The Default Prevention Act: Guarantees the Debt of the U.S. Will Always Be Paid in Full and on Time
Washington, D.C. – Rep. Tom McClintock (CA-05) delivered remarks today on the House floor discussing the House Ways and Means Committee taking up his legislation H.R. 187, the Default Prevention Act.
The legislation simply provides that even if there is a fiscal impasse in deliberations over the debt limit, the debt of the United States will always be paid in full and on time. The legislation was passed by the committee, and the bill will next go to the House floor.
Rep. McClintock's House floor remarks are below.
M. Speaker:
I want to thank the Ways and Means Committee for taking up my HR 187, the Default Prevention Act. Similar bills I have introduced passed the House in 2013 and 2015, and I am gratified the Committee would take it up in this session. The bill simply provides that even if there is a fiscal impasse in our deliberations over the debt limit, the debt of the United States will always be paid in full and on time.
Frankly, that's already the law. Our revenues vastly exceed our debt service costs. As every family knows, if you're living off your credit cards, you'd better make the minimum payment first. The law and the Constitution require it.
The organic act that established the Treasury Department in 1789 is clear on this point. (Quote) "It shall be the duty of the Secretary of the Treasury to digest and prepare plans for the improvement and management of the revenue, and for the support of public credit." REPEAT: "The management of the revenue and the support of public credit." The Constitution is also crystal clear. The 14th Amendment commands that "the public debt is not to be questioned." The GAO spelled it out so there would be no doubt in answering the Senate Finance Committee in 1985: "Treasury is free to liquidate obligations in any order it finds will best serve the interests of the United States."
And yet, over the years, various Presidents have threatened to default on the debt as a way to roil markets and pressure lawmakers to bend to their will. This president is no different.
But even while the Obama Treasury Department was denying it had the ability to prioritize payments to pay the debt first, we later discovered it was making preparations to do exactly that. We also discovered documents that revealed that Federal Reserve officials were appalled that the administration would suggest defaulting because such statements ran a severe risk of panicking credit markets. We are hearing those same statements today from some Democrats in this Congress and in this administration.
The Default Prevention Act simply takes this threat off the table. Amendments being offered by the committee also require priority be given to Social Security, Medicare and Defense to assure no president can threaten to hold seniors or servicemembers or veterans hostage as well.
Nor is this unusual. Most state constitutions provide that first call on any revenues is to maintain and protect their sovereign credit. Indeed, several years ago, in testimony to the Senate, Federal Reserve Chairman Ben Bernanke praised these state provisions for maintaining confidence in their state-issued bonds.
This is not to endorse a prolonged impasse over the debt limit. Postponing prompt payment of other bills is not a good thing. But the full faith and credit is fundamental to paying all of those other bills – and that is why we should prevent any president from threatening to default on that credit.
The most preposterous claim we hear is that this prioritizes paying China before other obligations. The fact is, most debt is held by Americans, including most likely, your pension fund. China holds around 3.2 percent of our bonds.
The debt limit is there for a reason. If your family is living beyond its means and needs to seek an increase in its credit limit, it had better sit down around the kitchen table and have a serious discussion over the circumstances that have gotten it into this predicament and what steps it needs to take to get out. That's why we have a debt limit – to have exactly that discussion as a nation.
Which is why it is so disturbing when the President says he is not even willing to discuss the subject. Considering the fact that he has added $3.7 trillion to the national debt in just 25 months in office, that's irresponsible. Not discuss it? Why in the world does he think we have this building with the dome on top in the very center of our capital city? It was built exclusively to have these discussions, to talk out our differences and to reach a wise and satisfactory conclusion to our public policy questions. Not discuss the biggest fiscal threat our nation has ever faced? He can't be serious!
But serious or not, no President should have the ability to threaten to default on our debt, to destroy the full faith and credit of the government or to take hostage our seniors, our veterans and our servicemembers. This bill prevents him from ever threatening to do so again, and it needs to be enacted.
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