House Republicans this week will vote on and pass legislation that would allow the U.S. to continue making debt service payments and writing Social Security checks in the event that Congress fails to expand the government’s borrowing authority by the Nov. 3 “debt ceiling” deadline.
The Default Protection Act lacks Democratic support so far, but will easily pass a Republican-controlled House, as it did in the previous Congress.
Senate Majority Leader Mitch McConnell, R-Ky., has not indicated whether he would take up the bill once it clears the House.
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The legislation would allow the Treasury secretary to borrow above the current $18.1 trillion limit, but only in order pay the principal and interest on U.S. debt and to “pay full benefits” to Social Security recipients.
“The legislation guarantees the sovereign debt of the United States government will be paid in full and on time, under any circumstances, even total political gridlock,” said Rep. Tom McClintock, R-Calif., who sponsored the bill.
The House plans to vote on the legislation as Republicans and Democrats wrangle over an accord that would both fund the government and allow an increase in the debt limit.
But there isn’t much time left for negotiating. Treasury Secretary Jacob Lew announced earlier this year that the nation reached the debt limit on March 16 and has since then survived by “shuffling funds among accounts,” to pay the bills. Lew said last week that wiggle room will run out on Nov. 3, after which the government will only be able to keep up its current level of spending through more borrowing.
Without an increase in the debt ceiling, the government in that case would have to pare back its spending in order to only spend the money it takes in.
Republicans are divided on raising the debt ceiling. Conservatives fiscal hawks oppose any increase in borrowing authority unless it is accompanied by cuts elsewhere in the budget. Other Republicans support an increase, arguing that the money has already been approved and that the debt limit must be raised to ensure the nation pays its bills and maintains its credit rating.
Republican aides acknowledge that with time running out, House Speaker John Boehner, R-Ohio, may put a standalone bill on the floor to raise the debt limit, rather than wrapping it into a larger budget deal. But no decisions have been made.
A standalone bill would likely exclude a provision requiring spending reductions in order to attract Democratic votes that would be needed to pass it and for it to be signed by President Obama.
But the Default Protection Act would serve as a buffer if Congress cannot clear a bill that increases borrowing authority.
“The goal here is to take default off the table,” a top GOP aide told the Washington Examiner. ‘With the debt limit deadline coming up in November, we are acting to ensure we do not default on our national debt.”
All Democrats serving on the House Ways and Means Committee voted against the bill when it was considered by the panel.
Rep. Sander Levin, of Michigan, who is the top Democrat on the committee, said the GOP plan would pay off foreign bondholders, while hurting “those currently deployed, doctors and hospitals that wouldn’t receive Medicare payments, and hardworking Americans who wouldn’t get payments for school lunches, veterans’ benefits, or student loans.”
