Statement of Administration Policy: H.R. 2586 - Temporary Increase in the Statutory Limit on the Public Debt

(House Rules)
(Archer (R) TX)

The Administration has repeatedly urged Congress to promptly pass legislation that would raise the debt limit for a reasonable period of time, to protect the Nation's creditworthiness and avoid default. A government default has always been unthinkable, but H.R. 2586 would threaten a default on December 13. If H.R. 2586 were presented to the President in its current form, he would veto it.

As the President has clearly said, Congress should keep the debt limit separate from the ongoing debate over how to balance the budget.

The congressional majority itself has acknowledged the need to raise the debt limit. The congressional budget resolution calls for raising it to $5.5 trillion, and the House voted to raise it to that level when it passed the reconciliation bill on October 26.

As the President has said, "the Republicans in Congress have resorted to extraordinary blackmail tactics to try to ram their program through. They have said they won't pass a bill letting the government pay its bills unless I accept their extreme and misguided budget priorities."

H.R. 2586 would threaten a government default after December 12 — the day on which the debt limit increase in this legislation would expire — for two reasons.

First, under H.R. 2586, on December 13, the debt limit would fall to $4.8 trillion, an amount which is $100 billion below the current level of $4.9 trillion. The next day, more than $44 billion in government securities mature, and we would be unable to borrow the funds needed to redeem them.

Second, H.R. 2586 would severely limit the cash management options that the Treasury may be able to exercise under current law to avert a default. Specifically, it would limit the Secretary's flexibility to manage the investments of the G-Fund and the Civil Service Retirement and Disability Fund — flexibility which Congress first gave to President Reagan. In addition, it would make it highly likely that after December 12, the federal government would be unable to make full or timely payments for a wide variety of government obligations including interest on the public debt, Medicare, Medicaid, military pay, veterans benefits, payments to defense and other government contractors, federal civilian pay, tax refunds, the Earned Income Tax Credit, Supplemental Security Income and various other programs.

H.R. 2586 is designed to force the President to choose between an extreme congressional budget and a government default. The President will not accept this choice. He would veto H.R. 2586 if presented to him in its current form.