I spoke to Lou Jacobson for his Politifact post on the debt limit fight and how it might be resolved.

• The White House could act unilaterally. The executive branch could mint a platinum coin with a face value of $1 trillion, deposit it in the Federal Reserve, and pay off its financial obligations as normal.

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During a previous debt limit fight, Obama called the idea “wacky,” and in 2021, Yellen called it a “gimmick.” It’s also unclear whether this would be upheld in the courts.

Ironically, some Republicans might like to see Biden take this path, said Liam Donovan, a principal at the law firm Bracewell.

“It would absolve Republicans of any responsibility, while opening the door to political attacks on Biden’s extra-constitutional overreach,” Donovan said.

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• A fig leaf solution. The likeliest endgame, experts say, is that the two parties will negotiate a deal that raises the debt limit, but with conditions that Democrats can live with, such as “a good-faith, bipartisan reform to the process that can help Republicans save face without Biden looking like he paid a ransom,” Donovan said. “A small concession is the optimal path because it provides an offramp for the bulk of the Senate conference that doesn’t want a clean hike but also doesn’t have the stomach for going over the brink.”

This would leave lots of tough negotiating for consideration of spending bills later this year, but most observers say that’s a preferable outcome.

Read the full piece here.

I spoke to Axios‘ Neil Irwin about the debt limit collision course and the circular risk of market optimism and underreaction.

What they’re saying: “In order for Congress to act expeditiously, there must be a sense of gravity around the consequences should they fail to act,” Liam Donovan, a principal at Bracewell LLP, tells Axios.

•”At this point, conventional market wisdom is actively undermining that sort of pressure by projecting unmitigated confidence that it will all work out,” he said.

The bottom line: The sanguine outlook on Wall Street makes it more likely that some ugly days may be in store later this year.

Read the full piece here.