The Debt Ceiling Decision Tree

With days to go before the ‘X-date,’ several scenarios could play out.

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President Joe Biden meets with House Speaker Kevin McCarthy in the Oval Office on Monday. (Photo by Demetrius Freeman/The Washington Post via Getty Images)

Republicans and Democrats still haven’t hammered out a deal to raise the debt ceiling and avert the financial catastrophe that could accompany a default on the national debt.  

House Speaker Kevin McCarthy and President Joe Biden are continuing to negotiate, but the range of potential outcomes goes beyond a default/no default binary. With eight days before the projected “X-date,” here are five possible outcomes.

1. A deal comes together in time. 

Democrats and Republicans have been at odds over conditions for raising the debt ceiling since this session of Congress began in January. Democrats wanted a clean debt ceiling hike while Republicans demanded a series of spending cuts. But a divided Congress means a deal will require buy-in from both sides.

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  1. Avatar photo
    Dustin Anglin

    I am so tired of the debt ceiling. Congress should get rid of the debt ceiling and require anyone who wants to bring it back to first stick lemon juice coated needles of increasingly grotesque size into their eyes so they can actually claim to have felt the pain that they are choosing to willfully inflict on this country.

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    The Bell Tower

    ‘If the administration was willing to play constitutional roulette with student debt cancellation, which was both worse policy and more legally dubious, there is no reason why they shouldn’t be willing to do the same for the 14th Amendment, given the both better legal underpinning and the more important policy implications,’ Ritz said.“

    Translation: I already broke my leg in this bike accident. I may as well cut my eyeball out with a butter knife.

    This is idiotic. Both Congress and the president are accountable for negotiating a solution. All the other bluster on both sides is detestable gaslighting. Do your frigging jobs and stop catastrophizing every decision that doesn’t go your way, vilifying everyone who doesn’t agree with you and threatening outlandishly asshat ideas to escape your constitutional responsibility: shared power.

    It’s like watching bunch of toddlers argue over Star Wars guys in the playpen. There is no known algorithm to measure the utter contempt I have for everyone involved in this absurd clown show.

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    1. Seth B

      "toddlers argue over Star Wars guys in the playpen." Thank you for that - made my day (as a father of two toddlers who argue in the playpen)

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        The Bell Tower

        Me too but they’re girls so it’s princesses and Peppa Pig around here.

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    Gibby

    The president should have pushed to raise the debt limit before the previous congress left washington.

    The biggest (among many) problems with Biden is that he has not differed in style with his predecessor as much as he promised.

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    1. R. James

      The only leader in Washington pushing to raise the debt ceiling before the Spring Recess was McCarthy and Biden stonewalled him for three months. The President caused this crisis.

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        Gibby

        I agree. Also the President could’ve pushed to raise the limit during lame duck if he was really worried about this

        Buck stops with the President. This is on him

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  4. Jfan

    "...it’s at least plausible that the Treasury could make debt payments on time while putting all other payments on a delay. That might not technically be considered a default on the debt."

    Why only "technically"? This would not be a default at all. If all interest and principal payments are made on time, then there is no default. Anyone calling it a default, technically or otherwise, is lying.

    I suspect that Price St. Clair has been confused by the fake reporting that equates running out of borrowing room with default. Running out of borrowing room means that the Treasury must cut spending. The Treasury will decide which spending to cut. There has never been a reason why that spending must be interest or principal on the debt instead of government salaries, government contracts, or transfer payments -- no reason, that is, except for economically illiterate reporters writing about things they do not understand. Price probably has come to equate hitting the debt ceiling with default so strongly that even when she writes clearly why that is not the case, she can't help inserting a qualifier -- "not technically" -- because she can't reconcile logic with the propaganda she has heard.

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  5. Dan A.

    If the choice is basically (1) Default; (2) 14th amendment; (3) mint the large-denomination platinum coin (which I assume is only alluded to as a "gimmicky workaround"), I'd say (3) is very clearly the best option.

    Let's look at the logic of this conflict: "[b]orrowing beyond the limit set by Congress in 2021 would be illegal, but so would the administration’s refusal to spend money Congress has already appropriated". There's a law on the book that allows for the minting of platinum coins of any denomination, and doing so would make it so the administration breaks neither of the above mentioned laws, nor runs afoul of the 14th amendment by calling into question our full faith and credit.

    I fully agree that law was not in place for this purpose. But by the letter of the law, the platinum coin is legal. And it's quite possibly the only way to avoid breaking the law by either borrowing in excess of the limit or by refusing to spend what Congress has appropriated.

    It's the least bad option.

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      The Bell Tower

      The least bad option is for both sides to do their goddam jobs and negotiate a solution. That’s the only serious option.

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      Richard Maxton

      "it's the least bad option"

      Not saying a lot there (not your fault, just reality), but it's worth a 'like'.

      I hope the idiots at the controls figure their $hi+ out sooner rather than later. . .

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    J. Eric

    Very helpful. Thank you

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  7. Bigdonmck

    Good stuff. Well organized for simpler retired minds like myself who now know what COULD happen. Thanks.
    I heard yesterday that this the 10th time in the past 13 years we have done this budget ballet. I'm tired of this...real tired.
    How 'bout moving the budget to the very first item that Congress addresses. And they don't begin to draw their Congressional salaries until the budget is passed?
    I know. Impossible. But their should be a financial penalty for not doing your job. In the private sector you get fired for not doing your job assignments in time.

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    1. Avatar photo
      Ben Connelly

      “How 'bout moving the budget to the very first item that Congress addresses.”

      It used to be.

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      1. Bigdonmck

        Wow! Did not know that. Good post. Thanks.
        Wonder when and why that changed?

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          Ben Connelly

          1. The debt ceiling is separate from the budget

          2. I exaggerated. The normal budget and appropriations process begins almost as soon as Congress is in session. It takes a very long time and they do other things during that time. It finishes at the end of the fiscal year (September). Now, Congress hasn’t followed the normal appropriations process for years. While the committees do still hold hearings and work on the budget, they don’t usually pass the 12 appropriations bills on time. Often we don’t get anything by the end of the fiscal year and there’s a continuing resolution (or two) to kick the can down the road (which sucks if you care about anything like defense) until Christmas. Then we get some giant omnibus package ramming through everything at the last minute. (Also I’ve simplified. There are separate bills for authorization and appropriations, but basically there’s a complicated process that Congress typically short circuits with a slapdash jumbled omnibus at the last minute after the normal last minute.)

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    Rev Snow

    "...the Treasury does not have the capacity to prioritize certain payments over others."

    The experience of several government shutdowns proves this to be a false claim. Paychecks to federal employees for work already completed can be and have been halted while other "essential" payments continued. I am certain there are other capacities available as well.

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    Mmaughan0

    As Jonah would say "BUY GOLD!"

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    Njh2005

    Curious as to what law requires the government spend every dollar appropriated? I understand the President cannot unilaterally decide not to allocate funds Congress has appropriated but I’m unaware of any requirement to allocate funds when authorized funds are unavailable.

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      Rev Snow

      Even if such a law exists, it would only have teeth on September 30 when the fiscal year ends and the whole annual appropriation could be measured against outlays. The administration has the power to navigate this. It lacks the power to authorize new debt by executive decree.

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