{"id":1928985,"date":"2023-05-11T13:43:05","date_gmt":"2023-05-11T17:43:05","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/how-the-treasury-is-scrambling-to-stop-default-or-mitigate-its-fallout\/"},"modified":"2023-05-11T13:43:05","modified_gmt":"2023-05-11T17:43:05","slug":"how-the-treasury-is-scrambling-to-stop-default-or-mitigate-its-fallout","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/how-the-treasury-is-scrambling-to-stop-default-or-mitigate-its-fallout\/","title":{"rendered":"How the Treasury is scrambling to stop default \u2014 or mitigate its fallout"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">26<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fhow-the-treasury-is-scrambling-to-stop-default-or-mitigate-its-fallout%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1928985&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>                         The country is embroiled in its most risky debt ceiling standoff in more than a decade, and Treasury officials are working both publicly and behind the scenes to prepare. <\/p>\n<p>             The so-called X-date, the point at which the Treasury will not be able to make payments on incoming bills on time and in full, is fast approaching \u2014 possibly as soon as next month. The United States has never defaulted on its obligations in all of the times that Republicans and Democrats have sparred over the ceiling \u2014 instead, negotiators have come to terms and passed legislation to lift the limit. Still, given how dug in both sides are, there must be preparations for what would happen in the case of default. <\/p>\n<p>             HOW THE DOMINOES WILL FALL IF THE WORST HAPPENS WITH THE DEBT CEILING <\/p>\n<p>             Publicly, Treasury Secretary Janet Yellen and other Treasury and White House officials have been sounding the alarm about just how catastrophic a default would be for the U.S. economy. They have been advocating raising the ceiling without legislating cuts to spending levels, as Republicans are hoping to do. <\/p>\n<p>             Privately, Yellen has been working the phones to generate support on Wall Street for a push to raise the debt ceiling. She has been having conversations with major CEOs and business leaders to discuss the \u201ccatastrophic\u201d effects that would occur if the country defaulted, according to Reuters. One source said the calls were to warn them about the \u201cdangerous consequences of the current brinkmanship.\u201d <\/p>\n<p>             Yellen appears to be acting on the hopes that business leaders might be able to sway Republican lawmakers, who largely support House Speaker Kevin McCarthy\u2019s (R-CA) stance that an increase to the debt ceiling should be tied to spending reforms. <\/p>\n<p>             There are also likely machinations going on behind the scenes in the slim chance that the U.S. does default \u2014 a scenario that would send shockwaves through the global financial system. <\/p>\n<p>             Robert Van Order, professor of finance and economics at George Washington University, told the Washington Examiner that it is possible federal officials are planning to prioritize payments should the U.S. actually end up defaulting. <\/p>\n<p>             Prioritizing payments \u2014 that is, paying some bills while allowing others to go unpaid \u2014 has been discussed in the context of past debt limit standoffs, but officials have repeatedly said that doing so would be unfeasible. But Treasury\u2019s hand could be forced by stalled negotiations, necessitating plans for post-default operations. <\/p>\n<p>             \u201cIt\u2019s not like they will have no money, they just won\u2019t have enough, and so they\u2019ll have to figure out what they pay and what story they\u2019ll tell in the capital markets about how soon it will all be fixed,\u201d Van Order said. <\/p>\n<p>             During a standoff with Republicans in 2011, the Treasury developed a contingency plan to use incoming tax revenue to keep making payments on the principal and interest on the federal debt. Other payments would be delayed until they could be paid in full as new tax payments came in. Cuts to government expenditures would grow worse each day that ticked by. <\/p>\n<p>             Then-Treasury Secretary Jack Lew testified in 2013 that doing so would be very difficult, given that critical government programs could be put on the back burner in favor of others. \u201cI don\u2019t know how you could possibly choose between Social Security and veteran\u2019s benefits, between Medicare and food assistance,\u201d he said. <\/p>\n<p>             Van Order said that officials might also be preparing for other, more out-of-the-box options to avoid default. <\/p>\n<p>                         President Joe Biden could try to move beyond negotiations entirely and raise the debt ceiling through the 14th Amendment. Biden said Tuesday evening that he was weighing such an option. <\/p>\n<p>             The controversial move was discussed by the Obama administration during the 2011 standoff, although his lawyers weren\u2019t confident. <\/p>\n<p>             The concept is predicated upon a broad reading of Section 4 of the amendment, which reads, \u201cThe validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.\u201d The idea is that Biden would simply direct the Treasury to issue new debt based on the 14th Amendment, despite lacking congressional authorization to do so. <\/p>\n<p>             Such a move by Biden would undoubtedly trigger legal challenges \u2014 which, of course, would be anticipated by officials who have been planning for all scenarios with the current standoff. <\/p>\n<p>             Yellen has notably not ruled out invocation of the 14th Amendment, although she has said it wouldn\u2019t be a good option. <\/p>\n<p>             \u201cThere is no way to protect our financial system in our economy other than Congress doing its job and raising the debt ceiling and enabling us to pay our bills. And we should not get to the point where we need to consider whether the president can go on issuing debt. This would be a constitutional crisis,\u201d Yellen said over the weekend. <\/p>\n<p>             There is also the even more unlikely possibility of the Treasury trying to mint a $1 trillion platinum coin. <\/p>\n<p>             CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER <\/p>\n<p>             A provision in a law intended for developing commemorative coins allows the Treasury to mint a platinum coin in any denomination. In theory, the Treasury could mint such a coin with a $1 trillion face value and simply deposit it in the Treasury\u2019s account at the Federal Reserve. The Treasury could then draw on the funds without having to issue new debt. <\/p>\n<p>            In 2013, during yet another fight over the debt ceiling, the Treasury Department said it doesn\u2019t think the commemorative coin law should be used in that manner, and Yellen herself has dismissed it as a \u201cgimmick.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The country is embroiled in its most risky debt ceiling standoff in more than a decade, and Treasury officials are working both publicly and behind the scenes to prepare. The so-called X-date, the point at which the Treasury will not be able to make payments on incoming bills on time and in full, is fast<\/p>\n","protected":false},"author":1,"featured_media":1928986,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[538],"tags":[15651,14552,26484,3618,10568,3778],"class_list":["post-1928985","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-washington-examiner","tag-default","tag-fallout","tag-mitigate","tag-riot","tag-scrambling","tag-treasury"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1928985","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1928985"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1928985\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1928986"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1928985"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1928985"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1928985"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}