The Honorable Tom McClintock
United States House of Representatives
2331 Rayburn House Office Building
Washington, DC 20515
Dear Representative McClintock:
On behalf of the members of National Taxpayers Union (NTU), I write in support of H.R. 692, your “Default Prevention Act.” This vital legislation would eliminate the potential of a default on U.S. debt obligations and ensure stability in financial markets in the event that Congress does not raise the debt ceiling in a timely manner.
The Default Prevention Act would simply allow the Treasury Department to continue borrowing in order to make principal and interest payments on debt held by the public and on Social Security’s so-called trust funds, ensuring that all creditors are paid in full and on time. The legislation also prohibits the Treasury from making payments to Members of Congress in the absence of legislative action on the debt limit.
H.R. 692 provides a necessary fail-safe ensuring the full faith and credit of the United States is not squandered on behalf of political posturing. Removing the possibility of default sends an important message to our creditors, who include investors and pension funds, and prevents further disruption to already volatile credit markets.
As a measure of just how far we’ve strayed from our nation’s founding traditions on borrowing, it is illustrative to note that prior to 1917, Congress actually had to separately approve each issuance of debt, including the maturity date and interest rate. With the passage of the Second Liberty Bond Act, Congress established a statutory limit on federal debt and granted the U.S. Treasury the authority to conduct auctions underneath that ceiling. Unfortunately, the debt ceiling mechanism has ceased to provide the kind of meaningful restraint on Congress’ spending habits that was clearly intended.
With over $18 billion in debt, it’s essential that Congress make the tough decisions necessary to rein in our out of control spending, especially the crushing load of entitlement spending, that is creating a drag on our economy and threatens our future prosperity. By prioritizing certain payments H.R. 692 eliminates the threat of crisis as well as the potential to manipulate debt ceiling increases for political gamesmanship.
To prevent default and aid in negotiations to reduce unsustainable federal spending, we urge all Representatives to cosponsor H.R. 692, the Default Prevention Act.
Sincerely,
Nan Swift
Federal Affairs Manager