White House Explored Possibility of Making Payments After Breaching Debt Limit, Report Says
16:21 GMT 02.10.2021 (Updated: 13:59 GMT 19.12.2022)
The US Congress is barreling towards the 18 October deadline set by Treasury Secretary Janet Yellen, who warned that failure to comply with it could lead to serious economic troubles for the country.
White House officials explored the possibility of the government continuing payments in the event of breaching the debt limit in mid-October, but concluded that a default and economic catastrophe would be unavoidable, The Washington Post reported
, citing people familiar with the matter.
In the reported internal review, the officials circulated memos with various theories suggesting scenarios of a debt ceiling breach. Among the theories was a once-popular idea to create a so-called "trillion-dollar coin" - a peculiar "new nuclear option" for the economy that was suggested back in 2013 to avert a similar threat of default.
However, all scenarios were ditched as unworkable, the sources told the WaPo. Even though all options were reviewed, the White House recognised Congress' action to maintain "full faith and credit of the US government".
“There is only one viable option to deal with the debt limit: Congress needs to increase or suspend it, as it has done approximately 80 times, including three times during the last administration”, Michael Gwin, a White House spokesman, said in a statement.
Something that has never happened in US history is a failure to raise the debt limit followed by default. If this occurs, the US Treasury could very soon run out of cash, according to Treasury Secretary Janet Yellen.
2 October 2021, 14:35 GMT
The stalled debt ceiling issue is frustrating for the Democratic Party, which is currently struggling to pass Biden's sweeping "Build Back Better" agenda. Apart from their own disagreements, Democrats are also facing unified Republican opposition to both Biden agenda and debt ceiling action.
While Senate Minority Leader Mitch McConnell has remained adamant in his assertions that it is up to Democrats to act on the debt ceiling, his rival, Majority Leader Chuck Schumer, is confident that the GOP counterpart is bluffing.
"As default gets closer and closer to becoming a reality, our Republican colleagues will be forced to ask themselves how long they are going to continue playing political games while the economic stability of our country is at risk", Schumer said on the Senate floor, cited by CNN.
According to CNN, however, one senior GOP aide said after seeing Schumer's quote on could hold out in the stare down "Longer than Biden and Democrats, that's for sure".
In a manner that does not signal any de-escalation in the standoff, White House Press Secretary Jen Psaki said that the Democrats do not intend to give up either.
"We're not going to, nor should anyone, let Republicans off the hook here, so we're going to continue to press them on it", she insisted.