Treasury isn't saying what it would do. But President Obama on Monday stressed that "there are no easy outs." And a report from the Treasury inspector general reviewing the 2011 debt ceiling standoff largely affirms that.
Some lawmakers say Treasury could simply "prioritize payments." That is, pick winners who would get paid in full and on time -- and losers who would be told to wait indefinitely to get paid what they're owed.
Experts expect that Treasury would bend over backwards to pay bond investors the interest they're owed to avoid default on debt held by the public.
But who else would qualify as special? Social Security recipients? Active duty troops? Veterans? Federal workers who legally aren't allowed to work unless they're paid? Small business contractors?
Treasury makes more than 80 million payments a month, and prioritizing them also presents administrative problems. Its automated payment systems are designed to make each payment in the order it comes due.
What's more, "while Congress enacted these expenditures, it did not prioritize them, nor did it direct the president or the Treasury to pay some expenses and not pay others. As a result, Treasury officials determined that there is no fair or sensible way to pick and choose among the many bills that come due every day," the Treasury inspector general noted.
Even if there were, "you can have a 'whoops' moment," said Joseph Minarik, research director at the Committee for Economic Development and a former chief economist at the White House Budget Office. That's because Treasury would have no excess cash to cover for any day when revenue comes in lower or spending higher than forecast.
Another potential option: Treasury could decide to offer partial payments to everyone with a promise to pay the rest eventually. If, for example, it decided to pay 60% of what's owed, that could mean the average retired worker's monthly Social Security check would be worth a little more than $700, instead of the roughly $1,200 he's owed. The rest would come later.
Again, however, Treasury's payment systems are not set up to make across-the-board cuts, the Treasury IG report noted.
Or maybe Treasury would choose to delay payments for everyone owed money on a given day until it has collected enough revenue to cover those day's bills in full. That means the average retired worker's Social Security check could be late by several days if not weeks.
Obama to Congress: Don't skip on the bill
Of all the distasteful options, Treasury officials deemed the delayed payment option "least harmful" in 2011.
Another possible workaround is entirely out of Treasury's hands. Congress could pass legislation that temporarily exempts debt issued to pay Social Security benefits from the debt ceiling.
During a debt ceiling standoff in the mid-1990s, Congress gave Treasury authority to issue enough securities to cover Social Security payments for the month of March, according to the Government Accountability Office.