WASHINGTON, D.C. – Senator Pat Toomey (R – Pa.) introduced his first piece of legislation today, entitled the Full Faith and Credit Act. The legislation will ensure that the U.S. government does not default on its debt by requiring the Treasury to prioritize payments on the debt in case the debt ceiling is not raised. Text of the legislation can be found below.
For months, some political leaders have argued that failure to raise the debt ceiling would necessarily cause the United States to default on its debt. This is not the case. If Congress refuses to raise the debt ceiling, the federal government will have more than enough money to service its debt. Next year, about 6.5 percent of all projected federal government expenditures will go to pay off the interest on our debt, and tax revenue is projected to cover about 67 percent of all government expenditures.
As Sen. Toomey explained in a recent Wall Street Journal op-ed, the Full Faith and Credit Act will take the option of default off the table and allow Congress to have a much needed debate about reining in the government’s out-of-control spending.
"We need to take the default scare tactics off the table so both sides can sit down at the table and have a serious and honest conversation about cutting spending and instituting structural reforms to put our country’s finances on a sustainable path," Sen. Toomey said. "The Full Faith and Credit Act will allow us to have that conversation by eliminating the possibility for default in case the debt ceiling is not raised. Failing to raise the debt ceiling is not a desirable situation and would be disruptive, but the worst thing we can do is simply continue he irresponsible deficit spending that jeopardizes our economic future."
Already, the Full Faith and Credit Act has garnered enthusiastic support from members of Congress. In the Senate, the legislation has fifteen cosponsors: Senators John Barrasso (Wyo.); Roy Blunt (Mo.); Saxby Chambliss (Ga.); Tom Coburn (Okla.); Jim DeMint (S.C); John Ensign (Nev.); Mike Enzi (Wyo.); James Inhofe (Okla.); Johnny Isakson (Ga.); Mike Johanns (Neb.); Ron Johnson (Wis.); Mark Kirk (Ill.); Mike Lee (Utah); Rand Paul (Ky.); and David Vitter (La.).
In the U.S. House of Representatives, a companion piece of legislation will be introduced by Representative Tom McClintock (Calif.-04).
To require that the Government prioritize all obligations on the debt held by the public in the event that the debt limit is reached.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ”Full Faith and Credit Act”.
SEC. 2. PRIORITIZE OBLIGATIONS ON THE DEBT HELD BY THE PUBLIC.
In the event that the debt of the United States Government, as defined in section 3101 of title 31, United States Code, reaches the statutory limit, the authority of the Department of the Treasury provided in section 3123 of title 31, United States Code, to pay with legal tender the principal and interest on debt held by the public shall take priority over all other obligations incurred by the Government of the United States.