U.S. Representative Colleen Hanabusa (HI-01) voted against a bill that would prioritize U.S. debt payments to foreign bondholders, like China, before payments to our troops, veterans, small businesses, and hospitals, if the nation hits its borrowing limit.
Once the statutory debt limit is reached, H.R. 807 says the Treasury Department can continue borrowing above the limit, but only to pay the principal and interest on government debt held by the public, as it comes due, and obligations from the Social Security trust fund. The Treasury would not be able to borrow for any other purpose, causing the nation to default on its obligations, and all other bills would have to be paid for by general revenues and other incoming revenue streams as they are received.
"This bill is evidence that my Republican colleagues did not learn from their mistakes in 2011 when they steered our nation towards default, resulting in the downgrade of the U.S. credit rating for the first time in history," said Hanabusa. "This measure undermines the full faith and credit of the U.S., and as we saw in 2011, will slow job growth, drive up interest rates, and hurt our economic recovery. It also puts payments to foreign bondholders over the salaries of our troops, pensions and benefits for our veterans, small businesses that sell goods to our government, and doctors and hospitals who care for millions of Medicare patients nationwide.
"When the U.S. pays its bills, the system is designed to pay our bills in the order they are received. With up to 100 million transactions a month, asking the Treasury to prioritize our debt is an impossible task that would create immense uncertainty here at home and around the globe. Instead of turning us towards another debt crisis, we should be working together on a bipartisan agreement that responsibly reduces spending and replaces sequestration."
Under the No Budget, No Pay Act, the debt limit will reset on May 19 at a higher level to account for the additional borrowing that has occurred. At that time, the Treasury Department will have to resume using "extraordinary measures" to pay government debts and finance government operations. However, because federal revenues are expected to be higher, and spending lower, the Bipartisan Policy Center estimates the real deadline for raising the debt ceiling will most likely fall in September or October.
Hanabusa did vote for an amendment that prohibits the Treasury from using any funds borrowed beyond the debt limit to pay for the salaries of Members of Congress.