With one week to go before America’s August 2nd debt ceiling deadline, Senator Pat Toomey (R-PA) is drumming up support for a fallback plan. At a Capitol Hill news conference, Toomey introduced the Full Faith and Credit of the United States and Protecting America’s Soldiers and Seniors Act. “What our bill would do is it would instruct the Treasury secretary, in the event the debt ceiling is not raised prior to August 2nd, to make certain obligations priority so that they will be paid in full, on time and without delay,” Toomey stated.
The legislation would prioritize the interest on America’s debt, Social Security payments and the payroll for active duty military personnel. By placing interest payments atop that list, Toomey says the nation would not default on its debt, and not plunge into economic chaos. “This bill is not and is not meant to be a substitute for raising the debt limit,” Toomey said. “What this bill is all about is minimizing whatever disruption might otherwise occur if the debt limit is not raised prior to August 2nd.”
This comes the day after President Barack Obama and US House Speaker John Boehner (R-OH) held dueling primetime television appearances. “The American people may have voted for a divided government, but they didn’t vote for a dysfunctional government,” the President chided. But, Speaker Boehner says the President won’t accept ‘yes’ for an answer. “Even when we thought we might be close to an agreement, the President’s demands changed,” rebuked Boehner.
That back-and-forth among Washington’s biggest powerbrokers set the stage for Toomey’s Tuesday news conference. “At this late stage in the process, it’s obvious now to everybody that it is possible – increasingly possible – that we will not have raised the debt ceiling by August 2nd,” Toomey said.
If Congress fails to reach a compromise, and if there is a default on the nation’s debt, the credit rating agencies could downgrade America’s bond rating. That, in turn, could lead to higher interest rates for everyone. But, this is not entirely uncharted territory. Senate historian Don Ritchie says the debt ceiling has been raised at least 80-times in recent history, and stalemates have become somewhat common since the 1980s. “At some point they’ve always managed to work out an arrangement, even though there were quite often stark differences of opinion between the two sides,” Ritchie said, providing at least some reason for optimism.