Rollover Risk: Ideating a U.S. Debt Default

This Article examines how a U.S. debt default might occur, how it could be avoided, its potential consequences if not avoided, and how those consequences could be mitigated. The most realistic default would result from roll-over risk: the risk that the government will be temporarily unable to borrow sufficient funds to repay its maturing debt. The United States, like most governments, routinely finances itself through short-term debt, which is less expensive than long-term debt. But this cost-saving does not come free of charge: it increases the threat of default. A U.S. debt default—even a mere “technical” default such as temporarily missing an interest or principal payment—would have severe economic and systemic consequences both domestically and worldwide. Such a default would also raise a host of legal issues, including questions of first impression under the Fourteenth Amendment to the Constitution.