Geof Stone on Possible Debt Ceiling Solutions

The Debt Ceiling Crisis: Approaching the Witching Hour
Geoffrey R. Stone
The Huffington Post
July 30, 2011

As the clock runs down toward the witching hour on August 2, I see three possible solutions to the crisis. First, the Republicans and Democrats in Congress can agree on a compromise plan that raises the debt ceiling for a reasonable period of time and deals with at least some of the issues of spending cuts and new revenues that have thus far so furiously divided the parties. I suppose this is still possible, but it seems unlikely.

Second, the Republicans and Democrats in Congress can agree to increase the debt ceiling for a reasonable period of time without addressing any of the bitterly divisive spending and revenue issues. This is pretty much what has always happened in the past. Congress has separated the debt ceiling issue from the more difficult and more contentious issues of taxing and spending. At this point, that might be the best solution, but it too seems unlikely because of Republican intransigence.

Third, Congress can remain paralyzed and simply do nothing. If they follow that approach, which now seems likely, the current debt ceiling will remain in place and as of August 2 the government will not be able to borrow any more money and thus will no longer be able to pay its bills -- for the first time in American history. What happens then?