House Republicans are preparing a plan telling the Treasury Department what to do if Congress and the White House don’t agree to lift the nation’s debt limit later this year.
The plan, which was previously unreported, was part of the private deal reached this month to resolve the standoff between House conservatives and Rep. Kevin McCarthy over the election of a House speaker. Rep. Chip Roy , a leading conservative who helped broker the deal, told The Washington Post that McCarthy agreed to pass a payment prioritization plan by the end of the first quarter of the year.
“Any plan to pay bondholders but not fund school lunches or the FAA or food safety or XYZ is just target practice for us,” a senior Democratic aide said, speaking on the condition of anonymity to discuss a proposal that hasn’t yet been released publicly. For the plan to be binding on the Treasury Department, it would have to pass not only the House but also the Democratic-controlled Senate, and President Biden would have to sign it into law.
raise the debt limit. One of these people noted that interest payments amount to roughly $500 billion per year, which can be easily met through federal revenue without additional borrowing.Republicans have explored various ways to push prioritized debt payments over the years. Rep. Tom McClintock released a bill in 2011, called the Default Prevention Act, that would require the Treasury Department to borrow above the debt limit to ensure that interest on the debt gets paid no matter what.
These efforts are expected to prove controversial even among some GOP allies. Neil Bradley, executive vice president of the U.S. Chamber of Commerce, said the business group opposes prioritizing payments.
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