Debt Prioritization Bill Passes in House

On May 9, the House of Representatives passed H.R. 807, the “Full Faith and Credit Act” by a 221-207 vote.  In the event the debt of the U.S. government reaches the statutory debt limit, H.R. 807 would allow the Treasury Secretary to issue debt to the extent necessary to pay principal and interest on certain obligations as outlined in the bill, such as borrowing for debt obligations and Social Security. In other words, it does not raise the debt ceiling, but instead would provide clarity about what was to be done when the Treasury Department hit the limit. The most recent increase in the debt limit came in February, when President Obama signed into law a bill to temporarily suspend the debt ceiling through May 18. Currently, the debt subject to limit stood at $16.7 trillion. Budget experts estimate that if the Treasury Department takes so-called “extraordinary measures” – steps that allow a few extra months to finance Social Security, military salaries and other payments past May 19 – the debt ceiling would not be reached until late September or early October. AGC continues to monitor the negotiations on the national debt and its implications on other fiscal policies being debated in Congress. For more information on the Full Faith and Credit Act, you can visit the House Rules Committee webpage here. For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org.