Senator Pat Toomey (R-PA) “introduced a bill Tuesday aimed at laying out a path for the federal government to avoid default on its obligations if the debt limit is not raised in the coming months,” the Daily Caller reports.
The text of Toomey’s bill is only 98 words long. It is co-sponsored by 16 other Republican senators, including six out of his 13 members from the current freshman class. It is intended to give the Treasury Department instructions on prioritizing the use of taxpayer funds in the event that government debt, which is closing in on $14.1 trillion, hits the debt limit, which is $14.3 trillion.
Toomey’s bill would “require that the government prioritize all obligations on the debt held by the public in the event that the debt limit is reached.”
“In the event that the debt of the United States Government, as defined in section 3101 of title 31, United States Code, reaches the statutory limit, the authority of the Department of the Treasury provided in section 3123 of title 31, United States Code, to pay with legal tender the principal and interest on debt held by the public shall take priority over all other obligations incurred by the Government of the United States,” the bill says.
That means the Treasury would prioritize interest payments on government debt, ensuring that there is no default, and then pay for whatever else in the federal budget it could. Someone or some programs would likely be shortchanged, whether it was contractors due payment, or Social Security recipients, or government employees.
The essence of “Toomey’s idea, some Republican staffers said privately, is to take the administration’s ‘sky-is-falling’ trump card off the table.”
They are trying to deprive the White House of the upper hand in the showdown over spending that will arrive in a few months when the debate over the debt limit begins in earnest.