The Treasury Department is secretly scrambling to find ways to avoid defaulting on the nation’s debts if Congress is unable to raise the debt ceiling ahead of the Aug. 2 deadline, according to a report Thursday.
Though top department officials, including Treasury Secretary Timothy Geithner, have said they are not making contingency plans should Congress and the White House fail to reach a deal, sources told Reuters Wednesday that officials are mapping out strategies to ward off default.
The discussions are being led by Mary Miller, assistant secretary for financial markets, Reuters said. Her team is said to be studying whether the Obama administration can delay payments, as well as if the Constitution gives the president the authority to ignore Congress and permit the government to continue issuing debt.
Speaking at his Twitter town hall on Wednesday, President Barack Obama said that he doesn’t want to turn to the Constitution to find a solution to the debt crisis.
“I don’t think we should even get to the constitutional issue,” he said. “Congress has a responsibility to make sure we pay our bills. We’ve always paid them in the past.”
Treasury is also considering whether a 1985 finding by the Government Accountability Office gives the government legal authority to prioritize certain payments and is talking to the Federal Reserve about working as the department’s broker in the markets if the Aug. 2 deadline is blown.
The White House wouldn’t comment to Reuters about Treasury’s efforts.
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