US Debt Crisis: Ro Khanna Says Default Won't Happen

California Democrat Rep. Ro Khanna (D-CA) has reportedly said the U.S. will not default on its debt but the Biden administration might have to act unilaterally to stave off the crisis.

The question is whether its going to come to unilateral action by the executive branch, Khanna told Bloomberg News. I hope it doesnt, he added.

Khanna also laid out several possible executive maneuvers to tackle the situation. He pointed out the options include presenting a legal argument that congressional appropriations which have been already approved must be paid regardless of the debt limit.

Other alternatives include hiking the interest rates on Treasury bonds which is an accounting gimmick that would artificially bring down the face value of U.S. securities but also risk long-term damage to confidence in the market. Minting a $1 trillion coin is another option, he indicated.

However, Treasury Secretary Janet Yellen has rejected the coin idea, expressing doubt that the central bank would accept such a note.