> Repay the dollars with Bitcoin -

This is your mistake. 

That's not the point of holding an ever inflating asset on your balance sheet. The point is to allow it to inflate forever as your debt does. Its a collateral item. 

>US government will still have to borrow more than it earns. With or without Bitcoin, the above plan is akin to declaring bankruptcy, but with one extra Bitcoin step.

This is why I said only solution is to simultaneously reduce liabilities and increase assets. 

Whereas your plan is this:

Yes the balance sheet is a disaster but its always been, so lets just keep it that way. 

freetx

bitcoin

The “Digital Gold” Fallacy, or Why Bitcoin Can’t Save the US Dollar

That seems like a silly plan to me:
1) Print US dollars (or would you prefer heavy taxation?)
2) Buy Bitcoin
3) Devalue the US dollar, wait a bit for Bitcoin to go up
4) Repay the dollars with Bitcoin
-> The US dollar is now worth significantly more, there's been years of heavy inflation (or taxation), and the US government will still have to borrow more than it earns. With or without Bitcoin, the above plan is akin to declaring bankruptcy, but with one extra Bitcoin step.