Hitting the debt limit: What bills would be paid?

WASHINGTON — In the summer of 2011, when a debt crisis like the current one loomed, President Barack Obama warned Republicans that older Americans might not get their Social Security checks unless there was a deal to raise the nation’s borrowing limit.

After weeks of brinkmanship, Republicans consented and Obama agreed to a deficit- reduction plan the GOP wanted. Crisis averted, for a time.

Now that there’s a fresh showdown, the possibility of Social Security cuts —and more — is back on the table.

The government could run out of cash to pay all its bills in full as early as Feb. 15, according to one authoritative estimate, and congressional Republicans want significant spending cuts in exchange for raising the borrowing limit.

Obama has pledged not to negotiate again.

Without an agreement, every option facing his administration would be unprecedented.

It would require a degree of financial creativity that could test the law, perhaps even the Constitution.

It could shortchange Social Security recipients and other people, including veteran and the poor, who rely on government programs.

It could force the Treasury to contemplate selling government assets, a step considered but rejected in 2011.

In short, the Treasury would have to create its own form of triage, creating a priority list of its most crucial obligations, from interest payments to debtors to benefits to vulnerable Americans.

“It may be that somewhere down the line someone will challenge what the administration did in that moment, but in the moment, who’s going to stop them?” asked Douglas Holtz-Eakin, a former director of the Congressional Budget Office. “I pray we never have to find out how imaginative they are.”

In such a debt crisis, the president would have to decide what laws he wants to break.