House Ways and Means Committee Debates Bill to Prevent Default Over Debt Limit

A bill which would guarantee the payment of principal and interest in the U.S. debt was subject to a House Ways and Means Committee markup.

The Default Prevention Act was created at a time when the United States appears to be on the verge of defaulting on its obligations.

Janet Yellen is Treasury Secretary warned If the debt ceiling is not increased, the United States might default before June 1. The United States has not defaulted in the past.

Democrats and Republicans both have eliminated cuts to entitlements like Medicare and Social Security.

The bill Members of Congress would be prohibited from being paid until the issue regarding the debt ceiling is settled. This would also prevent the Treasury Department delaying payment to the president and vice president.

It also would prohibit government travelers from spending until they have fulfilled their obligations.

“Washington doesn’t have a revenue problem. It has a spending problem,” Jason Smith, Chairman of the Ways and Means Committee (R-Mo.).

“And Washington hit the limit on what it can borrow.”

Smith admitted that Smith was not happy with the bill. “not a substitute” For the issue of debt limit.

The committee’s top member, Rep. Richard Neal (D.Mass.), said that five million Treasury payments were made every day.The bill was criticized by, who called it “a joke”. “a sham.”

The following are some examples amendment The bill requires the Secretary of the Treasury, in order to issue debt obligations to cover the debt limit.

This would allow these obligations to be exempted form the debt limit, in order for them to pay principal or interest on the debts held by public funds and Social Security Trust Funds.

The Secretary would not be allowed to pay any other obligations until the ones for Veterans Affairs and Department of Defense are fulfilled.

In order to fulfill Medicare and Social Security obligations, the bill also allows the Treasury secretary to issue debts beyond the current limit.

In terms of prioritizing what obligations are to be paid, there would be four tiers in the bill.

The bill will prevent the United States delinquent on its debt.

Democrats were critical of the bill.

Representative Earl Blumenauer, a Republican from Oregon, asked Shaun Freiman to explain to him how Treasury would prioritise which obligations it will pay in case the debt limit is reached. This was considering the fact that Treasury pays 1.28 Billion annually or 5 M transactions per day, the congressman said.

Freiman claimed that the bill didn’t address those issues and he deferred his concerns to Smith, Yellen and Smith. Smith will appear before the committee March 10, following the release of its annual budget proposal by the Biden Administration.

This latest estimate, released on March 9, was $6.9 trillion.

Many Democrats criticised the bill for prioritizing the payment of new debt if it is not paid off by the debt ceiling.

The bill passed 21-17 in committee and now goes to the House.

It is estimated that the U.S. has a national debt of $31 trillion.