Here are 3 'creative' options the Treasury has if lawmakers can't reach a deal to raise the debt ceiling

• Debt ceiling talks are still underway in Washington, and it needs to be lifted for the government to pay its bills.
• Charles Schwab said commentators have offered three "creative possibilities" if no deal is reached.

Washington is running low on time to raise the $31 trillion debt ceiling required to prevent the first-ever US default, but the Treasury Department may have some tricks to employ in getting cash to pay the country's obligations.

House Majority Leader Kevin McCarthy on Monday threw cold water on the view that the Biden administration and Republican lawmakers may be inching toward an agreement. He told CNN both sides are "far apart" and that a deal would need to be reached by this weekend to give time for it to pass in both the House and the Senate.

Treasury Secretary Janet Yellen has said the government could run out of money as soon as June 1.

"A default would risk sending short-term yields higher, while riskier assets and the dollar would likely fall," brokerage Charles Schwab said in a recent note. That's what happened in the 2011 debt-ceiling showdown, which prompted Standard & Poor's for the first time to cut its US sovereign rating below AAA.

If no deal is reached, there could be a technical default, which is an extended period of time of non-payment of interest and principal on the debt.

An eventual debt deal would allow investors to receive interest and principal payments, likely with extra accrued interest, Schwab's Liz Ann Sonders, Kathy Jones and Jeffrey Kleintop said. But a severe market reaction could follow, including a jump in short-term interest rates, a drop in the dollar's value, and credit downgrades.

The government would see a long-term rise in the cost of borrowing, and the spike in interest rates would likely cause a recession and send unemployment higher, Schwab said.

But Schwab also outlined other "creative possibilities" for the Treasury Department.

1. Premium bonds

Economist Paul Krugman in a recent New York Times op-ed called premium bonds one of "two main gimmicks" that could be used as end-runs around the debt ceiling. Premium bonds are debt securities sold for higher than face value.

Krugman explained that under the premium bond idea, old, expiring bonds would be renewed by the government at higher coupon rates. Investors, for example, would pay more to hold a bond that pays $7 a year than one that pays $3.50, and offering a higher interest rate would allow Treasury to raise more money.

Such action would not technically add to the nation's debt, Krugman said.

2. Minting a platinum coin

The Treasury has the authority to mint platinum coins and could create one with a face value of $1 trillion. That coin would then be deposited at a Federal Reserve account to pay the country's bills while legislative leaders remain at a stalemate.

"This seems pretty far-fetched and potentially illegal," Schwab said.

3. Invoking the 14th Amendment

There's a clause in the 14th Amendment stating the validity of the US public debt "shall not be questioned." Some legal experts have argued the clause makes a default, and the debt-ceiling law leading to that default, unconstitutional.

Biden recently left the door open to using the 14th amendment to solve the debt ceiling standoff. "But the problem is it would have to be litigated," he said. "And in the meantime, without an extension, it would still end up in the same place."

Schwab noted that Yellen has downplayed the idea of invoking the 14th Amendment, calling it a "constitutional crisis" earlier this month.

"Clearly there are no good choices for the Treasury," Schwab said. "Even if feasible, these creative suggestions may not pass muster in court if challenged."