John Boehner during his weekly press conference on Thursday morning, vowing a repeat of the 2011 debt limit hostage crisis by saying that any increase in the debt limit will "have a price tag attached to it" and that he believes "any increase in the debt limit has to be accompanied by spending reductions that meet or exceed it."
In 2011, most people assumed that congressional failure to raise the debt limit would automatically force default and financial apocalypse would soon follow. But as Yale Law Professor Jack Balkin argued, that was a bad assumption. If Congress were to fail to lift the debt limit, the administration would still have several options to avert catastrophe. One such option would be to essentially ignore the debt limit because it conflicts with congressional statues appropriating funds beyond that limit. Another option would be to mint a trillion dollar coin and deposit it in the Federal Reserve.
These wouldn't be ideal, although they are vastly preferably to a financial meltdown or rewarding GOP legislative terrorism. The best scenario would for Congress to simply raise the debt limit, especially given that Congress appropriated the funds and extended the tax cuts that caused us to run up against the debt limit in the first place. But if they don't do their job, the White House can use innovative legal strategies to manage the consequences. There's no guarantee that they will use those strategies, but the only reason for failing to deploy them is if they want to use the debt limit as a political tool to build support for spending cuts and tax hikes. Given how badly that strategy fared in 2011, they'd be making a huge mistake to try it again. The first few months of 2013 would turn into a replay of the summer of 2011—and nobody in their right mind should want to see that.
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