Second, it’s probably possible to use financial engineering to bypass the debt limit. The most famous proposal calls for minting a platinum coin with a face value of, say, $1 trillion, depositing that coin with the Federal Reserve and spending out of the bank account thus created. Believe it or not, this would almost certainly be legal.
Another option would involve raising money by issuing “premium bonds” when existing debts come due — bonds whose face value is the same as that of the bonds they replace, so that they don’t officially increase the debt, but offer high interest rates, so they sell for much more than their notional value.
These would, of course, be financial gimmicks. So? If it takes gimmickry to frustrate the schemes of destructive extremists empowered by a legal quirk, and thereby avoid financial catastrophe, so be it.
Finally, there are a couple of what I think of as constitutional options. The 14th Amendment to the Constitution says that the validity of public debt “shall not be questioned,” which might be construed as a reason to ignore the debt ceiling rather than default on payments.
Alternatively, it seems fair to say that the White House is facing incompatible demands. Congress has, through duly enacted legislation, specified levels of federal spending and taxes; but one house of Congress appears poised to tell the president that he can’t raise the money he needs to obey the previous legislation. Since it seems that President Biden can’t avoid breaking at least some laws if the debt ceiling isn’t raised, ignoring the debt ceiling may be the “least unconstitutional” option.
Which option should Democrats pursue? I’d say all of them. Above all, this is no time for officials to worry about seeming silly or undignified. The Biden administration is facing the threat of economic terrorism — that sounds extreme, but it’s basically what creating an artificial debt crisis amounts to. And it should do whatever it takes to face down that threat.
Thank you, Jim, for your cogent discuss of this horrid chapter in our lives. And the interesting option, I had not known about, something that will take time but might help move things along. I have deep feelings about our having to clean up yet another Trump mess, and have to deal with congressional folks who played big roles in the Jan 6 insurrection having MAJOR voices in what comes next. My other concern is how our allies will be able to support our efforts and who might give up on the US. Another horrid chapter to come, I fear.