Well, not quite that many, but the Congressional Budget Office (CBO) has released its latest in what has evolved into a once-every-two-years series, Options For Reducing The Deficit. This genre was created back in the 1970s and evolved toward its current form in the 1980s, when concern over the federal government’s booming deficit rose to a fever pitch.  The idea was to give the Congress an unbiased, on-the-one-hand-on-the-other-hand evaluation of something approaching the deficit-reduction waterfront.  There were ideas for cutting spending and raising taxes, and the legitimate pros and cons of each idea were presented in a dispassionate fashion, with all of those options organized by parts of the budget – entitlement programs, by purpose; appropriated programs, by purpose; and revenues, by type of tax.  An interested Member of Congress or staff member could use the volume like an encyclopedia to see how his or her target area of the budget might be accessed for savings.

(I worked at CBO from 1981 into 1984, and was involved in the preparation of the reports of that period.  My clearest memories of the process are the careful and unbiased work of the organization’s entire staff that went into the reports, and my first self-taught lesson in tactical forensic editing.  For my second edition, I was told that my chapter, on revenue options, was quite satisfactory but much too long, and I was given what my supervisors clearly believed to be a draconian number for reduction of the page count.  I analyzed the chapter and found that the typical discussion of an individual policy option was one page plus a small number of lines long, with the formatting of the volume dictating that the remainder of that second page be left blank.  I carefully combined a few paragraphs, with each combination saving on average one and one half lines [counting the blank line between paragraphs], and thereby pulled the few lines from the second pages back onto the first pages, quickly hitting my page-reduction target without deleting a word.  I trust that my supervisors of that time, who expressed great admiration that I could do the job so quickly and effectively, are not reading this blog.)

The CBO volume has become an essential building block of all discussions about reducing the deficit.  Many deficit-reduction plans have been constructed merely by figuratively checking the boxes of a list of the CBO options.  Computer games BlogQuote20131115have been designed to allow individuals in effect simply to choose from among the CBO options in a spreadsheet until they reach a target amount of deficit reduction or (to say the same thing in different words) a target lower level of debt.  Such games have been made available on the Internet, or even taken to town-hall meetings so that people can debate their own deficit-reduction choices with their neighbors around a conference table.

These games have performed important functions.  At the most fundamental substantive level, they have forced people to face up to the size of the budget problem.  The more Americans who become aware that eliminating foreign aid and cutting congressional salaries to zero will not begin to trim our mounting debt, the better.  And with that reality on the table, getting people together to debate the necessary and far more difficult choices is obviously a good thing.  Getting folks with strong preferences for tax increases and against spending cuts, and vice versa, to debate the best combination of both is an important public service.

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The federal budget outlook has improved over the last year.  The budget always moves with the economy, and there is a tendency for the numbers to move more than had been projected when a business cycle bends around a turning point.  There are reasonably predictable relationships among output, employment, wages and profits, but financial market valuations and the incomes that flow from them are a bit of a wild card.  For whatever reason, the swings in those incomes always tend to be sharper than the budget mavens expect when the economy changes direction — more sharply upward in good times, more sharply downward in bad times.

So right now we are in an upswing, and that is good news.  However, every now and then the hosannas seem to be just a bit louder than appropriate.  It may be useful to try to put the recent changes into context.

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In 2010, the Committee for Economic Development announced in a public statement that we believed that the right vote on the Patient Protection and Affordable Care Act was “no.”  We acknowledged that the creation of the health-insurance exchanges was a step toward employing market forces in health care, but we believed that it was being done in a far-from-optimal way.

While noting our opposition to the ACA, one must have a certain sympathy with the law’s defenders today with respect to one particular sore spot in the implementation of the law.

During the 2009-2010 debate, the law’s strongest advocates made two emphatic statements:

The current health-insurance system is horrendous.  It inhumanely denies coverage to millions of hardworking Americans.  And it is inefficient and unaffordable for households, employers and the federal government alike.  It wastes money in bad care, under-care, and even over-care that causes more pain and cost than it does healing.  It is more costly than care in any other developed country, and yet it yields inferior outcomes by every major indicator of health.  Our healthcare system is a disaster.

 

…and…

 

If you like it, you can keep it.

Clearly, the first manufactured “quote” is a caricature of the debate, but many on both sides of the key 2010 votes said nearly that.  And equally clearly, the second “quote” was not precisely paired with the first.  But the juxtaposition of the two does not do violence to the reality.  And so today, when numerous Americans find that the insurance plans with which they have been satisfied will be discontinued with the implementation of the ACA, there is considerable angst.  Some, perhaps much, of it is justified.  But there is an important lesson in this angst, and we should absorb it.

Some existing insurance plans should go away, and are doing so because of reforms in the ACA that have majority bipartisan support.  We know from experience, for example, that there was until recently a sub-industry of health insurance that combed the original application forms – sometimes years or even decades old – of now seriously ill customers to find discrepancies that could be used to deny coverage.  Sometimes they used grounds of pre-existing conditions, but sometimes they sought circumstances totally irrelevant to the ailment in question.  Such “rescissions,” as well as discrimination at the time of application on the basis of pre-existing conditions, are now banned by law.  Insurance policies created using business plans that relied on after-the-fact rescission to generate their profit are not viable in the new, and arguably better, marketplace.

But put such obvious issues aside.  Consider instead only the basic question of the efficiency of delivery of health care.  On a totally bipartisan basis, analysts pronounce as a truism that our system of delivering care must change if it is to remain affordable at acceptable levels of quality.  And assume for sake of argument that the ACA is wiped from the face of the industry, and the nation can start fresh.  What reform that fundamentally changes our mode of delivering health care can promise that every American can keep the insurance that he or she has today?

This is not an empty question, and not a mere acknowledgement that to make the soufflé, we must crack some eggs.  Millions of Americans know that they have medical conditions, and are today in a physician’s regular care.  Many of those have coverage in the old-fashioned fee-for-service system, where incentives reward providers who deliver more services – helpful or not.  Suppose that a fully justified reform creates strong incentives toward new modes of organization that integrate providers into cost-responsible systems.  How many thus-outdated insurance plans will go away?  How many providers already near the ends of their careers will contemplate the changing world and then decide to hang up their stethoscopes and retire?  So how many of their patients will find that they cannot “keep what they have,” and will blame the reform for disrupting their care and their lives?

Any new healthcare system, either the current ACA or any successor, will need to deal with such questions of transition.  The ACA included a “grandfather” clause for existing plans, but merely allowing a plan to continue legally does not mean that it will continue if reform-induced changes in the marketplace undermine its business model.  Thus, anyone who hopes to restructure the U.S. healthcare system, even if unambiguously to the entire society’s betterment, must be prepared to respond to the many individuals – often the elderly or the sick – who will not be able to “keep what they have.”

This past Wednesday, the conference committee on the fiscal year 2014 budget met.  The plan is that they will meet again on November 13, two weeks from now.  Their deadline to produce recommendations is December 13, and their objective is to avoid another government shutdown and the impending budget sequester that is set to occur on January 15.

A two-week recess with such a short deadline might not seem promising.  However, the recess is not the problem.  Public meetings of conference committees are not where the work is done.  Under the best of circumstances and with the best of outcomes, a conference committee might have one public meeting, during which all of the members present opening statements in which they say how important the work of the conference committee is; and then a second public meeting, during which the members vote on the final product, and present closing statements in which they say how important the work of the conference committee was.  In between, the important decisions were made in private meetings, generally informal (to avoid requirements that the meetings be held in public).

The real problem is that it is not clear whether anyone in the room has the authority to cut the deal.  The issues at stake long ago have escalated to the leadership level.  In fact, with the margins in the two chambers so narrow, even the leaderships must go to their rank and file hat-in-hand and request their votes.  We know from the last shutdown season that the caucuses can send their leaderships back to the drawing boards, and leave the necessary legislation in limbo.

The opening statements in the budget conference were generally conciliatory.  However, they stopped far short of common ground.  Republicans continued to declare tax increases off limits, while Democrats asked for at least one tax-loophole closure to justify the expected cuts in entitlement programs to “pay for” lifting the budget sequester.  This time, as last time, Republicans have the upper hand, at least in theory.  The Republican House could send the Senate a continuing resolution bill to extend appropriations with the sequester, with an increase in the debt limit attached.  Democrats in the Senate would have to come up with a reason for the House Republicans to change their minds.

It is worth remembering that the ostensible goal of this conference – to remove the sequester, reduce entitlements and / or increase taxes to offset that budget cost, and increase the debt limit – would neither reduce the long-term debt problem nor stimulate the economy.  Of course, there are potential questions of timing of spending increases versus other budget cuts, and there are potential permanent spending cuts that in the very long term would exceed the spending increases.  But speaking broadly, both the potential macroeconomic and fiscal-responsibility stakes in this game are extremely low.  You probably have heard the old saw that it is the low stakes that make academic politics so vicious.  Perhaps the same will prove true about the budget conference, but we have learned very little from the opening meeting.

This post assesses the task facing the budget negotiators on Capitol Hill.  It concludes that those negotiators could achieve real progress by laying out a budget plan based on those fundamental issues on which the two parties should be able to agree.  So rather than trading mini-concessions that would have little long-term payoff, the two sides instead should build the framework of a plan that would have true ultimate beneficial impact.

With the debt limit / shutdown standoff now on temporary hold (thank goodness), attention has shifted to the newly appointed conference committee for the fiscal year 2014 budget resolution, whose formation was a part of the shutdown-settlement deal.  This conference committee is just a bit late – given that it was supposed to produce a resolution to be passed by both chambers of the Congress back on April 15, and the fiscal year already is more than three weeks underway; but better late than never.

In fact, the budget conference committee faces a formidable task.  Job one will be to find a way past the new deadlines of January 15 (when the continuing resolution for the annual appropriations expires, and also when the second round of the budget “sequester” kicks in), and February 7 (when the Treasury again hits the debt limit).  These deadlines might suggest a game of small-ball – finding a few dollars here and a few dollars there to justify another punt, like the one that was played a couple of weeks ago.

But small-ball far understates the occasion.  The last few months have been a disaster for the economy and for U.S. business.  Both businesses and households reacted to the uncertainty of the indefinite shutdown and the impending default by going into a freeze – businesses on hiring and investing, and households on spending.  Meanwhile, government employees who weren’t getting paid and government contractors who were in economic limbo were not engaging in much commerce either.  All of this scrubbed off some of what little momentum the already stumbling economy had.  Washington cannot revert to this self-destructive pattern barely a quarter of a year later, when appropriations could again expire, and the debt limit could again constrain the nation’s ability to pay its bills.  In fact, any hint now of a relapse into shutdown showdown and default deadlock could impose an even greater economic toll.  The nation – in the person of the budget conference committee – must find a better way.

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If all goes well – a frightening thought – Washington is about to kick the can down the road yet another time.  This would be a good outcome because Washington seems just as likely to miss a mighty swing at the can and fall on its bum in the mud.

There is no realistic alternative to another can kick, after all.  This is October.  The fiscal year has already begun.  The federal government has been shut down for two weeks.  The Treasury is just about out of borrowing ability, and on the brink of default (to use the stark term).  This is a drain-the-swamp-versus-fend-off-the-alligators moment.  The Congress is not going to reform the nation’s tax code, Medicare and Social Security before the end-of-the-year holidays, as anyone who has watched our legislators work even at their finest knows all too well.  Think of 1981-1982 on Social Security, and in 1981-1986 on the income tax – and note that these were separate, multi-year efforts.  It is time for damage avoidance; that is the best we can hope for.

So if we are going to kick the can, we might as well kick it strategically.  Let’s think about our situation – what we must accomplish, and when.

What do we need to accomplish?

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broccoli                                                        Image by Carl Rose

We came very close to a moment when the definition of the word “default” would become very important – and we may come to that moment again, perhaps within a matter of weeks.  My definition:  Default is what the financial markets say it is.  Personally, I hope that the financial markets never need to make that definition specific.

Some background – that is, how the Treasury markets work:

The Treasury sells securities of varying maturities.  The shortest-term securities, called bills, have maturities generally of four weeks, 13 weeks, 26 weeks, and 52 weeks.  (Treasury sometimes sells even-shorter-term securities, called “cash-management” bills, to deal with minor unforeseen financing needs.)  Bills are like “zero-coupon” securities – that is, they are sold at a discount, and the return is delivered when they are redeemed upon maturity at their higher par values.  Intermediate-term securities, called notes, have maturities including two years, three years, five years, seven years, and 10 years.  Treasury notes bear coupons which are paid twice each year.  Treasury also issues 30-year bonds, which like Treasury notes bear twice-yearly coupons.  (Treasury also sells Treasury Inflation-Protected Securities (TIPS) of five-, 10- and 30-year maturities, plus various non-marketable securities (including the familiar “savings bonds”) that are not pertinent here.)

The Treasury normally takes some steps to sell securities on almost every business day.  Treasury securities are sold at auction; bidders offer a price that they are willing to pay for a specified dollar yield.  Treasury announces its tentative financing schedule quarterly, with each tentative schedule extending over the next six months (thus being a partial revision of the previous schedule).  Treasury announces the terms of each auction at least one day (for four-week bills) or as much as a week (for longer-term securities) in advance, executes its auctions generally on Mondays through Wednesdays, and then settles the auctions usually on Thursdays (but there are exceptions to this pattern).  The major Treasury auction is a quarterly refunding, which establishes ongoing cycles of longer-term securities maturing and being refinanced with new securities.  The quarterly refundings include three- and ten-year notes, and 30-year bonds.

So where are we now?

Treasury Secretary Jack Lew has announced that as of October 17, after executing the current financing plan, the Treasury will have exhausted its borrowing authority.  That is to say, after using his various extraordinary statutory authorities (see here) essentially to replace internally held government debt (which counts against the debt limit) with informal IOUs (which don’t), the Secretary will have well and truly pushed his head up against the debt ceiling.  He will be unable to borrow any net new cash.  (In truth, there will be some additional headroom left, but it will be veritable nickels and dimes).

Therefore, without borrowing as a live option, the Secretary will be left with a bare-minimum cash balance, tax revenues coming in, and a greater amount of claims due to be paid arriving daily.  The greatest economic power in world history will be living hand to mouth.

What happens next?

The honest answer is that nobody knows.  No great financial power, no provider of the world’s reserve currency in markets that trade instantaneously around the globe, ever has been there.  The ramifications are so wide-ranging that no one can get his or her arms totally around the situation.  I can only give it my best shot.

Perhaps the one certainty is that the federal government’s basic financial infrastructure will be strained as never before.

A fundamental fact:  Until now, the Treasury has paid all of its due bills as they arrive every day, and then balanced its checkbook later that night.  When you have an ample cash balance backed by a virtually unlimited ability to borrow, you can do that.  But starting on October 17, the Treasury no longer will have an ample cash balance, because it will not be able to borrow net new cash.  If the Treasury continues its current practice of paying all its bills during the day and then doing the accounting that night, what are the chances that it may discover that it bounced some checks four hours before?  Answer:  Far, far too great for the world’s greatest economic power.  We don’t have a system to give reliable second-by-second cash balances, and we are not going to create one in the next week.

The fallout would extend beyond a potential “oops” end-of-day moment.  The Treasury could discover that paying too many of its bills that were due on a Monday and a Tuesday, followed by an unexpectedly weak revenue flow on a Wednesday, could leave it unable to pay a large bill that was due on that Thursday.

The sum and total is, again, that a payments system that was designed for the world’s greatest economic power, which reasonably could be expected never to be cash-short, will not work flawlessly in a hand-to-mouth mode.  Presumably, in time, we could build the kind of financial system we would need to count and pinch pennies.  But if we go that route at some future date, we should stop claiming to be the world’s greatest economic and financial power.

Which gets us back to the significance of the definition of “default” in the context of the United States Treasury.  Some take that word to a fine point, and say that revenue flows are sufficient to pay all interest due on the outstanding debt, and that rolling over the maturing debt is a zero-net-cost operation; and therefore the United States need not “default” in that narrow sense even if left without a debt-limit increase for a very long time.  And in fact, the Treasury’s payment system does have two separate channels: all debt finance transactions, which are internal to Treasury; and all other transactions, which come mostly from other agencies.  So Treasury literally and operationally could “prioritize” its payments in a limited sense – that is, it could pay debt service first, and then, with what funds were left over, pay what other claims it could.  So it is literally true that the Treasury could ensure that the United States did not, in this strict sense, “default on its debt.”

But there are a lot of qualifications.

First, the Treasury would fail to pay a lot of bills, and the stack of unpaid bills would get taller and taller by the day.  Then, the definition of “default” would become a real issue.  Like the household that would promise to keep its home mortgage current even while it juggled scarce cash and failed to pay its car loan and its credit-card payments, the Treasury would not look very solid to its creditors.  This is why default unavoidably would be what the financial markets say it is.  If the markets began to react negatively to the Treasury’s cash management perils, it is worth remembering that people who smell smoke in crowded theaters do not typically arrange themselves in orderly two-by-two columns; they run for the exits.  Dictionary definitions would quickly become irrelevant.

To put just the roughest order of magnitude on this factor:  From the beginning of the month through the middle of this week, before the markets began to smell concessions in the non-negotiations between the House of Representatives and the White House, the annualized yield on 13-week Treasury bills increased by more than 25 basis points (that is, more than one quarter of one percent).  That is more than one standard tightening move by the Federal Reserve Open Market Committee.  Presumably, if we had stumbled yet closer toward a debt-ceiling collision, that interest-rate increase would have continued.  And though it is always perilous to assign causation to market behavior, this episode was tied as clearly as any to the debt-limit standoff.

A second issue is that although the Treasury has a separate channel for its non-debt-service transactions, it has no capability to prioritize among claims within that channel.  Treasury has a simple filter to avoid paying claims to entities that are, for example, suspected of fraud; but it has no capability to rank its roughly 80 million payments each month by some measure of priority.  And one lesson from the news items emerging from the current shutdown (see here) is that there is a vast number of enormously diverse claims on the Treasury that virtually everyone agrees must be kept current.  Prioritizing one such instance leads immediately to prioritizing another, and another, and another.  It would be a hopeless task to try to create guidelines for each individual agency to send its claims to the Treasury in some particular order – relative to its own other claims, and relative to all of the claims of every other agency.  And all of that complexity does not speak to whether some ostensibly higher-priority claim that is currently due should be paid before some on-the-surface lower-priority claim that was due three weeks ago – noting that both claims were mandated by Acts of Congress, and therefore have equal legal standing.

And speaking of which:  Would some legal claimant whose bill was prioritized lower choose to sue, on the ground of being denied equal treatment under the law?  Could an entire prioritized Treasury payment system be hauled into court?

But it is time to loop back to the theoretical ability to prioritize the servicing of the public debt.  Remember that Treasury revenue flows are highly unpredictable.  Suppose that the Treasury decides to pay high-priority non-debt-service claims (perhaps Social Security benefits and salaries for uniformed servicemen and women), and then tax receipts come in lower than expected.  The Treasury might then not have the cash needed to pay interest on the debt, even though debt service has its own prioritized separate payment system.  Thus, like Arthur Okun’s metaphorical six-foot-tall economist who drowned in a stream that was on average three feet deep, the Treasury easily could fall afoul of data variability and the unpredictability of the future.  If the financial markets (and risk-averse investors like insurance companies and pension funds) become concerned about such contingencies, it could easily alter the functional definition of the term “default.”

And one more thought about debt service in the broader sense:  The narrowly defined refinancing of the debt (that is, as opposed to borrowing net additional cash) is on the surface a zero-sum swap of securities, and therefore not an increase of debt outstanding; but there are complexities and issues of timing.  As was explained at the outset, Treasury bills are sold at a discount.  Thus, retiring a $1,000 Treasury bill will require the sale of a bill that will raise somewhat less than $1,000, plus a little bit more.  Even coupon-bearing longer-term securities tend to be sold for less than par.  The law of large numbers should allow the management of this mismatch, but it adds one more layer of complexity to an already fraught situation.

And as to timing:  In theory, refinancing the debt entails swapping one security for another, in one zero-net-debt-change transaction.  In practice, to retire a maturing security, the Treasury needs the cash to pay the investor.  Thus, technically, the Treasury needs to sell a new bond first to retire a maturing bond later, in two separate transactions.  This is a technicality, but we are in a technical situation where the letter of the law matters.

Should the world’s greatest economic and financial power be stuck in this mire?  Every citizen is entitled to answer for him- or herself.  For sake of discourse, let’s assume that the most common answer will be “no.”

So in the absence of an Act of Congress increasing the debt limit, what can the President and the Treasury Secretary do to avoid such dire consequences?  Basically, there are two families of responses that are under consideration.

The first is resort to a part of Section 4 of the 14th Amendment to the Constitution, which reads (in case your pocket Constitution should be stuck in your pocket) “The validity of the public debt of the United States, authorized by law, … shall not be questioned.”  This amendment was ratified in the wake of the Civil War, so that the United States could both affirm its constant commitment to honor its debt while denying responsibility for debt undertaken by the newly reunited Confederacy.

Some would argue that this language contradicts the statutory debt limit itself.  How can a law restrict the power of the Treasury to honor its debt, when the Constitution itself establishes that power without limit?

In other words, and in a possibly independent argument:  If the Congress exercises its constitutional power of the purse to spend a lot and tax a little, how can the Congress then restrict the authority of the Executive to issue the debt that is essential to pay the difference?  The Congress thus puts the Executive on the horns of a dilemma:  Either the Executive violates the statutory debt limit, or the Executive violates the charge of the Constitution to honor the validity of its debt, authorized by law.  This would not be the first time when the Executive had been forced to choose between mutually contradictory legal or constitutional obligations, and the Judiciary has been reluctant to fault the Executive for making one or the other choice.  (This interpretation might be challenged as a practice of the law without a license.)

Some would argue that the Executive, so tied in constitutional and statutory knots, should simply issue additional debt – either while invoking the 14th Amendment, or simply citing the dilemma imposed upon it by the Congress and the Constitution.

The President has stated that the Treasury’s attorneys do not agree with this analysis.  I do not believe that it is unfair or unkind to say that the Treasury attorneys have a reputation for being cautious.  Their argument is that debt issued under such uncertain authority would not be received blithely by the markets.  There would be fear that the debt might be ruled invalid in the courts, and that the investors would find themselves holding worthless paper.  Again, practicing without a license, the most common analysis would seem to be that no one would have standing to sue to challenge the validity of such securities, on the ground that no one who had not voluntarily purchased those securities could claim to have been harmed.  Still, the most conservative analysis might conclude that the Treasury would not want to run any such risk.

A more likely contingency would be that the President would be impeached.  One might question whether a House of Representatives that claimed in no way to want to place the United States of America in default would take an action that would threaten at least indirectly to do just that (because the ground for impeachment would be that the President had sold bogus, unauthorized United States Treasury securities).  One might also ask whether there would be any chance that the Senate would even engage in a trial.  But again, the cautious choice would be to avoid such a contingency in the first place.

But the President and the Secretary might not enjoy such a clean option.  If the choice is between failing to pay the nation’s bills and running such legal and constitutional risks, the President and the Secretary might determine that the less-imprudent course would be to issue additional debt and invoke the 14th Amendment – regardless of what the President has said publicly to this moment.

The second broad class of options for the Executive is asset sales.  The Treasury could sell (or sell and lease back) just about any piece of federal property.  Any private (or other government) investor with some confidence could be willing to deliver cash to take ownership of real estate, military hardware, the gold in Fort Knox, or just about anything else – in return for a piece of the action.  That cash would replace an equivalent amount of additional Treasury borrowing – although because the transaction would be (shall we say) irregular, it surely would cost the Treasury more than would equal borrowing through the sale of Treasury securities.

A particular form of asset sale that has achieved considerable attention lately is the minting by the Treasury and sale to the Federal Reserve of a platinum coin.  The Treasury is authorized by law to mint platinum coins (see here), according to specifications chosen by the Secretary.  Thus, the Secretary could mint coins in denominations of his choosing, and sell them to the Federal Reserve to repay existing Treasury debt.  That would give the Treasury headroom under the debt ceiling to sell new debt to the public to raise net new cash.

No Treasury Secretary would choose to undertake such a transaction under normal circumstances; but these are not normal circumstances, and some might argue that the platinum coin would outrank a failure to meet the Treasury’s obligations in full and on time.  Again practicing law without a license, there would seem from the statute to be no prohibition against such a transaction, so there might be less legal vulnerability to the Secretary and the President than invocation of the 14th Amendment.  Yet there is little doubt that such a financial transaction would seem to the rest of the world to be beneath the United States of America – but again, perhaps not as far beneath the United States of America as playing the deadbeat.

If pushed to the wall, what would the President do?  I have no inside information, but the platinum coin feels like too much of a gimmick.  Other assets sales seem less likely, because they would entail both greater transactions costs and – perhaps most importantly – time to execute, in a world where the Treasury necessarily will be counting coins and watching the second hand on the clock.  The worst outcome – one that I believe no President and no Treasury Secretary of either political party ever would (or should) accept – would be to allow what they would perceive to be the first default (see this  for a technicality) by the United States of America.  Accordingly my money – whether in cash or Treasury securities – would be on an appropriately solemn speech, invoking the 14th Amendment and citing the Catch-22 that the Congress’s inaction has forced upon him, in which the President accepts the responsibility to sell bonds in excess of the statutory debt limit.

Our nation may have dodged this bog; but that is not yet certain, and we may find ourselves back in this unseemly place in just a few weeks.  For myself, I hope that I will not need to research this topic further.