Faced with an Aug. 2 drop-dead date for raising the $14.3 trillion debt limit and encumbered with two parties that don’t play well together, President Barack Obama did what any president would do: He called a White House summit. (Answers b, “appoint a czar,” and c, “create a commission,” are incorrect in this instance.)

The invitations went out to the leaders of both parties for yesterday’s powwow, “a unique opportunity to do something big” about the budget deficit, according to Obama.

Unique? Big? Congress has raised the debt limit 10 times in 10 years. It’s not even unique for one party to hold the ceiling hostage to partisan demands.

As for big, I would bet on something smaller: an agreement based on budgetary sleight of hand (spending cuts on paper) and political horse-trading, including concessions by Republicans on revenue increases, that falls short of addressing runaway entitlement spending and an inefficient, loophole-ridden tax code that retards growth and saps government revenue.

As recently as last week, Obama was focused on closing tax loopholes for “millionaires and billionaires”; now Social Security is on the table. Republicans, who previously refused to utter “tax increases,” have indicated a willingness to eliminate some tax preferences as part of a deficit-reduction deal that would raise the debt ceiling. (Lobbyists must be lining up to advise on which tax breaks to protect.)

Time to Motivate

Summit participants called the meeting “constructive.” (Translation: No one walked out.) Still, some lawmakers claim there’s not enough time to hammer out something big before Aug. 2, which is when the U.S. will default on its debt, according to Treasury.

Debt default is unthinkable, unlikely and unanticipated, judging by the miniscule 3.15 percent yield on the 10-year Treasury note.

It certainly was no surprise Congress would exceed its borrowing authority sometime this spring or summer. And yet, lawmakers never find the motivation to address the deficit in a meaningful way until they run out of time to do it.

What if they had more time? The truth is, they can have it if they want it.

In a June 30 paper, Veronique de Rugy and Jason Fitchner, senior research fellows at George Mason University’s Mercatus Center in Arlington, Virginia, outline steps Treasury can take to meet its financial obligations and prevent a technical default until the end of the fiscal year on Sept. 30, and possibly longer.

Budgetary Brinkmanship

First, based on Congressional Budget Office estimates, tax revenue of $2.2 trillion in fiscal 2011 will cover the $214 billion of interest on the debt, the authors write. Technical default averted. Tax revenue is sufficient to cover Social Security, Medicare and Medicaid outlays as well, de Rugy and Fitchner write.

Second, the Treasury secretary can take “extraordinary actions,” such as suspending investment in government pension funds and the Social Security Trust Fund -- something Timothy Geithner has been doing since the public debt hit the statutory limit in May.

Third, Treasury can use cash on hand, including $113.5 billion of nonrestricted cash, or sell assets, such as gold, foreign currency or assets acquired under the Troubled Asset Relief Program. Such sales won’t yield enough to cover all the bills, but Treasury can prioritize what payments to make.

“Oh, and by the way, they can always cut spending,” de Rugy told me by e-mail after walking me through the budgetary accounting on the phone.

Debt Limit Distraction

This is hardly a desirable solution. Yet if time is what negotiators really need to produce “something big,” Geithner can give it to them.

That said, the debt limit will have to be increased.

“There is no budget out there, including Paul Ryan’s, that alleviates the need for a debt-ceiling increase,” de Rugy said.

Although this game of chicken over the debt limit is preoccupying those in Washington and in the news media, it really isn’t the issue.

“The tragic part is that, if we didn’t have a debt limit, we’d still have a problem,” said Douglas Holtz-Eakin, former director of the Congressional Budget Office and now president of the American Action Forum, a Washington think tank.

That problem is the growing gap between what the U.S. government has promised to pay retirees and what it collects in taxes. The public doesn’t want its benefits touched. Nor does it want to pay higher taxes.

The implication? Some brave souls in Washington are going to have to do what’s right even if the voters think it’s wrong.

So to all those senators and representatives who claim time is running out to do “something big,” the Treasury can buy you some time. You need to get serious about the “big.”

(Caroline Baum, author of “Just What I Said,” is a Bloomberg View columnist. The opinions expressed are her own.)

Read more Bloomberg View columns.

To contact the writer of this column: Caroline Baum in New York at cabaum@bloomberg.net.

To contact the editor responsible for this column: Mary Duenwald mduenwald@bloomberg.net.