This week, the House is considering passage of the Full Faith and Credit Act, a bill that would force the Treasury Department to prioritize interest payments on the national debt and Social Security payments over all other payments. According to Ways & Means Committee Chairman Dave Camp’s (R-MI) spokesperson Michelle Dimarob, the rest of the federal budget would then be prioritized according to President Obama’s preferences.
Democrats have nicknamed this piece of legislation the “Pay China First” bill. This talking point, with all of its derision, is now being parroted by various media sources, despite the reality that paying China (and all of America’s debt holders) is the responsible thing to do. To not pay debt holders first would create the only situation in which America could default on her debt.
Starting it off is Jed Lewison of Daily Kos, who wrote, “the practical impact of [the GOP’s] move would mean the government would be obligated to pay creditors, including foreign governments like China, before serving the needs of seniors who depend on Social Security or members of the armed services who depend on their salaries.” Never mind that the legislation prioritizes Social Security benefits and paying creditors on the same level.
A recent Huffington Post article went even further than Lewison, however, in misleading readers on the practical consequences of this Act. Consider:
First, the article says “…Boehner was asked about this week’s vote on the Full Faith and Credit Act, which, in the event that the U.S hits its debt ceiling, would direct the treasury secretary to pay only the principal and interest owed to bondholders before making any other payments.” As stated above, this is not accurate. The legislation also states that Social Security interest will be covered, thus allowing Social Security payments to be made.
In the same paragraph:
Money for other payments, such as those for veterans, Medicare and national security, would have to be divvied up from what remained of the scarce federal funds.
Is there any Tea Party activist taxpayer who believes federal funds are “scarce?” Even with the limitations of the debt ceiling in place, the federal government will be able to spend over $3 trillion with expected tax revenue, around 70% of all spending.
Republican supporters of the bill maintain that the most important thing is that the nation won’t default on its credit as long as those interest payments are made on time.
This is not something GOP backers of the bill need to “maintain.” America won’t default on her debt unless interest payments are not made. Reducing the GOP’s declaration to a talking point is like saying LeBron James fans “maintain” he won this MVP this year. It’s a simple fact.
The article cites the Obama Administration near its closing:
“American families do not get to choose which bills to pay and which ones not to pay, and the United States Congress cannot either without putting the Nation into default for the first time in its history.”
Again, this claim is false. Treasury can choose which bills to pay, and as long as it chooses to pay interest on our debt, the nation will not default.
Business Insider jumped into the fray, citing a Democratic aide in the Senate who said he was “surprised” the Speaker “would employ this strategy at all,” since it’s risky politics – and the Speaker said he is not concerned about the politics of the bill:
“The message of the bill is terrible and no one takes it seriously as a piece of legislation, since it’s a nonstarter in the Senate and the President would veto it in any event,” the aide said. “Doing nothing would probably be smarter for them than doing this bill.”
Got that? In 2011, President Obama and other Democrats said not raising the debt ceiling risked the “full faith and credit of the United States.” The media repeated this, and also set the GOP up for blame if it ignored legislation that would deal with the debt ceiling. According to Democrats and its allies the media, the GOP was also threatening the financial futures of seniors.
Now that the House GOP is pushing a bill that will cover the “full faith and credit” of the nation plus Social Security payments, the argument has changed. Now, Democrats/Media claim Republicans are paying more attention to those evil foreigners who own our debt than to the troops. Never mind that more debt is owned by the American people and various U.S. government entities than foreign nations and if there’s one person unqualified to talk about budget decisions that harm troops, it’s President Obama.
Neither party is without blame in D.C.’s runaway spending. It seems that only people outside the beltway can see the incoming train wreck. Washington has broken faith with the American people, and the Full Faith and Credit act is a step in restoring the confidence of our debt holders and taxpayers alike.