Economy

White House threatens veto of GOP bill to defuse debt-limit fight

The White House would likely veto a Republican attempt to defuse the debt limit, arguing the bill is just a “default by another name.”

In a statement of administration policy, the White House said Tuesday that the Full Faith and Credit Act is a “deeply irresponsible approach” to dealing with the nation’s borrowing cap and recommended a veto if it reaches the president’s desk.

“American families do not get to choose which bills to pay and which ones not to pay, and the United States Congress cannot either without putting the Nation into default for the first time in its history,” the White House said.

“This bill would threaten the full faith and credit of the United States, cost American jobs, hurt businesses of all sizes, and do damage to the economy. It would cause the Nation to default on payments for Medicare, veterans, national security, and many other critical priorities.”

{mosads}The legislation, which could receive a vote in the House on Thursday, is intended to allow the Treasury to issue debt above its borrowing limit to continue meeting debt payments and Social Security payments. The bill comes as both parties are beginning to jockey for position on the debt limit, which likely will need to be raised again some time in the fall.

Republicans contend the measure would remove the most damaging aspects of hitting the debt limit by guaranteeing that the nation’s debts are paid. The White House argues any attempt to use the debt limit to extract fiscal concessions is reckless and a threat to the nation’s economy.

Republicans have indicated they will be demanding major fiscal reforms in exchange for a debt limit boost.

Democrats and the White House insist any attempt to work around the debt limit instead of raising it in a timely fashion is not a viable option. The White House said the bill is “unwise, unworkable, and unacceptably risky.”

“Congress must pay the bills it has already racked up; failure to do so would put the Nation into default,” the White House said. “The President will not tolerate political gamesmanship.”

The debt limit will be reinstated on May 19, after it was suspended earlier this year as part of another compromise. Once the $16.4 trillion limit is reimposed, it will automatically be raised to cover any borrowing done during the suspension period. At that point, the Treasury Department would begin to employ “extraordinary measures” to free up space under the limit to continue meeting its obligations.

The Treasury has yet to indicate how long the “extraordinary” measures would last, but outside analysis suggests that Congress would likely need to raise the limit in September or October to avoid a default.

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