House Republicans are taking steps to prepare for a possible debt ceiling default
The House Ways and Means Committee is soon taking up a bill that would require the government to keep making certain payments if it breaches the debt ceiling, three people familiar with the matter told Semafor.
Per a notice sent to committee members reviewed by Semafor, the panel will be marking up a three-page bill from Rep. Tom McClintock, R-Calif., that would authorize the Treasury Department to continue making interest payments on the national debt to try and prevent an outright default.
A spokesperson for the Ways and Means panel did not immediately respond to requests for comment.
Some Republicans have long argued that, if the government were to crash up against its borrowing limit, it could still prioritize payments to bondholders and spare certain programs from funding cuts.
“You got to pay your creditors first,” Rep. Jodey Arrington, chair of the House Budget Committee, told Semafor. “That’s the principle our grandfathers taught us. We pay the people that you owe.”
Arrington, who also sits on the Ways and Means Committee, said he supported the new legislative push, adding he was “very confident we're doing the right thing.”
Prioritization has been met with resistance from both Democratic and Republican White Houses, which have argued it may be illegal and logistically infeasible.
But conservatives in the House reportedly demanded a vote on a bill that would force the government to prioritize among its obligations as part of the deal that delivered the speaker’s gavel to Rep. Kevin McCarthy. The Washington Post reported in January that a debt prioritization measure would move through the lower chamber by the end of the first quarter.
A group of conservatives in the Senate led by Sen. Rick Scott, R-Fla., released a bill in January that would require the government to keep making payments on Treasury bonds, Social Security benefits, military salaries, and veterans benefits. It’s meant to be a fallback plan for Republicans in the event of a debt limit breach.
However, Semafor previously reported that prioritizing payments is much easier said than done. While it may be technically feasible to pay bondholders, it could be a much bigger lift — if not unworkable — to ensure domestic benefits like Social Security checks go out the door in a timely manner. The move could also expose Republicans to a barrage of Democratic attacks that they are paying foreign bondholders at the expense of other program.
“It just seems silly and stupid,” Rep. Don Beyer, D-Va., who sits on the Ways and Means Committee, said on Tuesday. “Why would we prioritize Chinese bondholders over American military, Social Security, seniors, children? It’s going to drive up costs for American citizens when we put bondholders first.”
A recent analysis from Moody’s Analytics projects the “X-Date” — the point at which default becomes unavoidable — to land around August 18th. The same report also warns of dire economic consequences if Congress fails to take action by then.