The Treasury Department at least has to make a contingency plan for what to do in the event that the debt limit is reached. They have very few options that are legal, and the legal options, like minting a trillion-dollar coin with Ronald Reagan’s picture on it (because who would claim that a Reagan coin is irresolute?), aren’t ones they are likely to use. So their decision, apparently, is to pay the bills in the order in which they arrive.

The outlines of the answer, however, already are clear. Officials have said repeatedly that Treasury does not have the legal authority to pay bills based on political, moral or economic considerations. It cannot, for instance, set aside invoices from weapons companies to preserve money for children’s programs.

The implication is that the government will need to pay bills in the order that they come due. President Obama has warned as a result that the government “cannot guarantee” payments of Social Security benefits or other popular programs. Officials also have disputed the assertion of some Republicans that the government could prioritize interest payments.

Several independent analysts estimate there is enough money on hand to pay the bills until Aug. 10. Treasury has declined to provide its own estimate.

“You’re basically running on fumes from midnight Aug. 2 forward,” the White House spokesman, Jay Carney, told reporters Wednesday.

I don’t know that there’s really anything else they can say at this point. Payment prioritization is not really an option. Indeed, just getting the automatic payment process to stop is going to be a huge logistical challenge.

Meanwhile, Wall Street is angry that the Fed has not involved itself in this process whatsoever. They want their implicit bailout guarantee, and assurances of credit support and liquidity. The Fed isn’t really talking until the Treasury comes up with a way forward.

This really makes the elegant solutions – the 14th amendment, coin seigniorage – look a lot more elegant. But we don’t have political actors willing to execute them.

David Dayen

David Dayen

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