May 8, 2013, Fairfax, VA—Americans for Limited Government Vice President of Communications and Public Policy Rick Manning today issued the following statement urging the House of Representatives to amend prior to acting on H.R. 807, the "Full Faith and Credit Act":
"The Full Faith and Credit Act is based on very good intentions, which is to avert default and meet essential obligations should the statutory debt limit be reached. This in turn will insulate Congress from coercive political pressure from the White House to increase the debt ceiling under duress when there was enough revenue to cover the bulk of obligations. To be clear, that is a great idea that we wholly support.
"Unfortunately, even if Congress preferred that the White House handle payments prioritization beyond debt payments as they are constitutionally empowered to do, the bill does not even minimally bother to explicitly authorize and commit the President to doing so. Just look at how sequestration was implemented with air traffic control when specific guidance was not provided on how to manage the FAA's accounts. Assuming good faith from this White House should the debt ceiling be reached to properly handle payments prioritization based on a broad reading of current law is not a sound financial decision. We already know what Obama will do.
"The current proposal will not stop Obama's political fear mongering. It covers debt held by the public and debt held Old-Age and Survivors Insurance Trust Fund and Disability Insurance Trust Fund that finance Social Security benefits. It says nothing about the $325 billion of treasuries in the Hospital Insurance Trust Fund and the Supplemental Insurance Trust Fund that helps pay for Medicare. Why not?
"Nor does it instruct the President on how to prioritize existing revenue. To insulate Congress from the accusation it is ditching Grandma and the troops, this legislation must provide a wider range of prioritization, expanding on the Toomey proposal in the Senate that also encompasses Social Security and active duty military payments, but going even further to also include Medicare and veterans' benefits.
"Out of the $2.7 trillion of annual revenue the White House expects in 2013, only about $420 billion, or $35billion monthly, will go to paying gross interest on the debt. In addition, there would also be enough revenue to pay out Social Security ($812 billion), Medicare ($504 billion), defense ($652 billion), and veterans' benefits ($80.8 billion), with nearly $250 billion left over to pay for other essential items. We urge the House to amend the proposal to provide these protections.
"If the House GOP leaves the option of prioritization to the White House, Obama will easily claim, even if it is untrue, that he lacks the authority to prioritize other payments. Then, he will make payments on debt service to the stated trust funds and to the public, but deny payments to the other trust funds and essential services. Congress will get blamed for not providing more explicit instructions.
"What is the GOP's debt ceiling strategy?" by Robert Romano, ALG Senior Editor, May 8, 2013 at http://netrightdaily.com/2013/05/what-is-the-gops-debt-ceiling-strategy/
"Republicans taking default off the table" by Robert Romano, ALG Senior Editor, April 24, 2013 at http://netrightdaily.com/2013/04/republicans-taking-default-off-the-table/
Americans for Limited Government is a non-partisan, nationwide network committed to advancing free market reforms, private property rights and core American liberties. For more information on ALG please call us at 703-383-0880 or visit our website at www.GetLiberty.org.