Let's assume, just for the sake of argument, that constitutionality of the debt ceiling is not in question. And let's assume we hit D-Day on August 2, and Congress has, for whatever reason, failed to raise the ceiling.
What choices is the President left with?
- Continue paying social security, Medicare, etc. Fund the government. Stiff the bondholders. Nobody wants this (well, except maybe the millions of people who rely on government money for their health and wellbeing, but who cares about them, right?), and it seems clearly unconstitutional, besides. The US government is not allowed to default.
- Continue to borrow anyway. Hope that no one has standing to challenge the borrowing. Regardless, this is also unconstitutional, because if the debt ceiling has been validly passed into law by Congress, the President doesn't have the authority to unilaterally override it.
- Prioritize the debt. Continue to pay bondholders as long as he is able. Cut out military wages, social security checks, whatever. Shutter government offices and buildings. And here's the thing: this is also unconstitutional. Once again, you'd have the president overriding laws passed by Congress -- not the debt ceiling, but the appropriations bill.
Imagine if, in the absence of a debt ceiling crisis, the president announced that he was withholding all military pay. Or that he was canceling funding to Medicare Part D. This new assertion of authority -- to choose budget priorities as he pleased -- wouldn't be remotely legal. It doesn't become more so if he's forced into it by Congress.
So which should he pick?
Virtually everyone agrees that Option 1 should be avoided. The prospect of default frightens people across the political spectrum.
Most everyone also agrees that Option 2 is substantively superior to Option 3. Only a handful of people believe that the government even can avoid default by prioritizing debt repayments -- and only a small subset of those people believe that we'd actually be better off if we stopped borrowing altogether. Everyone who isn't in that last, tiny group ought to prefer that the president keep borrowing.
The sticking point hasn't been practical, but legal. "Sure, we might be better off if Treasury just borrows the money, but unfortunately, it's not allowed to borrow anything until Congress says so."
Maybe not. But after August 2, the president literally won't have any legally valid options left! No matter which path he chooses, he's going to run afoul of the Constitution. So why would anyone prefer that he opt for the more fiscally ruinous path -- a path that also just so happens to leave millions of people without money they're owed?
The answer, of course, is that no one really does. When it comes right down to it, most Republicans hope that -- one way or another -- the debt ceiling doesn't take effect on August 2. But they can't admit that now, because it shows the inherent opportunism of their demands. The GOP's favored course might be no more legal than any other, and vastly more destructive, but they have to pretend to favor it anyway -- otherwise, their negotiating position collapses. They've dug their trenches and set up the barbed wire, and now they're hoping that the Democrats surrender before anyone notices that everyone is on the same side of line.