Pundits are suggesting creative workarounds to avoid a debt ceiling crisis
AYESHA RASCOE, HOST:
With a raucous caucus, House Speaker Kevin McCarthy has his work cut out for him. And that's especially true with the debt ceiling. That's the country's borrowing limit for spending it has already agreed to. And it's reliably become the subject of brinkmanship by congressional Republicans. There's so much concern about a national default, given McCarthy's perceived weakness as House speaker and how fractured his Republican caucus is, that people are floating creative workarounds. NPR correspondent Danielle Kurtzleben has been looking at these schemes, and she joins us now. Thank you for being here, Danielle.
DANIELLE KURTZLEBEN, BYLINE: Oh, of course, Ayesha.
RASCOE: So Treasury Secretary Janet Yellen says the U.S. will reach the debt limit on Thursday, but they can use what she calls extraordinary measures to push off default until this summer. They can move some things around. And that may feel like a lot of breathing room, but the first of these workaround ideas we're going to talk about needs a lot of time to work, right?
KURTZLEBEN: Yes, right. Now, this is something called a discharge petition. Now, what this is is in the House, if a bill is sitting in committee not going anywhere, House members can sign on to a petition that would push the bill through for a vote, even if leadership hasn't scheduled that vote. Now, you need a majority of members, 218, to sign on to this. And the thinking here is that a handful of Republicans might join Democrats in doing so. But yes, this would take a lot of time, because before a vote can happen, the bill has to be in committee for 30 legislative days, and that's legislative days. The House isn't in session every day or even every week. So it could be months before the bill could proceed. And even then, it would need all of those signatures, plus a few more days until a vote. So, yeah, this isn't a last-minute option. It means the bill would have to be introduced well before default would potentially happen.
RASCOE: So I'm hearing people talk about discharge petitions, using discharge petitions for a lot more than avoiding default. But what you're describing sounds like it's very rare. And it sounds like it is procedurally complicated. So it may not be a silver bullet to congressional dysfunction.
KURTZLEBEN: Absolutely right. It doesn't happen very often and for very good reason.
RASCOE: And so there are some other ways that people have floated to get around the debt ceiling. They always talk about minting that trillion-dollar coin. I don't know why they...
RASCOE: ...Haven't done that. Or just say the debt ceiling doesn't exist. Like, you know, you just use your mind because of the Constitution. Like, how would that work?
KURTZLEBEN: Right. So let's start with the first of those, the trillion-dollar coin. Now, this idea has been around since the big debt ceiling fight in 2011. That's when it got popular. The idea leans on a law from the '90s that allows the Treasury to mint commemorative platinum coins of any denomination they want. Now, the intent of this law was to make commemorative coins, not to avoid a debt crisis.
KURTZLEBEN: So this isn't what they meant to do. But the idea here is that this law creates a loophole allowing the government to literally print money - so to print a coin worth $1 trillion. Then what would happen is the Treasury deposits the coin at the Fed. And poof, then there's money to keep paying the bills. So that's one idea, and we'll come back to that.
The other idea you mentioned was invoking the Constitution. Specifically, there is a section in the 14th Amendment that says that the validity of the public debt of the United States shall not be questioned. So the idea here is that President Biden could invoke that, and the U.S. could keep paying its debt obligations. But to be abundantly clear here, these are untested ideas. They're very controversial, to say the least. But the reason they keep coming up every time we have this debt-ceiling conversation is because defaulting would be extraordinarily, catastrophically bad. So these unorthodox ideas just keep coming up.
RASCOE: I mean, in desperate times, some people would say, would call for desperate measures.
RASCOE: I mean, would a platinum coin or the 14th Amendment, just invoking it - and I guess that would be the president just saying it or putting it in writing - would that avoid a crisis?
KURTZLEBEN: Well, this is the thing. It's not clear because, first of all, legal scholars differ on whether that 14th Amendment route would be constitutional. So if the president invoked that, there could be all sorts of legal fights that would proceed out of that. Meanwhile, coming back to the coin, in 2021, both Janet Yellen and the Biden White House rejected the idea of minting the coin. But you know what? Let's say, hypothetically, that even if the administration were behind either of these ideas and even if they were solidly legal - and those are huge ifs - these potential solutions could create other problems. For instance, if you minted that coin, you could be dragging the Fed into a political fight, which is exactly where the Fed doesn't like to be. And also, there are economic problems. Here's Mark Zandi. He's chief economist at Moody's Analytics.
MARK ZANDI: So you own a 10-year bond. You want to make sure you're getting paid on a timely way for 10 years. And you're watching these machinations, gimmicks and legal challenges. And you're saying to yourself, there's a pretty good chance I'm not going to get paid at some point in the next 10 years. Therefore, you got to pay me more to take this risk, or I'm just out of here.
KURTZLEBEN: So in other words, a platinum coin or the 14th Amendment might leave investors spooked, which means that the economy might still sustain some real damage.
RASCOE: That's NPR correspondent Danielle Kurtzleben. Thanks so much, Danielle.
KURTZLEBEN: Yeah, thank you, Ayesha.
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