White House economists sound the alarm on US default risk, saying it would inflict a ‘devastating blow’

The country is on the precipice of a financial calamity and Democrats are on the verge of potentially altering the contours of the Senate with a potential one-time rules change that would enable them to pass a debt ceiling increase well ahead of the Oct. 18 deadline.

It’s a strategy that Democratic leaders have been socializing since last week in the caucus, but the idea got a serious boost on Tuesday night when President Biden said it’s “a real possibility” that Democrats would establish a carveout of the filibuster rules to let the debt ceiling be increased by a simple majority vote.

Here’s a look at the options (from most likely to least likely at this point) that Congress has to increase the country’s borrowing limit by that date:

Democrats change the rules: This option is the most serious right now. CNN learned early on Tuesday that it was on the table, that it came up during a private lunch last week and was the subject of conversation Tuesday. This is essentially a carve out of the filibuster for the debt limit. Leadership’s rationale here is that they don’t need Republicans to raise the debt ceiling through reconciliation.

So, why do they need 60 votes to do this any other way? Some Democrats are arguing this wouldn’t be akin to going nuclear or blowing up the filibuster on legislation, but you can imagine how it will be perceived by Republicans as a slippery slope. The ability to use this tool, however, is only possible if every single Democrat agrees to do it. Moderate Democratic Sen. Joe Manchin of West Virginia threw cold water on this Monday. Tuesday he said he was not going to talk about it and it was up to leadership to work out a deal. We’ll see if anything changes.

Fellow moderate Democratic Sen. Kyrsten Sinema of Arizona has expressed deep concerns about changing the legislative filibuster too, but let’s keep an eye on these two because this is a more narrow change.

Democrats cave and do reconciliation: For weeks, this seemed like the most obvious option, but time is really beginning to run out for this. The process is lengthy and complicated. It requires Democrats to say exactly how much they are raising the debt by and Majority Leader Chuck Schumer has been leading his caucus in saying he’s not going there.

The process would require Democrats to pass a budget, put it on the floor, debate it for 15 hours, engage in a marathon vote series known as a vote-a-rama, have the Finance Committee write the debt ceiling increase, send it back to the floor for 20 more hours of debate, have another vote-a-rama and then finish it up. It’s a lot, and you can understand why Democrats want to avoid it. But it’s an option and up until Tuesday, it was perceived as maybe the most likely one.

That’s now changed.

Republicans relent: This is what Democrats hope. They bring House-passed debt ceiling bill to the floor. No Republican forces a 60-vote threshold and Democrats vote to increase the debt ceiling with a simple majority. But, it’s not happening Wednesday. It won’t happen Thursday, and no, it isn’t happening next week, either.

Even if GOP leaders got to a point where they’d let this slide, Roy Blunt, a Republican leader from Missouri, summed it up pretty well: “we really wouldn’t have the ability to control all 50 of our members on this issue.”

See: Sens. Ron Johnson of Wisconsin, Ted Cruz of Texas, Josh Hawley of Missouri and Bill Hagerty of Tennessee (who have been unafraid in the past to hold things up).

Biden does this using the 14th Amendment: There is no evidence that the White House is seriously entertaining this idea, but Senate Democrats have discussed it privately. Within the 14th Amendment, there is a public debt clause that says the “validity of the public debt of the United States, authorized by law, including debt incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” Some read this to mean that the President can just keep paying the country’s debts. The potential problem with taking this route is that it would likely end up in court. It’s completely untested for this use, which is why it’s not really on the table right now.

Read more about where things stand on the debt ceiling here.