The White House said President Obama would veto a House bill on the floor Wednesday that would grant the Treasury Department limited borrowing authority if the federal government hits the debt ceiling, which is set to happen Nov. 3.
The Obama administration wants Congress to raise the debt limit again without restrictions, which would allow the government to borrow money in order to maintain current spending levels across the board.
The bill expected to pass the House Wednesday would only allow Treasury to put the U.S. further into the red to pay principal and interest on certain obligations. After Treasury’s borrowing authority is exhausted Nov. 3, under the Default Prevention Act, the federal government would only be allowed to issue new debt to cover principal and interest on debt held by the public or the Social Security trust funds. It also would explicitly bar new debt to pay lawmaker’s salaries.
In a statement of administration policy, the Office of Management and Budget said the bill authored by Rep. Tom McClintock, R-Calif., “would result in the Congress not paying obligations it has already agreed to, thereby putting the nation into default on its obligations.”
“[A]ny legislative proposal to prioritize certain payments over others is default by another name and would not protect the full faith and credit of the United States government or avoid the negative impact of default on American jobs and businesses,” the OMB statement added. “Such an approach would be the equivalent of a family saying that it will choose to pay its mortgage, but not its car payment, credit card or student loans, and expecting that its creditworthiness will not suffer.”
OMB noted that the bill would force the federal government to default on “payments for Medicare, veterans, national security and many other key priorities.”
The statement goes on to note that the annual budget deficit has shrunk during Obama’s presidency and warns, “he will not negotiate about whether to uphold the full faith and credit of the United States.”
