Legislation will ensure debt service payments in the event the debt ceiling is reached
Washington, D.C. – Congressman Tom McClintock (R-CA) yesterday introduced HR 421 -- the Full Faith and Credit Act -- directing the United States Treasury, in the event the debt ceiling is reached, to pay principal and interest due on debt held by the public before making any other payments. The legislation is being co-sponsored in the House by Republican Study Committee Chairman Congressman Jim Jordan, Congresswoman Virginia Foxx and Congressman Scott Garrett. This bill is a companion to an identical measure introduced yesterday by Senator Pat Toomey.
Maintaining the good credit of the United States is essential to economic prosperity and national security. In the event of a shortfall in the federal budget, default on credit obligations should not be our first option, it should be the last. A default on debt would lead to catastrophic consequences, including loss of the nation’s triple-A credit rating, sky-high interest rates and rapid inflation, all of which would make a return to prosperity, job growth, and balanced budgets an impossibility.
“The ‘full faith and credit’ of the United States should not hang in the balance on every adjustment to the national debt limit,” said Congressman McClintock. “States protect their credit by pledging first call on revenues to their debts and so should the federal government. After all, before you can ‘provide for the common defense, promote the general welfare and secure the blessings of liberty,’ you have to be able to finance them.”
“A pitiful scare tactic already being used by the Treasury Secretary in the debt ceiling debate is the threat of allowing the federal government to default on its obligations,” said Republican Study Committee Chairman Jordan. “This is government mismanagement at its worst. Secretary Geithner knows full well that he has the authority to prioritize federal spending so that default is not an option. This bill will take Secretary Geithner’s disastrous scenario completely off the table.”
"America's sterling credit rating is vital to our future prosperity,” said Congresswoman Virginia Foxx. “This bill offers a simple safeguard to protect our credit and prevent a sovereign debt crisis. It's the sort of common sense solution that we can easily put in place without wading into the debate over raising the debt ceiling."
“This important piece of legislation ensures America’s debt rating and the threat of default on our debt cannot be used as political weapons. This bill will remind the markets and the world that America will never default on its debt while giving Congress time to have a meaningful, reasonable discussion about how to rein in out-of-control spending and prevent our country from sliding further into debt,” remarked Congressman Scott Garrett.