Treasury Department holds secret talks on debt contingency plan

Treasury Department officials may say they don't have a backup plan if Congress fails to raise the debt limit by August 2, but Reuters reports that top officials have been meeting to hash out a Plan B.

Some of the questions on the table are:

• Does the 14th Amendment to the Constitution -- which states that public debts "shall not be questioned" -- give President Obama the authority to ignore Congress if it fails to raise the debt ceiling?
• Can the Obama administration delay payments -- including a disbursement of more than $49 billion to Social Security recipients -- to manage cash flow after the August 2 deadline?
• Is a 1985 finding by the Government Accountability Office that Treasury has the authority to prioritize payments in the event of a debt default legal?

The Obama administration wants Congress to raise the debt limit by more than $2 trillion to meet the country's needs through the 2012 election season. As talks continue, the likelihood of a default grows. A default could be especially hurtful for the economy, which is still recovering from the financial crash of 2008.

"As we have said repeatedly over the past six months, there is no alternative to raising the debt limit," Treasury spokeswoman Colleen Murray said of the Treasury discussions, according to Reuters.