Is the Debt Limit Constitutional? Biden Aides Are Debating It.

[Beautiful Disaster]

11. Because it doesn't guarantee anything.

It still is ambiguous enough that financial institution participating in a treasury auction are not going to feel good buying those treasury bonds. The US debt would be entangled in a constitutional crisis, and investors would be at the mercy of this SCOTUS which already has an infamous track record as activists who just make it up as they go along.

No one is going to have any confidence buying those bonds. It would wreck financial markets just the same. Investors would treat it just like a default, in part because the SCOTUS could cause a default at any moment.

None of these alternative solutions actually solve the problem, which is uncertainty. Investors need certainty. That's why US Treasuries are the backbone of the global financial system. When you take that certainty away, the damage is all the same.

And that's the problem. We're trying to avoid an economic meltdown.

If a deal isn't reached, the US is likely to do just that - ignore it on the grounds of the 14th Amendment. But it's not going to be a good solution. It's going to likely plunge the US into a recession.

Hell, back in 2011, the uncertainty of not lifting the debt ceiling forced the US to have its rating downgraded and slowed growth. The stock market also lost its largest percentage since the tail-end of the Great Recession in 2009.

Obama didn't do it because he was able to reach a fairly equitable deal at the time that likely saved a recession and his reelection.

A deal to lift the ceiling is always the most preferred outcome because it's the one with the least amount of uncertainty. If you don't raise it, the economy is going to get slammed regardless if it's technically considered unconstitutional.