danger of the “as-applied” harm of a certainly-impending risk of catastrophic government default resulting from the statute’s enforcement.

The lawsuit to void the debt ceiling is part of a larger policy/litigation endeavor—DisruptiveJustice.org—that I launched, applying Harvard Business School’s market-based “disruptive innovation” strategies for reform of public markets. The Jerome Frank Litigation Center implements Judge Frank’s vision of the “private attorney general” suing on behalf of the public while unencumbered by government accountability or special interest affiliation.

Academics Agree that Debt Limit Statute Conflicts with Fourteenth Amendment

Many academics, other than Dr. Brat, persuasively argue that the debt limit statute conflicts with the Fourteenth Amendment. Most rely on the Supreme Court’s 1935 Perry v. United States plurality ruling that Section Four embraces “whatever concerns the integrity of the public obligations.” Professor Jack Balkin connects the Fourteenth Amendment’s drafting history and text to its contemporary relevance. The Public Debt Clause has “broad terms in order to prevent future majorities in Congress from repudiating the federal debt to gain political advantage, to seek political revenge, or to try to disavow previous financial obligations because of changed policy priorities.” Professors Neil Buchanan and Michael Dorf have repeatedly explained how the debt limit statute traps the Executive in an impossible “trilemma.” The president must choose which of the three fiscal statutory duties he must violate—spending, taxing or borrowing. In Atlantic essays, Professor Garrett Epps analyzed the statute’s unconstitutionality; he even drafted a presidential speech announcing repudiation.

President Obama rejected their collective advice. The Treasury Department has instead managed to push through a series of congressional debt limit suspensions just in the nick of time to avoid catastrophic default.

Media Misreporting: Not a “Clean Debt Bill”

The last debt limit suspension was universally misreported a a “clean debt bill.” It is anything but clean. The February 2014 Temporary Debt Limit Extension Act‘s Section 3 was subtitled, Restoring Congressional Authority Over the National Debt. The statute as amended prevents Treasury from prepaying obligations and/or building a “cash balance above normal operating balances in anticipation of the expiration of such period.” The amendment envisions and encourages default.

As if it were a huge student loan, Republican Congressional Leadership strategically put the debt into “deferment” into 2015—until after the midterm elections strengthen their numbers. While the debt is in deferment, Uncle Sam continues to borrow to cover present bills while the interest accrues and is capitalized. Our foreign creditors do not acknowledge even the rare hardship exception to allow bankruptcy discharge. Is the US to become the next Argentina?

Dave Brat’s Delusional Pledge: No Debt Limit Increase for Five Years and No Tax Increase, Ever.

Dave Brat states emphatically that Congress can reduce spending so that it need not raise the debt limit or increase tax revenues. With an American University Ph.D. in Economics, Professor Brat surely understands Treasury’s stated position that massive spending cuts with substantial tax increases “cannot make the necessary cash available” to avoid debt default. Debt must be rolled over. Why does Dr. Brat ignore the financial market’s reactions to the imminent debt default of November 2013? The “TED spread” between investor confidence in government debt versus corporate debt inverted; big commercial banks spent millions preparing for the default; and large financial houses, such as Morgan and Fidelity, dumped all short-term Treasury holdings.

Brat has doubled down on delusion by renewing a pledge to never increase taxes and to not vote to increase (or suspend) the debt limit for five years.

In Stress Test, Tim Geithner warns about Republican economic delusion: “Many of them truly seemed to believe that default could cleanse the sins of the US economy, which was insane. Boehner was unwilling … to correct the delusions of much of his caucus.” The former Treasury Secretary is explicit: “They … strap a financial bomb to their chests and try to extort a ransom in exchange for agreeing not to blow up the economy.”

Killing the Debt Ceiling Through Litigation

Hours before the debt limit was last breached, on February 7, 2014, I initiated suit in the District of Columbia’s federal trial court in D.C., attempting to kill the debt limit law. I publicly revealed the lawsuit—on the American Constitution Society’s blog in May 2014 just after ACS ran an excellent series celebrating Brown v. Board of Education‘s 60th Anniversary. I use Brown in the suit to argue that the debt limit statute similarly facially contravenes a fundamental provision of the very same Fourteenth Amendment (which was, of course, one of the three broadly written post-bellum amendments). Just as the Fourteenth Amendment allows no separated-but-equal education regime under its Equal Protection Clause, there can be no limited-but-valid public debt regime under its Public Debt Clause.

In a subsequent Huffington Post Memorial Day Tribute, I explain that holding public debt is a patriotic act of civic engagement on the order of electoral participation. Proudly during times of peace and humbly during war, Americans have held their nation’s debt. Public debt is about national honor.

Invoking Clapper and Ignoring Susan B. Anthony, DOJ Defends the Debt Limit by Throwing Jack Lew under the Bus

Attempting to avoid the constitutional analysis by not answering my complaint, the Justice Department filed a strong preemptive attack on the suit’s standing and ripeness. Invoking Clapper v. Amnesty International, DOJ attempts to have the suit preemptively dismissed on standing and ripeness grounds. Parroting Clapper DOJ argues in its FRCP 12(b)1 motion that my “fears” of debt default injury are only a law professor’s hypothetical “speculation.”

No longer is debt default a “catastrophic” danger; it is only a “hypothetical fear.” DOJ’s dismissal motion thus contrasts starkly with Secretary Jack Lew’s repeated congressional testimony and public statements averring present bondholder harm, and actual and impending debt-limit default harm.

The Justice Department position directly conflicts with years of Treasury warnings about—and “extraordinary actions” taken to prevent—a “catastrophic” default. It appears that DOJ is throwing Jacob Lew and the Treasury Department (its clients) under the bus to win a quick procedural dismissal.

Regardless, DOJ reliance on Clapper may prove too much in light of the Supreme Court’s June 2014 Susan B. Anthony v. Driehaus ruling. Commentators query whether the “substantial risk of injury” standard may have returned to Article III standing analysis regarding future ham. DOJ refuses to accept that my lawsuit avers past, present and ongoing harm.

I am still puzzled as to why Eric Holder chooses to defend the patently unconstitutional debt limit statute. As he courageously proved by repudiating DOMA, our Attorney General knows that his highest calling is to not enforce the unenforceable; to not defend an unconstitutional statute.

The Ides of March, 2015 is now eight months away. Whether by a declaratory judgment or a “miracle” of legislative common sense, we must eliminate the debt limit statute. Our “interesting times” need not be catastrophic “end times.”

Victor Sanchez Williams, DisruptiveJustice.org founder, is a Clinical Assistant Professor at Catholic University of America Columbus School of Law. He teaches Law and Economics, Remedies and Lawyering Skills. Williams is widely published in numerous legal journals and is a frequent media interview guest, analyzing legal and political issues by print, television, radio and Internet media.