IOUs, Trillion-Dollar Coins and More: 5 Creative Debt Ceiling Solutions

Gabrielle Karol
Posted

3. The 14th Amendment

The 14th amendment guarantees due process and equal protection under the law–which doesn’t necessarily seem to have anything to do with the debt ceiling. However, section four of the amendment states, “The validity of the public debt … shall not be questioned.” Some have interpreted this to indicate that the president is constitutionally required to continue making interest payments on debt, which would necessitate unilaterally raising the limit.

As such, many Democrats—including House Minority Leader Nancy Pelosi—are a fan of this plan because it would avoid another partisan battle by circumventing Congress altogether, as well as prevent any concessions regarding the spending cuts desired by many House Republicans.

Could This Really Happen?

Last month, Press Secretary Carney said that the president does not believe in this interpretation of the amendment, so it’s unlikely that the scenario would play out.

4. Spending Cuts

This is where the concept of “leverage” comes in: One way to solve the debt ceiling issue would be to simply cut spending, accomplishing some of the Republican goals that were unmet by the fiscal cliff resolution. Many members of the Republican Party have been fighting for years now for a Balanced Budget Amendment, which would accomplish this goal.

Could This Really Happen?

Economists predict that trying to hastily balance the budget by cutting spending equal to tax revenue would effectively shut down the economy–and cause a return to recession. Aside from that, President Obama has said, “We can’t not pay bills that we’ve already incurred … If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic.” Spending cuts floated by Republicans would likely include cuts to federal programs, such as Social Security and Medicare.

RELATED: Why It’s Hard to See Eye-to-Eye on Entitlement Spending

5. Raise the Debt Ceiling

The quickest option—and the one that President Obama clearly wants—is for Congress to raise the debt ceiling, no questions asked. Assuming it won’t be quite that easy, one way to raise the ceiling (approved by Speaker of the House John Boehner) is to match any increase dollar-for-dollar with spending cuts.

However—and as we’ve already said—President Obama is resistant to the idea of tying spending cuts to this issue. This was reaffirmed by Carney on January 9, who said, “I think the President has been very clear that his absolute principle is that we need to reduce our deficit in a balanced way that does not shift all the burden through cuts exclusively on senior citizens, on families who have disabled children, on families who are trying to send their kids to school.”

Could This Really Happen?

Yes, it is possible that Congress could just decide to raise the debt ceiling. In fact, they’ve been doing it since 1917, when it was first put into place. But it’s unlikely to happen without a fight over spending cuts.

What to Expect Moving Forward

If we had to make a prediction, we’d say that the more creative solutions–like the scrips and the 14th amendment–will likely not come to pass, since President Obama is pressed to prove that he can move his agenda forward without succumbing to questionable measures or trying to circumvent House Republicans.

What is clear is that both sides are gearing up for battle … and it may very well end in another down-to-the-wire standoff that has started to characterize the U.S. government. We’re keeping our fingers crossed that our elected officials can get it together to reach a solution–before the clock strikes midnight on the deadline.

  • http://profiles.google.com/lisak.lisa Lisa Lisak

    what a lame article… pay your bills… stop overspending… get people back to work and off the doles… and finally throw both corrupt parties out and start over…
    Trillion dollar coin… give me a break…