By Billy House
Updated: May 5, 2013 | 2:11 p.m.
May 5, 2013 | 12:00 p.m.
The brewing debt-ceiling showdown still looms weeks—if not months—away, but hostilities will begin flaring this week as House Republicans push action on a bill signaling no retreat from their demand for spending cuts as a condition to any ceiling hike.
Their Full Faith and Credit Act—even in the selection of its name—is carefully written to inoculate Republicans from accusations that they would be willing to put the nation at risk of default. It even includes language specifically prioritizing and protecting Social Security payments.
But in a sign of the showdown to come, Democrats say the GOP measure still entertains the idea that the U.S. will no longer pay all of its bills—to soldiers, doctors, hospitals, businesses, and others—on time and in full unless Republicans get what they want.
Other congressional activity this week includes:
Senate action on online-sales-tax legislation, known as the Marketplace Fairness Act, as early as Monday. The bill is expected to pass the Senate, but it will face a tougher ride in the House.
A House Homeland Security Committee hearing Thursday to examine the Boston bombings and their aftermath, with Boston Police Commissioner Edward Davis among the witnesses.
House action by Thursday on another bill, dubbed “family-friendly” by Republicans, that would allow employers to offer compensation time instead of overtime pay. But Democrats call it anything but family-friendly or appealing to women who want to spend more time with their children, because it could provide an incentive for businesses to pressure workers to choose comp time.
A House Oversight and Government Reform Committee hearing Wednesday into the attack last year in Benghazi, Libya, that killed four Americans.
The Joint Committee on Taxation’s release of a report Monday afternoon that outlines the various tax-reform proposals floating around Congress.
The kickoff of a three-week push in the Senate Judiciary Committee to complete a broad immigration bill that President Obama has labeled his top domestic priority.
The $16.4 trillion debt limit was actually reached on Dec. 31. But that cap was suspended by Congress through May 18 with the passage in February of the No Budget, No Pay Act.
The idea was to allow Obama and Republicans and Democrats time to come up with a longer-term deal to address the nation’s fiscal ills. But while both chambers have passed their own budgets, and the White House has proposed its own, there has been little progress in reaching a deal, or even much hope for the House and Senate to go to conference and iron out their budget differences.
Despite this stalemate, the ceiling—debt stood this week at more than $16.7 trillion—will need to be increased. The Treasury Department has said it can employ “extraordinary measures” to pay bills beyond May 19, but expert projections are that the U.S. will need to raise its borrowing limit by September or October.
The Republican bill in the House this week, which is not expected to get traction in the Senate, would allow some new borrowing outside of the debt limit, but it would only allow Treasury Department payments solely for the purpose of paying principal and interest on the current debt. The bill defines “interest” in a way that allows Treasury to make the payments for Social Security benefits in full and on time.
“By requiring Treasury to issue debt to make these payments, this legislation provides an ironclad plan to avoid the risk of default going forward,” said Ways and Means Committee Chairman Dave Camp, R-Mich., in a statement. But he conceded, “Some will argue that failure to pay an obligation other than interest or principal on our debt is simply another form of default.”
However, Camp says that two major credit-rating agencies, Moody’s and Standard & Poor’s, have indicated they distinguish between failure to make a debt payment and payment on another obligation of the United States. According to those agencies, he says, it is unlikely that a failure to pay an obligation other than debt would prompt a review of the United States’ credit rating.
Even so, Democratic members of Ways and Means argue the Republican plan would still be a form of default, and they do so in a dissenting report attached to the Republican bill bearing the signature of ranking member Sander Levin of Michigan.
“The Democratic Members of the Committee strongly oppose this legislation, which is simply a plan to default on the full faith and credit of the United States,” their report says.
“This legislation would require the Department of the Treasury to pay Chinese and other foreign bondholders first, before our troops in harm’s way if they are paid at all, before the doctors and hospitals that care for our seniors on Medicare if they are paid at all, before our veterans if they are paid, and before our American small businesses if they are paid,” the Democratic report says. “Let us be clear—under this legislation, the United States would no longer pay all of its bills on time and in full, and American families would pay the price. That is reckless and indefensible.”
The Democrats go on to urge Republicans to “stop blocking” a conference on the budget so that the House and Senate can sit down on a bipartisan basis “and work to get our fiscal house in order.”
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