WASHINGTON (AP) — In the summer of 2011, when a debtcrisis like the current one loomed,
President Barack Obama warnedRepublicans that older Americans might not get their Social Securitychecks
unless there was a deal to raise the nation’s borrowing limit.Afterweeks of brinkmanship, Republicans
consented and Obama agreed to adeficit-reduction plan the GOP wanted. Crisis averted, for a time.Now
that there’s a fresh showdown, the possibility of Social Security cuts —and more — is back on the
table.Thegovernment could run out of cash to pay all its bills in full as earlyas Feb. 15, according to
one authoritative estimate, and congressionalRepublicans want significant spending cuts in exchange for
raising theborrowing limit. Obama, forced to negotiate an increase in 2011, haspledged not to negotiate
again.Without an agreement, every option facing his administration would be unprecedented.It would
require a degree of financial creativity that could test the law, perhaps even the Constitution.Itcould
shortchange Social Security recipients and other people,including veterans and the poor, who rely on
government programs.Itcould force the Treasury to contemplate selling government assets, astep
considered but rejected in 2011. In short, the Treasury would haveto create its own form of triage,
creating a priority list of its mostcrucial obligations, from interest payments to debtors to benefits
tovulnerable Americans."It may be that somewhere down the linesomeone will challenge what the
administration did in that moment, butin the moment, who’s going to stop them?" asked Douglas
Holtz-Eakin, aformer director of the Congressional Budget Office. "I pray we neverhave to find out
how imaginative they are."In such a debt crisis,the president would have to decide what laws he
wants to break. Does hebreach the borrowing limit without a congressional OK? Does he ignorespending
commitments required by law?In a letter to Obama onFriday, Senate Democratic leaders urged him to
consider taking any"lawful steps that ensure that America does not break its promises andtrigger a
global economic crisis — without congressional approval, ifnecessary."The White House has resisted
that path. It hasrejected recommendations that it invoke a provision in the 14thAmendment to the
Constitution that states that "the validity of thepublic debt of the United States … shall not be
questioned.""Thereare only two options to deal with the debt limit: Congress can pay itsbills
or they can fail to act and put the nation into default," WhiteHouse press secretary Jay Carney
said. "Congress needs to do its job."So what’s left if Congress does not act in
time?Technically,the government hit the debt ceiling at the end of December. Since then,Treasury
Secretary Timothy Geithner has halted full payments into theretirement and disability fund for
government workers and to the healthbenefits fund of Postal Service retirees.The Treasury can
stoppayments to a special fund that purchases or sells foreign currencies tostabilize world financial
markets.Past administrations havetaken such steps to buy time awaiting a debt ceiling increase.
Thathappened under Presidents Bill Clinton and President George W. Bush. Thegovernment restored those
funds after Congress raised the debt ceiling.Thosemeasures and others could keep the government solvent,
perhaps as faras early March, according to an analysis by the Bipartisan PolicyCenter.There are other
extreme possibilities as well.The federal government could sell some of its assets, from its gold
stockpile to its student loan portfolio."Allthese things are in principle marketable, and in a
crisis you’d gethuge discounts on them," said Holtz-Eakin, now head of the AmericanAction Forum, a
conservative public policy institute. "They wouldn’t begood ordinary business, but you would be in
extraordinary times."Accordingto a treasury inspector general report last year, department
officialsin 2011 considered and rejected the idea, concluding that gold saleswould destabilize the
international financial system, that selling offthe student loan portfolio was not feasible and that
such "fire sales"would buy only limited time.An idea pushed by some liberals wouldtake
advantage of a legal loophole meant for coin collectors and havethe Treasury mint platinum coins that
could be deposited at the FederalReserve and used to pay the nation’s bills. But the Treasury issued
astatement Saturday putting the idea to rest, saying neither thedepartment nor the Federal Reserve
believes the law "can or should beused to facilitate the production of platinum coins for the
purpose ofavoiding an increase in the debt limit."Once all efforts are exhausted, then the
government would be in uncharted territory.Atthat point, the government would continue to get tax
revenue, buthardly enough to keep up with the bills. According to the BipartisanPolicy Center, the
federal government between Feb. 15 and March 15 willget $277 billion in revenue and face $452 billion in
obligations.TheTreasury would have to decide whether to pay some obligations and notothers or to simply
pay for one day’s bills as it tax revenue rolls in,exponentially delaying payments the longer the debt
ceiling is notraised. Under virtually every scenario contemplated, payment of intereston the debt takes
precedence to put off a calamitous default."Ihappen to think the triage would be chosen to create
the maximum amountof political pressure to break the impasse right away, which would bewithholding
Social Security checks," said Philip Wallach, a fellow atthe Brookings Institution.___Follow Jim
Kuhnhenn on Twitter: http://twitter.com/jkuhnhennCopyright 2013 The Associated Press.