House Republicans will advance a contingency plan on Thursday for Treasury Secretary Janet Yellen to make the minimum payments on the nation’s debt if Congress fails to strike a deal with the White House on raising the nation’s borrowing limit.
The legislation, which the GOP-led House Ways and Means Committee plans to advance on Thursday, aims to prevent a panic-driven economic meltdown if the debt ceiling isn’t raised on time. The measure would prioritize government spending if the borrowing limit is frozen, to ensure critical entitlements such as Social Security and Medicare are funded.
The measure would also take a swing at lawmakers by triggering a hold on their paychecks until they can reach an accord on a debt limit increase.
Republicans will consider the measure amid a months-long stalemate with President Biden over raising the debt ceiling.
The legislation would allow the Treasury to continue to borrow money to pay interest and principal due on the debt, even if the Biden-GOP impasse remains unresolved.
The Congressional Budget Office estimated the government’s ability to issue additional debt will end sometime this summer if Congress does not suspend the debt ceiling or increase it.
The bill, GOP lawmakers said, would make it difficult for Mr. Biden to use the specter of an impending default to pressure the GOP into supporting a debt ceiling increase without accompanying cuts to spending.
“It’s an absolute guarantee that the debt of the United States will be paid for, and on time,” Rep. Tom McClintock, California Republican and author of the legislation, told The Washington Times.”This measure simply prevents a president from threatening to default in order to panic markets for political reasons.”
The two parties are at an impasse over GOP demands to make spending cuts in exchange for raising the borrowing limit, which now stands at a record $31.4 trillion.
House Republicans have said they will not agree to more federal borrowing unless steps are taken to reduce the nation’s staggering debt.
Mr. Biden, however, isn’t budging on his refusal to consider reductions in federal spending.
Democrats believe Congress has a constitutional duty to raise the borrowing limit and point out it has done so 78 times since 1960.
“We’ve been very clear we’re not negotiating around the debt ceiling,” White House Press Secretary Karine Jean-Pierre said Monday.
The House tax-writing panel will vote on the legislation on the same day as Mr. Biden introduces a fiscal 2024 budget that includes spending increases and tax hikes.
Mr. Biden’s proposal includes a record pay increase of 5.2% for federal workers and would raise taxes on individual earnings more than $400,000 to shore up Medicare.
Republicans are poised to reject Mr. Biden’s budget, while the White House and congressional Democrats are flatly dismissing Mr. McClintock’s bill.
They argue it would only allow the government to “pay China first,” because China holds a significant amount of U.S. debt.
The top Democrat on the Ways and Means panel, Rep. Richard Neal of Massachusetts, said in a statement to The Times that the bill “shows the American people who the Republicans are by putting foreign bondholders before our military, our veterans, and given it’s tax season, the American people’s tax refunds.”
Mr. McClintock rejected the claim, pointing out the bill prioritizes Social Security, Medicare and veterans’ services.
The majority of debt is not held by China, Mr. McClintock said, but rather by Americans, including American pension funds.
“But whether our loans come from China or grandma’s pension fund, without the nation’s credit, we can’t meet any of our other obligations,” Mr. McClintock said. “This bill protects Americans.”