Durbin, Yarmuth, Boyle Introduce Bicameral Legislation To Transfer Debt Ceiling Authority To Treasury Secretary
WASHINGTON -- U.S. Senate Majority Whip Dick Durbin (D-IL), House Budget Committee Chair Rep. John Yarmuth (D-KY), and House Budget Committee Vice-Chair Rep. Brendan F. Boyle (D-PA) introduced the Debt Ceiling Reform Act, legislation that would repeal the debt ceiling and give the Secretary of the Treasury the authority to issue new debt as long as the president notifies Congress that new debt is needed.
Republicans previously used stonewalling tactics led by Senate Minority Leader Mitch McConnell (R-KY) to obstruct suspending the debt ceiling. Durbin, a member of the Senate Appropriations Committee, voted to raise the debt ceiling in December by a simple majority.
“After a near catastrophic default thanks to political games by our Republican colleagues, it’s time to put the debt ceiling in the hands of the Treasury Secretary,” Durbin said. “For the sake of the American people and for the good of our economy, we need legislation to reform the way we address the debt ceiling. The Debt Ceiling Reform Act is responsible, commonsense legislation that will give the Treasury the authority to raise the debt ceiling. I’m thankful for the leadership in the House from Chairman Yarmuth and Congressman Boyle. If Republicans are truly concerned about the economic well-being of America, they will work with us to put together a sensible response to the debt limit.”
“The debt ceiling provides no benefit to our nation, yet it has the potential to cause catastrophic consequences for all Americans,” Yarmuth said. “Just the threat of defaulting on the full faith and credit of the United States has had major impacts on our economy. Yet some Members of Congress are using it to play political games with no concern for the risks. That is why I’m proud to join with my colleagues, Congressman Boyle and Senator Durbin, to introduce this commonsense legislation. The Debt Ceiling Reform Act will make much needed reforms to end this political brinkmanship and ensure that our nation will always honor our financial commitments and provide the economic stability the American people deserve from their government.”
“Our current process of ‘governing by deadline’ and playing chicken with the debt ceiling is a self-inflicted crisis that risks the full faith and credit of the United States,” Boyle said. “This is reckless and irresponsible. It is no wonder that only a handful of countries around the world currently follow this disruptive, arbitrary, and restrictive fiscal practice. Here at home, some Congressional Republicans have illustrated that instead of legislating, they would rather gamble with calamitous political decisions for attempted political gains. Doing so would drive our nation directly over a fiscal cliff and hurl our economy into default. We must seek a more permanent solution to this toxic brinksmanship. The debt ceiling and the perennial crises it produces are completely avoidable.”
The Debt Ceiling Reform Act requires a notification whenever the total debt amount is within $100 billion of reaching a new trillion-dollar increment. The debt ceiling is a statutory limit on the amount of national debt that may be issued by the U.S. Treasury after it has spent and incurred that debt. It ultimately limits how much money the federal government can borrow to pay its own bills.
Moody’s Analytics predicts that a default could result in?a loss of six million jobs, an unemployment rate of nearly nine percent, the elimination of $15 trillion in household wealth, and a decline in real GDP of four percent. Just a delay in raising the debt limit can create uncertainty in the Treasury market and lead to higher Treasury borrowing costs. During the 2011 debt ceiling negotiations, in which a compromise was struck only two days before Treasury’s borrowing authority would be exhausted, the U.S. Government Accountability Office found the delays in raising the debt limit led to an increase in Treasury’s borrowing costs of about $1.3 billion.
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