House Passes Debt Limit Bill

Pablo Martinez Monsivais/AP File Photo

The House on Thursday passed legislation that would allow the Treasury Department to borrow money above the debt limit only to make payments on the debt and Social Security if the government hits its ceiling.

The Full Faith and Credit Act (H.R. 807) would require the government to pay the principal and interest on public debt and the Social Security trust funds before paying its other bills if it hits the debt ceiling. The government only could borrow money above the debt limit for those payments.

Under the bill, payments to the debt and Social Security trusts funds would take priority over troops’ pay, veterans’ benefits, contractors and Medicare, for example. The chamber also approved an amendment that would prohibit the Treasury Department from using the legislation’s authority to borrow money above the debt limit to pay lawmakers’ salaries. Rep. Sander Levin, D-Mich., criticized that amendment as disingenuous during remarks on the House floor Thursday. “It’s an effort to give some kind of fig leaf, or whatever it is, for a terrible, terrible bill.”

The White House said on Tuesday that President Obama would veto the legislation if it reached him, and that he would not negotiate on whether to uphold the full faith and credit of the United States. “Congress must pay the bills it has already racked up; failure to do so would put the nation into default,” the statement said. The Democratic Senate is unlikely to move on the bill.

President Obama in February enacted the No Budget, No Pay Act, which authorized a temporary suspension of the current $16.4 trillion debt limit through May 18, allowing the government to continue borrowing to pay its bills until then. After that date, the debt limit will be somewhere between $16.6 and $16.7 trillion; Treasury can implement “extraordinary measures” for a few months to avoid a default, which the Bipartisan Policy Center estimates would happen by mid-October, unless Congress approves a new debt ceiling increase above the amount accumulated through May 18.

One of the extraordinary measures that the government often has used to avoid a default is tapping into and suspending investments into the Civil Service Retirement and Disability Fund and halting the daily reinvestment of the G Fund, the most stable offering in the Thrift Savings Plan's portfolio. The law requires the Treasury secretary to refill the coffers of the G Fund and the Civil Service Retirement Fund once the issue of the debt ceiling is resolved, and in addition, to make up for any interest lost on those investments during the suspension.

House Republicans argued that H.R. 807 was necessary to avoid a default that could hinder the country’s economic recovery. “The legislation removes the risk of default by providing a mechanism to ensure that principal and interest on debt obligations are paid. Furthermore, it defines interest so Treasury can and must make the interest payments necessary to ensure that Social Security benefits can be paid in full,” said the House Ways and Means Committee report accompanying the bill.

Democrats on the Ways and Means Committee, all of whom oppose the bill, said it was “reckless and indefensible” to prioritize the government’s payments in such a way. “We are further concerned that just by entertaining the idea that the United States will no longer pay all of its bills on time and in full, the majority is damaging our reputation and our economic recovery,” they wrote in a dissenting view included in the committee report.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

    Download
  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download
  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

    Download
  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.

    Download

When you download a report, your information may be shared with the underwriters of that document.