A U.S. Appeals Court has thrown out a legal challenge to the nation’s debt limit, after a bondholder argued the borrowing cap is unconstitutional.
The D.C. Circuit Court of Appeals ruled Friday that Victor Williams, an attorney and legal professor, did not have standing to argue the statutory debt limit violates the U.S. Constitution.
{mosads}The suit, filed against Treasury Secretary Jack Lew, argues that a borrowing cap that must be raised by Congress periodically violates the 14th Amendment of the U.S. Constitution, which states that the validity of the nation’s debt “shall not be questioned.”
During prior debt-limit battles, some have pointed to that amendment to argue that the Treasury Department could simply ignore the statutory debt limit and continue issuing debt. However, the Obama administration has never found that argument compelling, instead maintaining that Congress must raise the borrowing cap each time it is reached to avoid a potential default.
Williams argued that as a holder of U.S. debt, he was damaged by a series of debt-limit standoffs in recent years, which drove up the cost of short-term borrowing for the U.S. government as the nation’s ability to borrow came into question. He also argued that he suffered from “increasing worry and concern” about the security of his investments in Treasury bonds.
But courts have not found that claim convincing. The Appeals Court ruled Friday that Williams cannot prove that he faces potential future harm from the debt limit, and that any examples of spiking borrowing costs during debt-limit fights have been limited to debt coming due during those battles.
The court did not rule on the merits of that argument, but rather argued that Williams lacked the standing to make the claim in court.
Williams filed the suit in 2014; a lower court had already dismissed it in 2015 on the grounds that he lacked standing to mount the challenge.
Partisan fights over the nation’s borrowing cap became a recurring theme under President Obama’s administration, as he butted heads with congressional Republicans multiple times as conservatives sought to use the limit as leverage to win concessions.
But the matter has been put to bed for the rest of the president’s time in office. In one of his final acts before resigning, former Speaker John Boehner (R-Ohio) hammered out a budget deal that also suspended the debt limit until March 2017.