What America does after a debt-ceiling disaster

America is once again in the throes of a debt-ceiling crisis. If Congress and the White House do not come to a deal, the government may run out of cash, and be on the brink of a sovereign default, in just a few weeks’ time. Most investors expect a last-minute compromise, thereby avoiding financial Armageddon, as during past crises. Yet positions on each side of the aisle look entrenched: Republicans want big spending cuts; Democrats are resisting. So the White House must consider its break-glass options. If there is no agreement, what would President Joe Biden do?

There are two broad kinds of workarounds—one magical, the other messier and neither appealing—that the Biden administration could use to manage the fallout from a debt-ceiling disaster.

Start with the actions that would render the debt ceiling moot—at least in theory. One that has captured the imagination of wonks, owing to its novelty, is a trillion-dollar coin. The Treasury can mint commemorative coins of any…

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This article was written by and originally published on www.economist.com