America Hit Its Debt Ceiling, Raising Economic Fears

Ms. Yellen has dismissed ideas for lifting the borrowing cap unilaterally, such as minting a $1 trillion coin, as fanciful.

Some veterans of debt-limit fights anticipate that as the X-date approaches, a sufficient number of Republicans will back away from the brink of a default.

“While no one really knows what would happen if you breach the debt limit, not many people would speculate that good stuff happens after that,” said Christopher Campbell, who served as assistant Treasury secretary for financial institutions from 2017 to 2018. “It’s a cascade of how bad it gets.”

Mr. Campbell, a former staff director for Senate Finance Committee Republicans, added, “At the end of the day, I think that cooler heads will have to prevail.”

White House officials, though, have privately begun exploring alternative routes to raising the limit, including maneuvers — which could take months — to force a vote on a debt-ceiling increase with predominantly Democratic support. They have not expressed confidence that Republicans will bend in negotiations, though they have repeatedly said they expect Congress to lift the limit.

Ms. Jean-Pierre reiterated on Wednesday that Mr. Biden would not negotiate over a debt-limit increase. Asked if she believed Republicans saw it as their responsibility to raise the limit and avoid a default, she replied, “They should.”

Article source: https://www.nytimes.com/2023/01/19/us/politics/debt-limit-economy.html