HONESTLY, THIS DEBT CEILING APPROACH SOUNDS FINE TO ME:

Many on Wall Street believe that the Treasury Department, in order to avoid defaulting on U.S. debt, would “prioritize” payments on its bonds if it could no longer borrow funds to cover all its expenses. They expect that America’s lenders — the bondholders who own U.S. Treasury debt — would be first in line to receive interest and other payments, even if it meant delaying other obligations like government salaries or retirement benefits.

Plus:

A number of prominent financial experts at Bank of America, Barclays and other major firms are confident that the U.S. will avert a global market meltdown by continuing to pay its bondholders if the Treasury Department crosses the threshold where it can’t cover all its other bills. They think the U.S. can do so by withholding funds for things like benefits owed to individual Americans or payments to firms doing business with the government.

It’s a view that aligns with those of conservative lawmakers, who argue that payment prioritization on Treasury securities — the bedrock of the international financial system — is a viable contingency plan as they push for budget cuts opposed by President Joe Biden.

The White House and Treasury are already putting up resistance to the idea, which Treasury says would amount to a default. But disclosures over the past several years — driven in part by investigations by House Republicans — have revealed that officials believe the government has the technical capacity to implement payment prioritization, though it would be experimental and risky.

And:

The key in both stories is that some on Wall Street are open to the idea of a default not being a financial catastrophe. A thorough read of both articles suggests that there are long odds on that. But note that just having this reportage out there reframes the conversation from “a default will be catastrophic!’ to “if a default happens, how would we muddle through?” The moment the framing shifts, suddenly the inconceivable becomes a little more conceivable. At that point, to paraphrase Winston Churchill, now we are just haggling over the price rather than sticking to principle.

It’s a way to shrink government obligations without defaulting on actual creditors. Since the political system is too broken/parasitized to do that, it’ll have to happen another way. Remember: Something that can’t go on forever, won’t.