Conservative Republicans’ bill seeks to take bite out of debt ceiling

The Republican Study Committee (RSC), a conservative group comprising more than half of all GOP House members, is throwing its weight behind a bill that would defang the high-stakes debates around the debt ceiling.

On Thursday, the group’s steering committee unanimously decided to re-adopt the Default Prevention Act, an initiative Rep. Tom McClintock (R-Calif.) introduced in 2015. It would require the U.S. Treasury to pay its debt, interest, and Social Security obligations, even if it reached its legal borrowing limit.

{mosads}Political clashes over the raising debt ceiling create uncertainty as to whether the Treasury would legally be able to borrow in order to pay its bills and debts if the ceiling were raised. A default would have catastrophic financial and economic effects and showdowns in 2011 and 2013 raised U.S. borrowing costs by billions of dollars.

The RSC initiative would bring the high-wire act lower to the ground, ensuring that the Treasury would pay its debts even if the debt ceiling were reached. It would be forced, instead, to stop or slow payments to government contractors and federal employees, for example. It would also require special reporting, and ban salary payments to Congress.

That would give conservatives, who have tried to use the must-pass bill to enact spending or regulatory reforms, more leeway to pursue that agenda without concern of seriously damaging the U.S. economy.

The RSC may not find support in the Treasury for its approach, however.

Treasury Secretary Steve Mnuchin, a Republican, told the House Financial Services Committee on Thursday that “I have no intent on prioritizing, I think that doesn’t make sense.”

“The government should honor all of its obligations and the debt limit should be raised,” he added.

Democrats have also opposed such measures.

In 2013, then-Treasury Secretary Jack Lew spoke out against plans that would prioritize some payments over others.

“I think prioritization is just default by another name. It’s just saying that we will default on some subset of our obligations,” he said.

–This report was updated at 12:32 p.m.