The beginning of 2023 was marked by deep tragedy in both the Asian and Black communities. The killing of 29-year-old Tyre Nichols sparked outrage, with renewed calls for systemic change to police violence. Soon after, 11 people were killed while celebrating Lunar New Year in Monterey Park, which sent shock waves throughout Asian communities and triggered a painful reminder of the 2021 Atlanta spa shootings that killed six Asian women.

This state of grief and outrage is a place weve been to before. We felt it deeply three years ago after the tragic death of George Floyd, which resulted in a racial reckoning for corporations nationwide to look inward and do better. With millions of eyes on them, businesses vowed to make diversity, equity, and inclusion a real priority. Since then, 71% of companies reportedly implemented DE&I initiatives, with roughly $7.5 billion spent globally on those programs in 2020 alone.

And yet, three years later, corporate Americas stated commitment to DE&I is a slipping priority, being tested against a recessionary backdrop and widespread layoffs. Talent is still bringing in trauma from the outside world and facing headwinds in the workplace. For AAPI professionals, some of these headwinds go unseen.

In 2020, anti-Asian hate drastically increased by 164%, and as the community reels, many hate crimes go unreported. To date, the Stop AAPI Hate coalition has tracked more than 11,000 self-reported hate incidents impacting Asian Americans and Pacific Islanders since March 2020. 

At Coqual, a leading global think tank, there was an urgent need to look closer at what the AAPI community was facing. Coquals recent study, Strangers at Home: The Asian and Asian American Professional Experience, finds nearly half of Asian and Asian American professionals say its very important that their companies address the hate and violence against their communities, but only one in four feel their company is vocal enough. 

Additionally, the report finds that 63% of Asian and Asian American professionals said the ongoing violence negatively impacted their mental health and nearly half said it also negatively affected their physical health. Many individuals dont feel safe partaking in routine, daily activities going out for a jog, sitting in the park bird watching, ringing a doorbell, or visiting a spa or local church. That anxiety and fear carry over into the workplace. Coqual finds that 62% of Asian professionals dont feel safe commuting to and from work. 

Other underrepresented communities can relate to living in fear of daily acts of racism. The Black community has battled racism for centuries. Its time for leaders to promote solidarity as a way of overcoming barriers in the workplace. Coquals research finds that Black employees, more than any other group surveyed, believe companies should be addressing violence against the AAPI community. The Black community knows how important it is for leaders to respond to racial injustice, and the shared experiences of racism between our communities is an opportunity to foster solidarity in the workplace.

However, we cant meaningfully support employees without dismantling the tropes and racial hierarchy that exist for both communities in the workplace.

For example, the model minority myth perpetuates the idea that Asian and Asian American professionals often outpace and outperform their Black and Latinx colleagues, and, therefore, dont need as much support. Coquals research finds the contrary to be true. Nearly one in three Asian and Asian American women reported feeling work-related burnout and Asian Americans and Pacific Islanders are the least likely racial group to say, People like me are in leadership positions at my workplace.

Not only do these tropes fuel divisions, but they also make it less likely for leaders to provide the support that traditionally marginalized professionals need. Leaders must look inward and revisit the commitments made in 2020. They must analyze the internal dynamics that create barriers to success and incorporate inclusive leadership and equity principles into the executive toolkit.

We cant wait for another reckoning to recommit to making our workplaces more diverse, equitable, and inclusive. Lets start the work now by doubling down on these initiatives, not trimming them. Let your actions speak for themselves, rather than signal a performative pledge to your employees. Progress, growth, and meaningful change require investment, and these investments pay off. 

Lanaya Irvin is the CEO at Coqual (formerly Center for Talent Innovation), a 19-year-old leading global think tank that conducts research on workplace diversity, equity, and inclusion and advises the worlds largest corporations. 

Manjusha (Manju) Kulkarni is a co-Founder of Stop AAPI Hate and executive director of AAPI Equity Alliance (AAPI Equity), which serves and represents the 1.5 million Asian Americans and Pacific Islanders in Los Angeles County.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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Shua Wilmot and Raegan Zelaya, two former dorm directors at a small Christian university in western New York, acknowledge their names are unconventional, which explains why they attached gender identities to their work email signatures.

Wilmot uses he/him. Zelaya goes by she/her.

Their former employer, Houghton University, wanted them to drop the identifiers in line with a new policy for email formats implemented in September. Both refused and were fired.

My name is Shua. Its an unusual name. And it ends with a vowel, a, that is traditionally feminine in many languages, Wilmot said in a nearly one-hour video he and Zelaya posted on YouTube shortly after they were let go last month. If you get an email from me and you dont know who I am, you might not know how to gender me.

Ongoing culture wars in the U.S. over sexual preferences, gender IDs and transgender rights have engulfed politics, school campuses and many other facets of public and private life. At least 17 Republican-led states have severely restricted gender affirming care. Debates continue to rage in some communities about school curricula mentioning sexual orientation or gender identity. And pickets have sprung up outside public libraries hosting drag story hours.

Meanwhile, controversies swirl at campuses with religious affiliations. The recent firings prompted more than 700 Houghton alumni to sign a petition in protest.

In the Northwest, 16 plaintiffs are suing Seattle Pacific University, a Christian liberal arts college, to challenge the schools employment policy barring people in same-sex relationships from full-time jobs.

In New York City, LGBTQ students are challenging Yeshiva Universitys decision to bar their student-run club from campus.

Paul Southwick, director of the Religious Exemption Accountability Project, a 2-year-old advocacy group for LGBTQ students at publicly funded religious colleges and universities, said actions such as these are cause for despair.

Theres a backlash against the rise of LGBTQ rights, he said, and not just with white evangelical Christianity in the South but in places like New York and Oregon that we wouldnt think would be experiencing this backlash.

Earlier this year, a federal judge in Oregon dismissed a lawsuit that LGBTQ students filed against the U.S. Department of Education claiming it didnt protect them against discrimination at religiously affiliated universities receiving federal money.

Houghton University, an 800-student campus 60 miles (96 kilometers) southeast of Buffalo, says it offers a Christ-centered education in the liberal arts and sciences.

In a statement emailed to The Associated Press on Saturday, the university said it could not speak publicly about personnel matters, but it has never terminated an employment relationship based solely on the use of pronouns in staff email signatures.

The university said it had previously asked employees to remove anything extraneous, including Bible quotes, from email signatures.

The university also shared with the AP an email outlining its new policy sent to staff. The memo cautioned employees against using politically divisive and inflammatory speech in communications bearing the Houghton name. It also directed them to use standardized signature styles and forbade the use of pronouns.

Also attached to the statement was a copy of a letter university President Wayne D. Lewis Jr. sent to students.

I would never ask you to agree with or support every decision I make, Lewis wrote. But I do humbly ask that you resist the temptation to reduce Houghtons decision making to the simple and convenient political narratives of our time.

Zelaya said she received an email in the fall from administrators saying the school was mandating changes in colors, fonts and other aspects of email to help the school maintain branding consistency.

She complied, she said, but retained her pronouns on her signature, calling it a standard industry practice to do so.

In the dismissal letters hand-delivered to Wilmot and Raegan Zelaya, copies of which they shared on social media, the university wrote that the firings were a result of your refusal to remove pronouns in your email signatures in violation of institutional policy.

In a video posted on Facebook, Zelaya said she already has another job lined up. In their joint YouTube video, she and Wilmot urged their supporters to push for change in policies, but constructively and with civility.

As a result of this whole controversy, as a result of having my pronouns in my email signature, Wilmot said, its given me the opportunity to educate people on this topic.

If the debt crisis roiling Washington were eventually to send the United States crashing into recession, Americas economy would hardly sink alone.

The repercussions of a first-ever default on the federal debt would quickly reverberate around the world. Orders for Chinese factories that sell electronics to the United States could dry up. Swiss investors who own U.S. Treasurys would suffer losses. Sri Lankan companies could no longer deploy dollars as an alternative to their own dodgy currency.

No corner of the global economy will be spared if the U.S. government defaulted and the crisis werent resolved quickly, said Mark Zandi, chief economist at Moodys Analytics.

Zandi and two colleagues at Moodys have concluded that even if the debt limit were breached for no more than week, the U.S. economy would weaken so much, so fast, as to wipe out roughly 1.5 million jobs.

And if a government default were to last much longer well into the summer the consequences would be far more dire, Zandi and his colleagues found in their analysis: U.S. economic growth would sink, 7.8 million American jobs would vanish, borrowing rates would jump, the unemployment rate would soar from the current 3.4% to 8% and a stock-market plunge would erase $10 trillion in household wealth.

Of course, it might not come to that. The White House and House Republicans, seeking a breakthrough, concluded a round of debt-limit negotiations Sunday, with plans to resume talks Monday. The Republicans have threatened to let the government default on its debts by refusing to raise the statutory limit on what it can borrow unless President Joe Biden and the Democrats accept sharp spending cuts and other concessions.

Feeding the anxiety is the fact that so much financial activity hinges on confidence that America will always pay its financial obligations. Its debt, long viewed as an ultra-safe asset, is a foundation of global commerce, built on decades of trust in the United States. A default could shatter the $24 trillion market for Treasury debt, cause financial markets to freeze up and ignite an international crisis.

A debt default would be a cataclysmic event, with an unpredictable but probably dramatic fallout on U.S. and global financial markets, said Eswar Prasad, professor of trade policy at Cornell University and senior fellow at the Brookings Institution.

The threat has emerged just as the world economy is contending with a panoply of threats from surging inflation and interest rates to the ongoing repercussions of Russias invasion of Ukraine to the tightening grip of authoritarian regimes. On top of all that, many countries have grown skeptical of Americas outsize role in global finance.

In the past, American political leaders generally managed to step away from the brink and raise the debt limit before it was too late. Congress has raised, revised or extended the borrowing cap 78 times since 1960, most recently in 2021.

Yet the problem has worsened. Partisan divisions in Congress have widened while the debt has grown after years of rising spending and deep tax cuts. Treasury Secretary Janet Yellen has warned that the government could default as soon as June 1 if lawmakers dont raise or suspend the ceiling.

If the trustworthiness of (Treasurys) would become impaired for any reason, it would send shockwaves through the system and have immense consequences for global growth, said Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics and former chief economist at the International Monetary Fund.

Treasurys are widely used as collateral for loans, as a buffer against bank losses, as a haven in times of high uncertainty and as a place for central banks to park foreign exchange reserves.

Given their perceived safety, the U.S. governments debts Treasury bills, bonds and notes carry a risk weighting of zero in international bank regulations. Foreign governments and private investors hold nearly $7.6 trillion of the debt roughly 31% of the Treasurys in financial markets.

Because the dollars dominance has made it the de facto global currency since World War II, its relatively easy for the United States to borrow and finance an ever-growing pile of government debt.

But high demand for dollars also tends to make them more valuable than other currencies, and that imposes a cost: A strong dollar makes American goods pricier relative to their foreign rivals, leaving U.S. exporters at a competitive disadvantage. Thats one reason why the United States has run trade deficits every year since 1975.

Of all the foreign exchange reserves held by the worlds central banks, U.S. dollars account for 58%. No. 2 is the euro: 20%. Chinas yuan makes up under 3%, according to the IMF.

Researchers at the Federal Reserve have calculated that from 1999 to 2019, 96% of trade in the Americas was invoiced in U.S. dollars. So was 74% of trade in Asia. Elsewhere outside of Europe, where the euro dominates, dollars accounted for 79% of trade.

So reliable is Americas currency that merchants in some unstable economies demand payment in dollars, instead of their own countrys currency. Consider Sri Lanka, battered by inflation and a dizzying drop in the local currency. Earlier this year, shippers refused to release 1,000 containers of urgently needed food unless they were paid in dollars. The shipments piled up at the docks in Colombo because the importers werent able to obtain dollars to pay the suppliers.

Without (dollars), we cant do any transaction, said Nihal Seneviratne, a spokesman for Essential Food Importers and Traders Association. When we import, we have to use hard currency mostly the U.S. dollars.

Likewise, many shops and restaurants in Lebanon, where inflation has raged and the currency has plunged, are demanding payment in dollars. In 2000, Ecuador responded to an economic crisis by replacing its own currency, the sucre, with dollars a process called dollarization and has stuck with it.

Even when a crisis originates in the United States, the dollar is invariably the go-to haven for investors. Thats what happened in late 2008, when the collapse of the U.S. real estate market toppled hundreds of banks and financial firms, including once-mighty Lehman Brothers: The dollars value shot up.

Even though we were the problem we, the United States there was still a flight to quality, said Clay Lowery, who oversees research at the Institute of International Finance, a banking trade group. The dollar is king.

If the United States were to pierce the debt limit without resolving the dispute and the Treasury defaulted on its payments, Zandi suggests that the dollar would once again rise, at least initially, because of the uncertainty and the fear. Global investors just wouldnt know where to go except to where they always go when theres a crisis and thats to the United States.

But the Treasury market would likely be paralyzed. Investors might shift money instead into U.S. money market funds or the bonds of top-flight U.S. corporations. Eventually, Zandi says, growing doubts would shrink the dollars value and keep it down.

In a debt-ceiling crisis, Lowery, who was an assistant Treasury secretary during the 2008 crisis, imagines that the United States would continue to make interest payments to bondholders. And it would try to pay its other obligations to contractors and retirees, for example in the order that those bills became due and as money became available.

For bills that were due on June 3, for example, the government might pay on June 5. A bit of relief would come around June 15. Thats when government revenue would pour in in as many taxpayers make estimated tax payments for the second quarter.

The government would likely be sued by those who werent getting paid anybody who lives off veterans benefits or Social Security, Lowery said. And ratings agencies would likely downgrade U.S. debt, even if the Treasury continued to pay interest to bondholders.

The dollar, though it remains dominant globally, has lost some ground in recent years as more banks, businesses and investors have turned to the euro and, to a lesser extent, Chinas yuan. Other countries tend to resent how swings in the dollars value can hurt their own currencies and economies.

A rising dollar can trigger crises abroad by drawing investment out of other countries and raising their cost of repaying dollar-denominated loans. The United States eagerness to use the dollars clout to impose financial sanctions against rivals and adversaries is also viewed uneasily by some other countries.

So far, though, no clear alternatives have emerged. The euro lags far behind the dollar. Even more so does Chinas yuan; its hamstrung by Beijings refusal to let its currency trade freely in global markets.

But the debt ceiling drama is sure to heighten questions about the enormous financial power of the United States and the dollar.

The global economy is in a pretty fragile place right now, Obstfeld said. So throwing into that mix a crisis over the creditworthiness of U.S. obligations is incredibly irresponsible.

______

AP Writer Bharatha Mallawarachi in Colombo, Sri Lanka, contributed to this report.

President Joe Biden and House Speaker Kevin McCarthy are set to meet at the White House at a pivotal moment as Washington works to strike a budget compromise and raise the nations borrowing limit in time to avert a devastating federal default.

The meeting Monday afternoon between the Democratic president and the new Republican speaker will be critical as they race to prevent a looming debt crisis. After a weekend of start-stop talks, both men appeared upbeat as they face a deadline, as soon as June 1, when the government could run out of cash to pay its bills.

Biden and McCarthy spoke by phone Sunday while the president was returning home on Air Force One after the Group of Seven summit in Japan. It went well, well talk tomorrow, Biden said in response to a shouted question upon his return late Sunday.

The call revived talks and negotiators met for 2 1/2 hours at the Capitol late Sunday evening, saying little as they left. Financial markets turned down last week after talks stalled.

McCarthy, R-Calif., told reporters earlier Sunday that the call with Biden was productive and that the on-again, off-again negotiations between his staff and White House representatives are focused on spending cuts.

Biden told a press conference before departing from Japan: I think that we can reach an agreement.

The contours of an agreement appear within reach, and the negotiations have narrowed on a 2024 budget year cap that would be key to resolving the standoff. Republicans have insisted next years spending cannot be more than current 2023 levels, but Democrats have refused to accept the steeper cuts McCarthys team first proposed.

A budget deal would unlock a separate vote to lift the debt ceiling, now $31 trillion, to allow more borrowing to pay bills already incurred bills. Treasury Secretary Janet Yellen said Sunday that June 1 is a hard deadline.

Well keep working, said Steve Ricchetti, counselor to the president, as the White House team exited talks late Sunday.

McCarthy said after his call with Biden that I think we can solve some of these problems if he understands what were looking at. The speaker added, But Ive been very clear to him from the very beginning. We have to spend less money than we spent last year.

McCarthy emerged from that conversation sounding optimistic and was careful not to criticize Bidens trip, as he had before. He did caution, Theres no agreement on anything.

Earlier, Biden used his concluding news conference in Hiroshima, Japan, to warn House Republicans that they must move off their extreme positions over raising the debt limit and that there would be no agreement to avoid a catastrophic default only on their terms.

Biden said its time for Republicans to accept that there is no deal to be made solely, solely, on their partisan terms. He said he had done his part in attempting to raise the borrowing limit so the government can keep paying its bills, by agreeing to significant cuts in spending. Now its time for the other side to move from their extreme position.

GOP lawmakers have been holding tight to demands for sharp spending cuts with caps on future spending, rejecting the alternatives proposed by the White House for reducing deficits in part with revenue from taxes.

Republicans want to roll back next years spending to 2022 levels, but the White House has proposed keeping 2024 the same as it is now, in the 2023 budget year. Republicans initially sought to impose spending caps for 10 years, though the latest proposal narrowed that to about six. The White House wants a two-year budget deal.

A compromise on those topline spending levels would enable McCarthy to deliver for conservatives, while not being so severe that it would chase off the Democratic votes that would be needed in the divided Congress to pass any bill.

Republicans also want work requirements on the Medicaid health care program, though the Biden administration has countered that millions of people could lose coverage. The GOP additionally introduced new cuts to food aid by restricting states ability to waive work requirements in places with high joblessness. But Democrats have said any changes to work requirements for government aid recipients are nonstarters.

GOP lawmakers are also seeking cuts in IRS money and, by sparing Defense and Veterans accounts from reductions, would shift the bulk of spending reductions to other federal programs.

The White House has countered by keeping defense and nondefense spending flat next year, which would save $90 billion in the 2024 budget year and $1 trillion over 10 years.

All sides have been eyeing the potential for the package to include a framework that would speed energy project developments.

And despite a push by Republicans for the White House to accept parts of their proposed immigration overhaul, McCarthy indicated the focus was on the Houses previously approved debt and budget package.

Republicans had also rejected various White House revenue proposals, with McCarthy insisting personally in his conversations to Biden that tax hikes are off the table.

For months, Biden had refused to engage in talks over the debt limit, contending that Republicans in Congress were trying to use the borrowing limit vote as leverage to extract administration concessions on other policy priorities.

But with the June 1 potential deadline looming and Republicans putting their own legislation on the table, the White House launched talks on a budget deal that could accompany an increase in the debt limit.

McCarthy faces a hard-right flank that is likely to reject any deal, which has led some Democrats encouraging Biden to resist any compromise with the Republicans and simply raise the debt ceiling on his own to avoid default.

The president, though, said he was ruling out the possibility, for now, of invoking the 14th Amendment as a solution, saying its an unresolved legal question that would become tied up in the courts.

___

Miller reported and Associated Press writer Josh Boak contributed from Hiroshima, Japan. Associated Press writers Farnoush Amiri, Colleen Long and Will Weissert contributed to this report from Washington.

Jimmy Horowitz has a big job in Hollywood as the vice chairman of business affairs and operations for NBCUniversal. When you watch your favorite movies, TV shows, or news programs, theres a chance Jimmy did the deal. Hes a lawyer by training, and he runs the business behind the creative.

In 2019, and for the first time in his life, Horowitz was suffering from clinical depression. He kept it a secret for months. 

In my job, Im responsible for the money we spend on films. The creative people get a little more leeway to be who they really are. [But] theres this expectation of being a straightlaced business person, like you dont have feelings.

So I just dealt with it on my own, he says. I basically worked in my office with the door closed and just tried to avoid interaction with people. When youre going through something like this, you realize everyones so busy and theyre also not equipped. I dont know how many people noticed.

He told no one until he was asked to be the executive sponsor of NBC Universals new workplace mental health program in the fall of 2020. I decided I couldnt lead the initiative without sharing my secret so I invited my boss Donna Langley (chairman of Universal Filmed Entertainment Group) to dinner and told her why I was so passionate about the issue and shared my story. Langley told him, I knew there was something going on for you. I just didnt know what it was. 

She didnt know how to ask, Jimmy says. And therein lies the dilemma. Because it isnt easy to notice, and its hard to start the conversation. How do you ask in a way that isnt too personal?

Horowitz has been open about his depression ever since, and colleagues have expressed gratitude but also disbelief that a leader like him might be suffering. 

I believe that there are many others like me, says Horowitz. We all have challenges. I think how you deal with them is important. Being professional even in spite of those things is paramount. One of the silver linings of the last few years, Horowitz believes, is an increased premium on leaders who are empathetic, compassionate, and more human.

Before the pandemic, you never left the office before your boss. It was just how it worked in big companies. But it was not productive. We missed being at home with our families. And I think now everyone on my team knows if theyre not home having dinner with their family, its their choice. We are not asking them to sacrifice that.

Like many who occupy corner offices, Horowtiz came up in a different world of work, with different expectations. It was just: How hard did you work? How tough were you? And certainly in my side of the business, its important to be respected. I think that there was a sense that if you showed vulnerability that maybe that would have a negative impact on how you were respected at work and by managers, he says. 

But things are changing, Horowitz continues. I think weve moved to a place where you can be serious, you can be hardworking, you can be tough, you can be determined, and ambitiousall those thingsand you can be vulnerable and you can be compassionate towards yourself, towards other people. And I think thats the balance that we are looking to achieve here. And I do believe that our leadership respects that and endorses it.

The NBCU team worked with clinical psychologist Emily Anhalt to develop protocols and practice to create more mentally healthy work practices, while also maintaining professional boundaries. 

Dr. Anhalt encouraged the team to be open about taking care of their mental health by stating they were taking a mental health day or that they might be having a tough day. At the same time, Anhalt helped leaders establish the skills to create boundaried vulnerability. Its the idea that we should share enough of ourselves and what were going through that we invite connection and that we get the support that we need, without sharing so much that we ask our colleagues to be our therapists. 

Horowitz agrees that its the leaders job to set up a space where people can get the help that they need outside of work so that they can show up as their best selves inside of work. Its the companys job, he stresses, to provide the benefits and access to care that allows employees to get the support they need.

Once he got the support from a good psychiatrist, Horowitz says it felt like a miracle when he found the right medication to treat his depression. After trying an SSRI that didnt work, his doctor tested his DNA and gave Jimmy a completely different kind of medicine, and he started feeling better in about two weeks. 

By the middle of February 2020 I was feeling almost back to myself and the feeling of relief and just the exhale that you can do when that happens is indescribable. I know how lucky I am that I have resources that I have to go and find a doctor and get a test not covered by insurance. Not everyone has that. These are big challenges that Im very concerned about; there shouldnt be access for some of us and not for others.

Over three years later, Horowitz acknowledged that his experience managing depression and serving as executive sponsor for his companys mental health awareness program changed how he leads and manages. 

Theres no question that this work and [NBCUs] focus on mental health and my engagement with it has allowed people to see me very differently. Theres no question that in any situation that Im in now, whether its a negotiation or or any other part of what I do in my role, I come at things from a place of compassion. And if someones going through something and you can tell, or if someone says they cant be on the phone because they have a family emergency, I think its better for everyone.

 Vulnerability doesnt have to be a weakness. Its changed me for the better because people now see me for who I am. All of us should strive for that.How could I not be thoughtful and compassionate towards someone who is having their own struggles?

If the fight with Congress over raising the governments debt limit is such a dire threat, why doesnt President Joe Biden just raise the borrowing ceiling himself? Its theoretically possible, but hes all but ruled it out for now.

The administration has been searching for possible ways to allow the U.S. to keep borrowing if Congress cant come to an agreement. One potential option Biden and his advisers have been looking at: Would he have the power to go around lawmakers by relying on the Constitutions 14th Amendment in a last-ditch move to avert default?

Maybe. But the main problem now, as Biden sees it, is the short time frame from now until the U.S. could default on its debts. It is almost certain to get tangled up in the courts, which would likely push the country beyond June 1, which is when the Treasury Department says the U.S. could be unable to pay its bills.

We have not come up with a unilateral action that could succeed in a matter of two weeks or three weeks, Biden told reporters during a news conference in Hiroshima, Japan, on Sunday as he concluded the Group of Seven summit. Thats the issue.

Biden has viewed the 14th Amendment route as a problematic, untested legal theory to ensure the country can meet its financial obligations. Treasury says if Congress fails to act before the June 1 date, it could kick the country into a painful recession.

Still, with the White House and Republican legislators at loggerheads over whether Congress should simply allow the government to incur more debt so the country can pay its bills as Biden wants or insist on pairing it with deep spending cuts, as demanded by the GOP, its no surprise that the president might be looking at emergency alternatives.

Biden over the weekend signaled the 14th Amendment option isnt completely off the table for the future.

Its up to lawmakers, Biden said in Hiroshima. But my hope and intention is: When we resolve this problem, Id find a rationale to take it to the courts to see whether or not the 14th Amendment is, in fact, something that would be able to stop it.

What does the 14th Amendment say?

The amendment, ratified in the aftermath of the Civil War, is better known for its provisions addressing citizenship and equal protection under the law. It has been used by the Supreme Court to mandate racial integration in schools in Brown v. Board of Education and same-sex marriage recognition in Obergefell v. Hodges.

It also includes this clause, which some legal scholars see as relevant to todays showdown: The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

Default, they argue, is therefore unconstitutional and Biden would have a duty to effectively nullify the debt limit if Congress wont raise it, so that the validity of the countrys debt isnt questioned.

Why is it being talked about now?

Congress establishes the limit on borrowing, and its up to Congress to adjust it. But the president faces pressure to act on his own because some leading Republicans are seeing default, a likely result before long, as an acceptable bargaining tool. That has stoked concerns within the White House that House Speaker Kevin McCarthy might be unable to deliver votes for an agreement to lift the debt limit or could be ousted from his position for even attempting to do so.

Those concerns were underscored Wednesday night during a CNN town hall with former President Donald Trump, the Republican frontrunner in 2024. If they dont give you massive cuts, youre going to have to do a default, Trump said.

The former president said he believes Democrats will absolutely cave and a default will be avoided. But he said a default is preferable to allowing the federal government to keep spending money like drunken sailors.

What does Biden say?

Biden has said his administration is studying the idea of invoking the 14th Amendment. He said hes skeptical that it is a viable option but the one thing Im ruling out is default.

The problem is it would have to be litigated, he said of the constitutional reasoning on Tuesday. If the matter got tied up in court, the government could default anyway.

If and when the current impasse is resolved, he says, he is thinking about looking into whether the 14th Amendment route could be a solution to avert similar showdowns in the future.

When we get by this, Im thinking about taking a look at months down the road to see whether what the court would say about whether or not it does work, Biden says.

His Treasury Secretary, Janet Yellen, has been more blunt, saying it could provoke a constitutional crisis.

Has this been studied before?

Yes. During past debt limit showdowns, including talks in 2011 between then-President Barack Obama and congressional Republicans, White House and Department of Justice lawyers also flirted with using the 14th Amendment as an emergency solution. They were deeply skeptical that it was a viable alternative to Congress raising the debt limit, and it was never invoked.

President Joe Biden and House Republicans led by Speaker Kevin McCarthy might have one more week of wiggle room than believed in order to avert a historic default of the U.S. federal government.

Speaking to Bloomberg Television on Friday, the chief political economist of Goldman Sachs said Treasury secretary Janet Yellens prediction of June 1 as the X-date when the government runs out of enough cash to pay all of its bills was likely a conservative estimate, and there was in fact more cushion.  

Our guess right now is that the real deadline is probably more like June 8th-9th, thats when theyre at the greatest risk said Alec Philips. 

Biden and McCarthy are set to meet on Monday for talks to break through the current impasse, amid signs bondholders are already pricing in the low-but-increasing possibility of a potential default.

Fixed income strategists at Canadas TD Securities, for example, argued one-year U.S. credit default swaps, essentially a form of insurance for debtholders, are trading near record levels. Moreover the spread between yields on those short-term Treasury bills maturing before June 1 versus those afterwards are blowing out in a sign investors are demanding higher premiums for the additional risk.

Interests favor brinkmanship to the last possible moment

High-stakes deals like this one are rarely reached before the pressure of an oncoming deadline helps focus minds and opens up room for new mutually acceptable solutions. The fear is, however, that the Republicans have every reason to hold firm ahead of next years all important Presidential election.

For one, Speaker McCarthy has little maneuvering room within his party to negotiate a deal: in order to get elected to the third highest-ranking office in the country after 14 previous failed attempts, he agreed to a key rule change that undermines his negotiating mandate.

If so much as single solitary lawmaker wants to oust McCarthy as speaker, they can force a vote of no confidence on the House floor.

And earlier this month, the leading candidate for the Republican nomination all but ordered McCarthys troops not to back down, calculating that the Democrats would absolutely cave.

I say to the Republicans out thereCongressmen and Senatorsif they dont give you massive cuts, youre going to have to do a default, ex-President Donald Trump said during a CNN town hall, arguing the party had little to lose with him out of the White House. 

A default under Biden that results in a financial crisis would hurt the entire country, but would likely prove far more damaging to the incumbent than to any one Republican serving in Congress. 

That gives the GOP motive to engage in brinkmanship as it eyes a potential win-win scenario: either it succeeds in getting the Democrats to back down and accept their full demands, or Bidens party takes the blame for a historic default.

Invoking the 14th Amendment may not help in time

Looking for bargaining leverage in the face of a potentially implacable opponent, a number of Democratic lawmakers are therefore arguing the President should resort to a controversial break-the-glass option.

Section 4 of the 14th amendment stipulates the validity of the public debt, authorized by law [] shall not be questioned, which could provide legal pretext for raising the debt ceiling unilaterally without the approval of Congress.

Speaking in at the G-7 conference of leading industrial nations in Hiroshima, Biden said he believed his administration had the authority to do so if necessary. But it may not help as it could get challenged and held up in the courts.

The question is, could it be done and invoked in time that it would not be appealed, and as a consequence past the date in question and still default on the debt, he said. That is a question that I think is unresolved.

Goldman Sachs Philipps nonetheless expects a deal will likely be reached and is more concerned about the effect of a U.S. Treasurystarved of cashflooding the market with $500-$600 billion in new debt issues that may siphon private capital away from investment into the real economy. 

The reality is Congress is going to have to do this at some point very soon and they should just go ahead and do it, he explained. Waiting until the last minute isnt necessarily the right move.

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