U.S. Treasury Secretary Janet Yellen continues to sound the alarm about the United States' debt ceiling crisis, warning that the U.S. could begin to default on its debt obligations as soon as Wednesday, June 1 — which is less than a week away.
A default, according to Yellen, would be an "economic and financial catastrophe." And she is urging President Joe Biden and House Speaker Kevin McCarthy (R-California) to work out some type of agreement before a default occurs.
Liberal economist Paul Krugman, in a May 25 column for the New York Times, is vehemently critical of House Republicans' handling of budget negotiations.
"As disaster looms," Krugman argues, "it's important to keep in mind that Republicans are the villains here: They're the ones engaged in extortion."
In addition to slamming Republicans, the economist offers three possible ways to avoid a U.S. debt default.
"The first possible strategy is simply to ignore the debt limit, declaring it unconstitutional," Krugman writes. "The 14th Amendment, which says that the validity of U.S. debt 'shall not be questioned,' has been getting a lot of attention…. A second strategy would be to exploit a peculiar legal provision that allows the Treasury to mint platinum coins of any value it chooses…. A third option would be to issue perpetual bonds — bonds that pay interest forever but no principal, and hence have no face value."
Krugman continues, "Since the ceiling is defined in terms of the face value of U.S. debt, not its fluctuating market value, it's hard to see how the ceiling can apply.… I hope someone inside the Treasury is quietly preparing to do whatever it takes. If not, God help us all."