Under antiquated regulations, when Congress passes a deficit budget, rather than letting the Executive assume they should fund Congress' requests, we need a separate vote to authorize debt. In the event that this vote fails, the US could default on its liabilities. This threat of voluntary and avoidable default led S&P to downgrade America's sovereign credit rating.
Legal scholar Jack Balkin described a method to resolve this threat in a blog post dated July 18, 2011, titled, "Obama's Top Secret Plan to Solve the Debt Crisis". Through coin seignorage, the Treasury can produce stop-gap funds to deal with the crisis; once the debt ceiling is raised, the new monetary base can be absorbed by the Fed. By pledging to use this option, we could assure the bond market that no default will occur.