Mr. Lowenstein is the author of “Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War.”
“The looming American debt crisis is politically contrived. The Treasury could borrow all it needed if the Republican majority in the House acted responsibly and raised the debt ceiling.
But the notion that if the House fails to come to agreement the United States faces a default on its debt has been accepted far too casually, partly because Janet Yellen, the Treasury secretary, has been vague about whether interest payments would be maintained.
In fact, were the government to run short of cash, the Treasury should manage the shortfall by prioritizing interest payments and reducing funding on ordinary budget items such as national parks, the military and education. This would be painful, and possibly extralegal, but it would be the best of bad options. Responsible nations honor their debts.
There is a historical precedent: The Civil War Congress faced a similar choice. President Abraham Lincoln and Republicans in Congress recognized that preserving America’s credit was the key to financing the Civil War, and therefore to the government’s continued health and existence. President Biden and Secretary Yellen should heed their example.”