Let’s assume, for a moment, that the Treasury Department actually can choose which bills to pay and which to ignore. That assumption is legally, technically and politically questionable, as Brad Plumer explained. Note that the one time we actually did default on our debt, it was the momentary result of a computer glitch, and the markets freaked out. The idea that we’ll simply rewire all our payment software over the next month so we can pick and choose which payments to make and we won’t see even the slightest problem requires a faith in government IT departments that I find surprising coming from the Republican Party. But ignore all that. Would the markets really be so calm in the face of the United States government doing something it has never done before and purposefully breaching the debt ceiling? The investors I asked pretty much laughed in my face.
Ever since the United States officially hit its $16.5 trillion borrowing limit on Dec. 31, the Treasury Department has been taking a slew of “extraordinary measures”—such as tapping its exchange-rate funds—to make sure the government has the money to meet all of its obligations. But, according to a recent report from the Bipartisan Policy Center, these measures will only last until Feb. 15 or so. After that point, the risk of missing a payment becomes real.
Last week, Senate Democrats sent the president a letter urging him to “to take any lawful steps to ensure that America does not break its promises and trigger a global crisis — without congressional approval, if necessary.” Yet the White House has insisted that it has neither the authority nor the ability to do so. It has ruled out options like minting platinum coins or invoking the 14th amendment to circumvent the debt ceiling.
“There are only two options to deal with the debt limit,” said White House press secretary Jay Carney on Saturday. “Congress can pay its bills, or they can fail to act and put the nation into default.”