Debt ceiling contingency plan advances in the House

Approval of the rule came after a sharp debate in which Republicans defended the bill as a way to ensure the government does not default on its debt, which is approaching $17 trillion, even if it bumps up against the debt ceiling.

There is some threat of a deadlock on the debt ceiling in the coming months. As of May 19, the debt ceiling will be in effect again, and and pressure will mount on Congress to find a way to raise that ceiling.

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Republicans are looking for more spending cuts and tax reform as part of a debt ceiling hike, while Democrats want a "clean" increase.

Democrats criticized the bill as evidence that Republicans seem to be planning for a failure to find a way forward on the debt ceiling. They also said it would favor foreign holders of U.S. debt and starve government programs of funding.

"The legislation does not raise the debt ceiling," said Rules Committee ranking member Louise Slaughter (D-N.Y.). "But instead, the bill guarantees that when we hit the debt ceiling, our foreign creditors and the Social Security Trust Fund will be paid in full, while the well-being of millions of Americans, and vendors and people we owe legitimate debts to are left to chance.

"Under this legislation, the majority is actively putting the interests of China before millions of Americans."

House Rules Committee Chairman Pete Sessions (R-Texas) flatly rejected this interpretation of the bill, and accused Democrats of either not reading it or not being "truthful." In his closing remarks, Sessions said that by allowing more borrowing above the debt ceiling, the bill is giving the administration more flexibility, not less.

This borrowing, he said, would help ensure that more federal tax revenues can be used for various programs programs instead of making payments on the debt.

"I've never heard of a more reasonable option. We're not telling the President how to spend the money, we're giving authorization for new debt to pay our debt obligations," he said.

"That's not cutting people off. It's not truthful to say we're going to do that. Anybody that tells you that didn't read the bill."

Republicans also rejected Democratic arguments that the bill would prioritize payments to foreign countries over U.S. citizens. Rep. Tom McClintock (R-Calif.), the sponsor of the bill, said during the debate that most of the national debt is held by Americans.

"I would… remind her that most of the public debt is held by Americans, much of it through American pension funds," McClintock said in response to Rep. Slaughter. "China holds less than 10 percent.

"So the overwhelming effect of this measure is to protect the investments that Americans have made in their own government, while protecting the credit that supports every other expenditure of this government, including our troops."

McClintock also argued that if the U.S. hits a crisis point with the debt and fails to keep up with its payments to creditors, its credit rating will fall, making it harder for the U.S. to borrow money for any reason.

"[P]ublic credit is what makes possible all of the other programs of this government, from paying our troops to seniors's healthcare," McClintock said. "Without it, we cannot pay our other bills."

House Republicans overhauled the bill compared to the version McClintock first submitted. His original version would have required the government to prioritize debt interest payments in the event the debt ceiling were reached.

The bill under consideration would allow borrowing above the debt ceiling to stay current on the debt, and to make payments related to the Social Security Trust Fund. The Social Security component was added to allow new government borrowing to cover the costs associated with selling off Social Security trust fund securities.

The trust fund needs to sell securities to make benefit payments because it is now paying out more than it takes in each year. But these sales require the trust fund to credit interest payments on these securities, which imposes a small cost with each sale.

The rule as approved makes in order one amendment from House Ways & Means Committee Chairman Dave Camp (R-Mich.), which would ensure that no new borrowing can take place to pay the salaries of members of Congress.

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