A union is still pushing to permanently end the threat of delayed paychecks due to a debt default

While a deal negotiated between President Biden and House Republicans has delayed the immediate threat of the government breaching its borrowing limit and defaulting on its debts, a union representing federal employees is moving forward with its lawsuit seeking to permanently remove the possibility of missed paychecks due to a default. 

Federal employees are still facing the prospect of delayed paychecks when the debt ceiling is reinstated in 2025, the National Association of Government Employees said, and the entire construct remains unconstitutional. A federal judge was set to hear arguments on the case last month, but canceled the hearing when Biden and lawmakers announced a deal. After Biden signed the Fiscal Responsibility Act into law Judge Richard Stearns of the U.S. District Court for the District of Massachusetts asked NAGE to declare whether it still wanted to pursue the case. NAGE laid out its case in a complaint filed Tuesday, arguing its original concerns remain relevant. 

On the precipice of a default earlier this month, the Biden administration “was about to take emergency measures of delaying wages and salary due to federal employees, including all or nearly all of plaintiff’s members,” NAGE said. The Fiscal Responsibility Act did not create a long-term solution to that threat, as it only suspended the debt ceiling until Jan. 1, 2025. That looming deadline has created a “concrete stake” for NAGE’s 75,000 members, the union said. 

“The injury which plaintiff alleged at the time of filing has not disappeared but will occur again, with certainty, under existing law and will be imminent or actual by the time this litigation takes an ordinary period to resolve,” NAGE said. 

Additionally, the Treasury Department suspended investments into the Thrift Savings Plan’s government securities (G) fund earlier in the year as part of its “extraordinary measures” to buy lawmakers more time until a default occurred. While the government has always promised to make federal employees and retirees whole when invoking those steps, the union argued its members already suffered real losses when they lost the interest that would have occurred during that time. 

Congress sets funding priorities, the NAGE said, as it did in its original complaint, and a default scenario that requires the president to pay down some obligations and not others undermines that constitutional structure. Complying with the debt ceiling is inherently unconstitutional, therefore, unless and until Congress sets a roadmap for the exact spending schedules during a default.

Similarly, the union argued, the president cannot simply cease making all payments during a default because the 14th Amendment to the Constitution prohibits the government from failing to pay its debts. The debt ceiling could place President Biden in an “impossible position,” it added, without legislative permission or constitutional authority for proceeding.

Therefore, NAGE said, the debt ceiling should “remain suspended and unenforceable indefinitely past January 1, 2025.” 

Some Democratic lawmakers, including the Congressional Progressive Caucus, pushed Biden in the runup to the debt deal to invoke the 14th Amendment to ignore a debt ceiling breach. Biden said at the time he was open to pursuing an end to the debt ceiling using that argument down the road, but it would take too long to work its way through the courts to address the current, acute situation. The Biden administration will now have to articulate its position on the issue, either agreeing with NAGE or spelling out why the debt ceiling is constitutional.