The Republican-controlled House is moving to put U.S. bondholders and people on Social Security at the front of the line to be paid if the government hits its borrowing limit and is unable to meet all of its obligations.
The idea is to lessen the consequences of a U.S. default on its obligations if Congress and President Barack Obama can’t find a way to lift the government’s so-called debt limit later this year, in hopes of salvaging the government’s credit rating and ability to borrow to pay its bills.
“It is imperative that credit markets are supremely confident that their loans are secure,” said bill sponsor Rep. Tom McClintock, R-Calif.
But Democrats said the legislation would guarantee a downgrade of the debt by suggesting the nation would be willing to pay some of its bills and not others. They’ve dubbed it the “Pay China First Act,” saying it prioritizes payments to foreign investors over funding important domestic programs, including benefits for veterans and soldiers, Medicare and companies that do business with the government.
The White House has promised to veto the measure in the unlikely event that the Democratic-led Senate approves it.
“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,” the White House said Tuesday in promising a veto. “It would cause the nation to default on payments for Medicare, veterans, national security and many other critical priorities. This legislation is unwise, unworkable and unacceptably risky.”