BOYLE & YARMUTH INTRODUCE LEGISLATION TO TRANSFER DEBT CEILING AUTHORITY TO SEC OF TREASURY
WASHINGTON, D.C. – Budget Committee Vice-chair, Congressman Brendan F. Boyle (PA-02), and Budget Committee Chair Rep. John Yarmuth (KY-03) today introduced the Debt Ceiling Reform Act, legislation that would eliminate the debt limit as we now know it and transfer that authority to the Treasury Department.
“For the third Congress in a row, I have introduced measures to reform the mechanisms surrounding this arbitrary and reckless debt limit”, said Congressman Boyle. “Now, with the Treasury on the verge of running out of money within the next month, we once again find ourselves barreling toward financial calamity. It’s quite clear that this measure, which was first introduced in 1917, has outlived its effectiveness. Simply put, the debt ceiling is incapable of accomplishing what it sets out to do—to control how much the government borrows—as the bills Congress passes are legally binding and cannot be inhibited by such a limit.”
The Boyle-Yarmuth bill would seek to transfer the duty of raising the debt limit away from Congress and vest it in the Secretary of the Treasury. 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.
A 2011 debt limit agreement negotiated in Congress gave the Obama administration authority to raise the debt limit by $1.2 trillion, an idea credited to then-Senate Majority Leader Mitch McConnell that was dubbed the “McConnell Rule.”
“After everything the American people have been through over the last 19 months and all the progress we have made in our recovery, the last thing we need is a dangerous game of political brinkmanship that will devastate our economy and plunge us into another recession,” said Congressman Yarmuth. “It’s time for Republicans to pull the ripcord and support our legislation to implement the McConnell Rule, giving the Treasury Secretary the authority to raise the debt ceiling. We need to get past this politically manufactured crisis and get on with the business of addressing the needs and priorities of the American people.”
Moody’s Analytics predicts that a default would result in a loss of six million jobs, an unemployment rate of nearly 9 percent, the elimination of $15 trillion in household wealth and a decline in real GDP of 4 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.
On September 21, both Boyle and Yarmuth voted in support of H.R. 5305, which would have raised the debt ceiling and avoided a government shutdown. The bill was subsequently blocked in the Senate by a Republican filibuster. Both Congressmen plan to support S. 1301, a clean debt ceiling increase which is scheduled to be voted on in the House today. The Boyle-Yarmuth legislation introduced today to give the Treasury Secretary this new authority provides an additional solution to this crisis should Republicans filibuster the second legislative attempt to raise the debt ceiling. This bill would also stop debt ceiling political brinkmanship going forward and bring an end to this era of self-inflicted crises.