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senate Bill S. 1740

If the Debt Limit is Reached, Should the Treasury Keep Borrowing to Meet Certain Obligations?

Argument in favor

Failing to service the national debt and defaulting could trigger a debt spiral that damages the entire U.S. economy. Reneging on Social Security & Medicare would harm vulnerable populations. This bill will prevent that kind of disaster.

CharleneK's Opinion
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02/09/2018
Technically, the answer is to abolish the debt limit in total. There should be no artificial limit on the debt that is needed to service our obligations. All it does is initiate yet another round of Kabuki theater regarding the budgeting process. If Congress does not want to borrow so much, it needs to not spend so much and also it must collect enough revenue from the people in the system. Cutting taxes may feel good but if we have to borrow money to make up the shortfall perhaps you should not cut taxes so deeply.
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···
02/09/2018
The debt ceiling is an artificial construct designed as a tool of distraction to manipulate public opinion and allow lawmakers to do whatever they damn well please. As informed citizens we need to understand the difference between REAL issues of government financing and the shell game our legislators play to achieve political goals. Goals, I might add, not all of which are bad or detrimental to the American people. But if we cease reacting to every increase as if it’s the Apocalypse, our lawmakers might actually be forced to openly discuss the real issues.
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Brian's Opinion
···
08/31/2017
Failing to service the national debt and defaulting could trigger a debt spiral that damages the entire U.S. economy. Reneging on Social Security & Medicare would harm vulnerable populations like the special needs community, elderly, etc. This bill will prevent that kind of disaster.
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Argument opposed

This bill lowers expectations by planning for Congress to fail to raise the debt limit. Lawmakers should focus on a solution rather than preparing a backup plan in case they fail to do what they need to.

Jeffrey's Opinion
···
08/31/2017
No. If I overspend I don't get to increase the size of my paycheck. The Federal Government needs to learn to balance a budget and stick to it.
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Guy's Opinion
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02/09/2018
The debt limit should not have been raised. Not sure if we can get ourselves out of the current whole we have created. Stop spending our money!!!!!
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Zach's Opinion
···
02/09/2018
As many have said, the solution is not to allow us to spend more, it is to make major cuts and spend less. Our government is wasting a colossal amount of money and there are so many cancers on our government that we can cut.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
      senate Committees
      Committee on Finance
    IntroducedAugust 3rd, 2017

What is Senate Bill S. 1740?

This bill — known as the Default Prevention Act — would prioritize the federal government’s spending obligations in the event that the debt limit is reached as tax revenue comes in. Priorities would be as follows: 1) paying the interest and principal on the national debt to avoid default; 2) pay and benefits for active duty military personnel; 3) Social Security benefits, including survivors and disability insurance benefits; 4) Medicare benefits; 5) obligations from programs administered by the Dept. of Veterans Affairs (VA).

The Treasury Dept. would be authorized to use its extraordinary measures and to continue issuing debt to meet the above obligations.

Impact

Taxpayers; members of the military; beneficiaries of Social Security, Medicare, and VA programs; and the Treasury Dept.

Cost of Senate Bill S. 1740

A CBO cost estimate is unavailable.

More Information

In-DepthSponsoring Sen. Rand Paul (R-KY) introduced this bill to prevent the U.S. from defaulting on its debt if Congress fails to raise the debt ceiling, and offered the following statement when he authored this legislation’s predecessor:

“My legislation takes the possibility of default off the table so we can continue to push for fiscal restraint. There is no reason the government would — or should — responsibly consider the idea of default.”

Of NoteThe term ‘debt held by the public’ refers to individuals, companies, state or local governments, Federal Reserve Banks, and foreign governments that own federal debt securities like bonds, T-bills, TIPS, savings bonds. Currently, debt held by the public accounts for about $13 trillion of the total national debt, which exceeds $18 trillion.

Once a country defaults on its sovereign debt, there is a risk of a debt spiral beginning. A debt spiral happens when interest rates on the country’s debt securities rise because of a default, which means that the government has to spend more money servicing its debt. In the absence of economic growth and increased tax revenue, this requires the government to issue more debt simply to service existing debt.

The debt limit was most recently through March 1, 2019 by the passage of the Bipartisan Budget Act on February 9, 2018.


Media:

Summary by Eric Revell

(Photo Credit: rrodrickbeiler / iStock)

AKA

Default Prevention Act

Official Title

A bill to provide guidance and priorities for Federal Government obligations in the event that the debt limit is reached and to provide a limited and temporary authority to exceed the debt limit for priority obligations.

    Technically, the answer is to abolish the debt limit in total. There should be no artificial limit on the debt that is needed to service our obligations. All it does is initiate yet another round of Kabuki theater regarding the budgeting process. If Congress does not want to borrow so much, it needs to not spend so much and also it must collect enough revenue from the people in the system. Cutting taxes may feel good but if we have to borrow money to make up the shortfall perhaps you should not cut taxes so deeply.
    Like (33)
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    Share
    No. If I overspend I don't get to increase the size of my paycheck. The Federal Government needs to learn to balance a budget and stick to it.
    Like (120)
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    Share
    Let’s see - you just gave a big tax cut to corporations and the 1% hence driving down US revenue. The debt will probably increase with respect to US GDP. Increased US borrowing is likely to crowd out other debt instruments forcing an increase of interest rates. A higher cost of capital will slow down industry growth. Gee - I guess magical thinking that support a supply side economic model along with a growing police state is the path to our Thunder-dome dystopian future??
    Like (47)
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    The debt limit should not have been raised. Not sure if we can get ourselves out of the current whole we have created. Stop spending our money!!!!!
    Like (36)
    Follow
    Share
    As many have said, the solution is not to allow us to spend more, it is to make major cuts and spend less. Our government is wasting a colossal amount of money and there are so many cancers on our government that we can cut.
    Like (29)
    Follow
    Share
    The debt ceiling is an artificial construct designed as a tool of distraction to manipulate public opinion and allow lawmakers to do whatever they damn well please. As informed citizens we need to understand the difference between REAL issues of government financing and the shell game our legislators play to achieve political goals. Goals, I might add, not all of which are bad or detrimental to the American people. But if we cease reacting to every increase as if it’s the Apocalypse, our lawmakers might actually be forced to openly discuss the real issues.
    Like (22)
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    The national debt is worrying!
    Like (17)
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    HELL NO. That's the definition of a debt ceiling, and it's the last thing standing between economically illiterate politicians and making debt-slaves of generations to come.
    Like (15)
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    Failing to service the national debt and defaulting could trigger a debt spiral that damages the entire U.S. economy. Reneging on Social Security & Medicare would harm vulnerable populations like the special needs community, elderly, etc. This bill will prevent that kind of disaster.
    Like (14)
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    No. It’s time the government learns the meaning of LIVING WITHIN YOUR MEANS..
    Like (13)
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    America is on a dangerous budget path. Current spending and debt are dangerously high, and future spending and debt are on track to rise even higher in large part due to increasing entitlement spending. Academic research shows that advanced economies like the United States are at risk of significant and prolonged reductions in economic growth when public debt reaches levels of 90 percent of GDP. High public debt threatens to drive interest rates up, to crowd out private investment, and to raise price inflation. The implications would be severe and pronounced for all Americans, but most especially for the poor, the elderly, and the middle class. U.S. policymakers should learn from Greece and Japan and avoid a fiscal crisis and economic stagnation brought about by public debt overhang.
    Like (11)
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    Look let’s stop kicking this damn can down the road and do something.
    Like (10)
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    Cut spending stupid. You don't have to borrow more, you have to SPEND LESS! National defense is literally the ONLY essential Federal government function, every other program in place from the Infernal Revenue "Service" to all of the various unelected regulatory agencies do more harm than good. Fire every damn bureaucrat in the country and you'd have a good start.
    Like (9)
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    To avoid global economic catastrophe? Yes. Please do this.
    Like (9)
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    It is incredulously irresponsible how this administration has spent taxpayer money Willy nilly. Unless there is a red line that advises do not pass go, do not collect $200, the wild spending will continue. I have a thought ~ Stop paying for the travel/security at Mira Lago and at #45’s NYC penthouse; that will save the taxpayers millions.
    Like (8)
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    At some point we need to face reality that 60% of our debt is due to entitlements. It’s extremely irresponsible to keep expanding entitlements for no purpose other than obtaining votes. This is unsustainable. We cannot keep borrowing money to pay for promises we can’t keep. It WILL bankrupt the nation. If people want to be free to pursue their own dreams then the price for that freedom is to accept responsibility for yourself. If you want to rely on the charity of government bureaucrats, then don’t expect to have choices.
    Like (8)
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    Hell NO! Pay for the vital programs first, scrap programs that aren’t vital, and be more responsible with MY money!
    Like (7)
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    The debt ceiling is an incredibly stupid idea. If you INSIST on keeping it, then at least mitigate the damage it can do.
    Like (7)
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    No! Fund the military, cut everything else.
    Like (6)
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    Rather than risk tankiing our economy again, then this backup plan seems resonable, if the borrowing is done to fund essential services such as Social Security, M-care/M-caid, and national defense. However, not one penny should go towards Trump's "wall".
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