Don't know much about this site: Motly Fool but this is an interesting take on debt ceiling options

[Kber]

http://www.fool.com/investing/general/2013/10/03/heres-what-obama-can-do-if-congress-doesnt-raise-t.aspx

Here's What Obama Can Do if Congress Doesn't Raise the Debt Ceiling
By Daniel Ferry | More Articles
October 3, 2013 | Comments (1)

When the federal government shut down on Tuesday, the resulting lose-lose stalemate presented a small preview of what will come later this month if lawmakers refuse to raise the debt ceiling, the maximum amount of money Congress allows the government to borrow. Around Oct. 17, the Treasury Department is expected to run out of money to pay the bills; if it cannot borrow more, the Obama administration will find itself in a constitutional crisis, a position in which, no matter what President Barack Obama does, he will have to break his oath of office. There are three illegal paths the administration could take if it doesn't get a debt ceiling deal.

The debt ceiling's legal gray area
Many observers assume that if the government runs out of money, it will have to simply stop paying bills, leaving soldiers without their paychecks, seniors without Social Security, and federal employees like air traffic controllers and prison guards out of work. Alarming, to be sure; a complete and sudden cutoff of all federal payments wouldn't just throw the economy into disarray, it could well cause significant social disorder. However, it's not obvious or inevitable that the federal government would stop payments. That's because even though it would be illegal to borrow money above and beyond the debt ceiling, it would also be illegal for the president to do anything else.

This is uncharted territory, since never before in the nation's history has Congress failed to raise the debt ceiling and allowed the government to run out of money. To understand the choices confronting the Obama administration, we have to look at three crucial powers reserved to Congress that, as chief executive, Obama is legally bound to uphold: taxing, spending, and borrowing. Collectively and colloquially known as "the power of the purse," Article I, Section 8 of the U.S. Constitution gives Congress the sole right and the responsibility to determine what to tax and how much tax revenue to take in, what to spend money on and how much to spend, and how much money to borrow.

Once Congress has decided these matters, they become laws that the president is bound by oath to execute. Originally, Congress took a direct hand in authorizing any borrowing, actually passing specific legislation to issue each new debt. As American society became more complex, Congress delegated this responsibility to the executive branch, specifically the Treasury. In place of direct oversight, Congress simply passed periodic laws putting a limit on how much money the Treasury could borrow: the debt ceiling. Now, if Obama were to order the Treasury to issue more debt than is authorized by the debt ceiling, he would be illegally breaching the separation of powers by taking up responsibilities the Constitution assigns to Congress.

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[bigbrother05]

1. W/o an increase, the only option is to pay out of current funds

The government collects taxes every day. As money comes in, it can be spent. One of the problems now are with a shutdown, we aren't maximizing collections, so there is less available to pay bills and makes the ceiling even closer.

Problems can arise in how the bills are paid. If we pay the "must fund" first (SS, Medicare, Military pay, etc.), then creditors get very nervous, but how can we pay China before a Disabled Vet? If you think the priorities the RW has pushed to fund the agencies is a sticky situation, just think about choosing between Granny's broken hip and an FDA food inspector.

[MFrohike]

2. History as a guide

Lincoln committed just about every constitutional violation possible. He had a Congress that ratified his actions after the fact and the Supreme Court, showing rare wisdom, upheld all of his actions except for his unilateral suspension of habeas corpus. I suspect the Court would have ratified everything but habeas regardless because Lincoln won (and the Court was wary after the disaster of Dred Scot). I only say this to point out that, in extremis, many options become viable.

The question is not what legal route can be taken if and when the president reaches the end of the rope in this situation. The question is which option will be the least bad under both legal and political analyses. The only route that seems clearly legal would be to mint a platinum coin. People can argue "spirit of the law" all day long, but that can be refuted with Scalia's obsession with textual analysis, which essentially states that the law means what it says, not what one thinks it should say. The coin route would run into political problems because it is a gimmick, but it's actually a gimmick that would work. The question is whether people could get past the gimmicky aspect of it to realize that, outside of a Congress not actively trying to create hell on earth, it's the option that doesn't put dictatorial powers into the hands of the executive and doesn't undermine the role of the legislature. Tough question.