Issue Brief: The Full Faith and Credit Act
Background: During the past decade, America’s national debt has increased from $5.7 trillion to more than $14.2 trillion. Current law caps our government’s ability to borrow at $14.294 trillion. Sometime in the next few months, our country will reach that ceiling and be unable to borrow unless Congress acts to raise the debt ceiling. Just 27% of likely voters favor raising the ceiling.
On January 6, Treasury Secretary Timothy Geithner sent a letter to Congress warning that failure to increase the debt ceiling “would precipitate a default by the United States,” “lead to the loss of millions of American jobs” and “have catastrophic economic consequences that would last for decades.” Those hysteric claims are both inaccurate and dangerous.
As The Heritage Foundation explained, the full faith and credit of the United States is not in jeopardy: “Contrary to the clear implications of [the] letter…refusing to raise the debt limit would not, in and of itself, cause the United States to default on its public debt.”
Heritage also suggests that to eliminate any ambiguity, “Congress could consider legislation providing clear guidance…legislation could clearly indicate that net interest on public debt would receive the first claim on income tax receipts, thus eliminating any remaining shred of substance from the question of default.”
Status: The Full Faith and Credit Act (S.163 / H.R.421), introduced by Senator Pat Toomey (R-PA) and Representative Tom McClintock (R-CA), would simply “require that the Government prioritize all obligations on the debt held by the public in the event that the debt limit is reached.”
On March 1, the Senate voted along party lines to table (i.e. kill) the measure. The House has yet to act.
Bring the Heat: The Full Faith and Credit Act takes the issue of default off the table, and allows Congress to focus on cutting spending, enacting reforms and lowering the deficit without inaccurate hyperbolic rhetoric. Every conservative Member of Congress should support Toomey-McClintock.
- Prioritizing Debt Payments. In the event we reach the debt ceiling, there would still be ample revenue to pay interest on the debt and thus avoid default. Despite Secretary Geithner’s rhetoric, there should be little doubt that Treasury would prioritize America’s debt payments over other incoming receipts. Toomey-McClintock would simply eliminate any remaining ambiguity.
- Failure of Leadership. In 2006, then-Senator Barack Obama opposed raising the debt ceiling, saying, “Increasing America’s debt weakens us domestically and internationally. … America has a debt problem and a failure of leadership. Americans deserve better.” Why is the President now unwilling to support necessary efforts to get America’s fiscal house in order?
Take Action: Call your Representative and tell him/her to support and co-sponsor The Full Faith and Credit Act (H.R.421). Then call your Senators. If they voted in favor of the measure, thank them. If they did not, ask them to explain why the Full Faith and Credit Act is not in our national interest.