House leaders are planning to bring a debt ceiling “prioritization” bill to the House floor before the end of April, bringing the divisive issue to the forefront ahead of the government hitting the ceiling sometime this summer.
The legislation tries to mitigate the damage of the government reaching the debt limit in the event that negotiations to raise it fail. But Democrats have panned the idea, meaning it is unlikely to be taken up by Senate Majority Leader Harry Reid, D-Nev.
The bill, introduced by Republican Rep. Tom McClintock of California, says the government must pay the interest and principal of its debts with incoming tax revenue before any other obligations.
“It removes default as an option,” said Rep. Steve Scalise of Louisiana, chairman of the conservative Republican Study Committee.
“When you’re depending on your credit card to pay your bills, you better be damn sure to make the minimum payment on your credit card first,” McClintock added.
If the legislation were enacted, and the government did reach the debt ceiling, the result would be a partial government shutdown, as the incoming tax revenue would be enough to cover payments on debt but not nearly enough for all of the government’s obligations.
However, the issue of prioritizing payments is complicated because the government’s computer system, housed in the Treasury Department, is designed to make payments in the order they come due, according to the department’s inspector general.
House Majority Leader Eric Cantor of Virginia said in a memo to Republican lawmakers last week that the chamber would consider such a bill in the “near future,” but more specific timing of when the bill would be brought to the House floor had not been disclosed until now.
Republicans are planning to hold an extended closed-door conference meeting hashing out further strategy decisions relating to the debt ceiling after the prioritization bill is passed.
The meeting may occur in May, after the next House recess.
The House Ways and Means Subcommittee on Oversight held a hearing Wednesday on “the government’s ability to prioritize its obligations and continue operations should the U.S. Treasury reach its statutory debt limit.”
Five Republican members were witnesses at the hearing, including Reps. Michele Bachmann of Minnesota, David Schweikert of Arizona, Daniel Webster of Florida, Scalise and McClintock.
“The Congress created the debt limit as a check on the delegated borrowing power of the president. Given its jurisdiction, it is important that the committee understand how the government could operate if the government reaches the statutory limit on the debt,” said Rep. Charles Boustany Jr. of Louisiana, the chairman of the subcommittee.
Democratic Rep. John Lewis of Georgia, ranking member of the subcommittee, called the bill a “dangerous signal to the markets.”
“I am troubled that we are here today discussing this issue. This hearing implies that it would be appropriate to default on our debt and that a default can be managed. This simply is not true,” Lewis said, according to his prepared remarks.
The administration repeatedly has dismissed the idea of prioritization given the lumpy nature of the budget.