The Impending US Debt Default and Its Consequences.
The US government is facing a debt-ceiling crisis, with Republicans demanding big spending cuts and Democrats resisting. The Biden administration has three options to manage the fallout: minting a trillion-dollar coin, deploying the 14th Amendment of the Constitution, or offering bonds with high coupons. However, these solutions are ruses and loopholes that could be subject to legal challenge, leaving prioritisation of payments as the fallback option. This would involve setting aside cash from tax revenues to make interest payments, resulting in a cut of one-quarter in non-interest expenditures and a harsh dose of austerity.