House Acting to Prevent Default of American Debt
Last week I released the following statement on the passage of H.R. 692, The Default Prevention Act, by a vote of 235 to 194, which takes a potential default on U.S. debt off the table by requiring the Treasury Department to continue to pay U.S. debts fully and on time, including Social Security payments if the debt limit is reached.
Giving President Obama a blank check for more deficit spending is not acceptable, nor is America defaulting on its debts. This bill ensures American families don’t pay the price for Washington’s wasteful spending. It also guarantees seniors get their full Social Security payments, and avoids a default that would increase deficits and risk throwing America into another economic recession.
Background: H.R. 692, The Default Prevention Act requires the Department of the Treasury to continue to borrow to pay the principal and interest on certain obligations if the debt of the United States exceeds the statutory limit.
If the debt limit is exceeded, Treasury is required to issue obligations solely for the payment of the principal and interest on debt held by the public or the Social Security trust funds. The bill prohibits Treasury from using obligations issued under this bill to compensate Members of Congress.
If Treasury exercises authority provided by this bill, a report must be submitted to Congress including an accounting of the principal on mature obligations and interest that is due or accrued, and obligations issued under this bill.