A day after Treasury Secretary Janet Yellen predicted a shorter countdown to catastrophe than previously thought, previously unthinkable options for preventing a U.S. debt default have entered the mainstream discussion.
Why it’s important The meeting between President Biden and House Speaker Kevin McCarthy (R-Calif.) is finally scheduled for next Tuesday, but so far there has been no sign that either party is willing to budge from their established — and seemingly intransferable — negotiating positions.
A senior administration official told Politico about the upcoming meeting: “If you need to hear again that it’s your responsibility to address the debt ceiling without conditions and a ransom, then he can say that again.”
President Biden has refused to do his job — threatening to bumble our nation into its first-ever default — and the clock is ticking,” McCarthy said in response to Yellen’s warning that the U.S. may be unable to pay its bills “potentially as early as June 1.”
Driving the news: The New York Times reports that top Biden officials are privately debating a controversial escape hatch: invoking the 14th Amendment, which some legal scholars say requires the federal government to pay its debts.
Overriding the debt limit with an untested constitutional argument would undoubtedly invite legal challenges — and could spook the markets, even if the immediate ramifications of a default are put on hold.
Yellen has previously characterized invoking the 14th Amendment or minting a trillion-dollar coin as unserious options — but perhaps not as unfathomable as the world’s largest economy defaulting on its debt.
Flashback: During the Obama administration’s 2011 debt ceiling standoff with Republicans, former President Clinton said he would invoke the 14th Amendment “without hesitation, and force the courts to stop me.”