May 8, 2023 -WASHINGTON (AP) — A union of government employees on Monday sued Treasury Secretary Janet Yellen and President Joe Biden to try to stop them from complying with the law that limits the government’s total debt, which the lawsuit contends is unconstitutional.
The lawsuit comes just weeks before the government could default on the federal debt if Congress fails to raise the borrowing limit. Financial markets have become increasingly nervous about the potential for default, with economists warning that a failure to raise the debt limit could trigger a global financial crisis.
On Tuesday, Biden will meet with the top Republicans and Democrats in Congress to seek a potential breakthrough. The two sides remain far apart. Republicans have demanded steep spending cuts as the price of agreeing to raise the debt limit. Biden has argued that the debt ceiling, which applies to borrowing the government has already done, shouldn’t be used as leverage in budget talks.
The lawsuit, filed by the National Association of Government Employees, says that if Yellen abides by the debt limit once it becomes binding, possibly next month, she would have to choose which federal obligations to actually pay. Some analysts have argued that the government could prioritize interest payments on Treasury securities. That would ensure that the United States wouldn’t default on its securities, which have long been regarded as the safest investments in the world and are vital to global financial transactions.