Protecting America's Full Faith and Credit

House Ways and Means Committee
April 10, 2013 

Remarks by Congressman Tom McClintock 
 

HR 807
 
Mr. Chairman:  
 
Most people would agree that the “full faith and credit” of the United States should not hang in the balance every time there’s a fiscal debate in Washington.  Even with record deficits, our revenues are roughly ten times greater than our public debt service, so there is no excuse for a debt default.
 
HR 807 will strengthen and protect our nation’s credit by assuring that debt service has first call on incoming revenues.    
 
This is not a radical suggestion.  The Government Accountability Office has consistently held that the Treasury Secretary already has “the authority to choose the order in which to pay obligations of the United States” to protect the nation’s credit.  Indeed, such authority is inherent in the 1789 act that established the Treasury Department and entrusted it with the “management of the revenue” and the “support of public credit.”  This measure simply restates that authority and requires the Treasury Secretary to use it to protect the nation’s credit.  
 
Most states have similar laws to assure debt service is paid first.  Last year in testimony to the Senate, Fed Chairman Ben Bernanke praised these state provisions for maintaining confidence in state and municipal markets and he told the House Budget Committee that a similar measure at the federal level would help to protect against a default.   
 
Is this a tacit suggestion that we shouldn’t meet our other obligations?     Does anyone suggest that all the states that have had similar provisions in their Constitutions and statutes for hundreds of years have ever used them as an excuse not to pay their other bills?   Of course not.  
 
On the contrary, Mr. Chairman, these provisions to protect their credit first actually supports and maintains their ability to pay all their other obligations in the event of a deficit.   Think about it this way: when you’re depending on your credit cards to pay your bills, you had better make sure to make the minimum credit card payment first.  
 
Some say we should include other top priorities like Social Security or payments to our troops.  The problem is, once we start down that road, we run out of money before we run out of worthy programs and Congress should not try to micro-manage this process.  
 
More importantly, the fact is that the public credit supports Social Security AND payments to troops AND all those other obligations and this legislation ought to be focused on this central and fundamental imperative: to protect the public credit.  Beyond that, we should leave it to the Treasury Secretary to set priorities according to the demands of the times.
 
Opponents have said that this would put repaying China ahead of paying Grandma’s Social Security.  But more than half of the debt held by the public is held by Americans (including Grandma’s pension fund).  China holds just eleven percent.  Thus, this bill overwhelmingly protects American debt holders, and assures that American pension funds won’t be undermined in the event of a temporary fiscal stalemate in Washington.
 
This is not an endorsement of a prolonged impasse over the debt limit or funding bills.  Postponing the prompt payment of all of the government’s bills would be unprecedented and dangerous.   Although existing revenues could support critical government responsibilities for a while, distress to other federal employees and contractors would be severe, would rapidly compound, and would eventually threaten core governmental functions.  The only worse fiscal outcome would be to fail to honor the nation’s debt obligations, and that’s what this bill would prevent.    
 
We should remember that if the Full Faith and Credit of the United States is ever compromised, all programs are jeopardized.  We must recognize that today our country is divided over fiscal policy and that protracted disputes in Congress are likely to continue for some time.  Financial markets ought to be confident that their Treasury bonds are safe regardless of what political storms are raging in Washington.  

This measure does so.
 
# # # 


Congressman McClintock introduced H.R. 807 on February 25, 2013 in the 113th Congress.  He discussed the legislation, and delivered these remarks, at an April 10th hearing of the  House Ways and Means Committee held to examine debt limit issues.
 

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Upcoming Events

 
Oakhurst Town Hall Meeting

Congressman McClintock will hold a town hall meeting in Oakhurst on Wednesday, April 23rd at 6:00 pm. The meeting will be held at Oakhurst Elementary School, 49495 High School Road, in Oakhurst. Hope to see you there!

Veterans Forum

An advocacy forum for Veterans will be held on April 17th in Truckee.  The forum, assembled by Congressman McClintock's office, will provide Veterans with the information they need to access the benefits they have earned.
 
Representatives from Nevada County and Placer County Veterans' service offices will join the Congressman’s staff to provide information on filing claims with the Veterans Benefits Administration.  Service providers and community program sponsors that help active duty military, wounded warriors and military families will also be present.
 
The forum will be held April 17th from 11:00 am to 1:00 pm at Truckee Airport in the Experimental Aircraft Association Building, 10356 Truckee Airport Road in Truckee.  
 
Satellite Office Hours

Office staff members are available to assist constituents with problems or concerns at satellite office locations held throughout the district.  Anyone wishing to discuss an issue of federal concern is invited to attend one of these satellite office sessions and speak with a member of staff.  For more information, or to reach staff, please call the district office at 916-786-5560.
  
Upcoming Satellite Office Hours Scheduled for April 2014:
 

Amador County

Jackson
Tuesday, April 29, 2014
2:00 pm - 4:00 pm
Conference Room D
County Administration Center
810 Court Street
 
Calaveras County

San Andreas
Tuesday, April 29, 2014
11:00 am - 1:00 pm
Calaveras County Water Agency Conference Room
120 Toma Court
 
El Dorado County

Placerville
Tuesday, April 15, 2014
10:00 am - 12:00 pm
El Dorado County Government Center
330 Fair Lane
 
El Dorado Hills
Tuesday, April 15, 2014
2:00 pm - 4:00 pm
El Dorado Hills Chamber of Commerce
2085 Vine Street, #105
 
South Lake Tahoe 
Monday, April 21, 2014
11:00 am - 1:00 pm
South Tahoe Public Utility District
1275 Meadow Crest Drive
 
Fresno County

Auberry 
Thursday, April 17, 2014
3:00 pm - 4:00 pm
Auberry Library
33049 Auberry Road
 
Madera County

Oakhurst 
Wednesday, April 16, 2014
2:30 pm - 4:00 pm
Yosemite Visitors Bureau Conference Room 40637 Highway 41
 
Coarsegold 
Wednesday, April 30, 2014
4:00 pm - 5:00 pm
Yosemite Lakes Park/Clubhouse Library
30250 Yosemite Springs Way
 
Mariposa County

Mariposa
Wednesday, April 9, 2014
11:00 am - 12:00 pm
Library Conference Room
4978 10th Street
 
Placer County

Auburn
Tuesday, April 8, 2014 
9:00 am - 11:00 am
Placer County Government Center 
CEO 3 Meeting Room
175 Fulweiler Avenue
 
Lincoln 
Tuesday, April 8, 2014
3:00 pm - 5:00 pm
Lincoln City Hall
600 6th Street
 
Loomis 
Tuesday, April 1, 2014
9:00 am - 11:00 am 
Loomis City Hall
3365 Taylor Road
 
Rocklin 
Tuesday, April 22, 2014
3:00 pm - 5:00 pm
Rocklin City Hall
3980 Rocklin Rd
 
Tuolumne County

Sonora 
Tuesday, April 8, 2014
2:00 pm - 4:00 pm
Small Business Center Conference Room
99 N Washington St, Sonora
 
For further information on satellite office hours, please call 916-786-5560.