The House Ways and Means Committee approved a measure last week that would allow the Treasury to continue issuing new debt to pay interest on the publicly held debt and Social Security benefits even if the statutory debt limit has been reached.
The measure, mislabeled the “Default Prevention Act,” would not actually prevent a default because failure to pay any government obligations is still a default and would be seen as such in global markets.
The legislation attempts to prioritize which payments the government would make if the debt ceiling is reached and Treasury can no longer pay all of its obligations. Under the act, all debts not related to debt held by the public or the Social Security trust funds would be left unpaid.
Treasury Secretary Jack Lew again urged Congress last week to raise the debt limit in a timely manner, reminding lawmakers that failure to do so in the...