Letter to the Honorable Timothy Geithner, Secretary of the Treasury, Department of Treasury

Letter

Dear Secretary Geithner:

According to various news reports, the administration has confirmed that it is developing a contingency plan to prioritize federal payments in the event that the debt ceiling is not raised by Aug. 2, just five days from now. I am encouraged by this news, but disappointed that it has taken many months to release such a plan.

For many months, I have urged you and the administration to join Congress in developing a contingency plan in case the debt ceiling is not raised by Aug. 2 and to reassure the markets and all Americans that the United States will not, under any circumstances, default on its national debt. I even introduced legislation to achieve this goal. The Full Faith and Credit Act would take the possibility of default off the table by prioritizing federal payments toward debt service. My bill was never intended to be a substitute for raising the debt ceiling and achieving fiscal reforms. Rather, it was intended to be a mechanism to diminish disruption and ensure market stability.

Unfortunately, you have repeatedly dismissed my legislation and criticized prioritization as "unwise, unworkable, unacceptably risky, and unfair to the American people." This was unfortunate because these types of statements have caused undue worry in the financial markets and have undermined American confidence in its government at a time when that confidence is, justifiably, diminished. With time running out, I hope you will join me in moving forward to allay these concerns.

This week, I have introduced legislation, along with 32 of my colleagues in the Senate, to prioritize federal payments in the event the debt ceiling is temporarily reached.

The Ensuring the Full Faith and Credit of the United States and Protecting America's Soldiers and Seniors Act (S. 1420) would require that interest and principal payments on our debt, Social Security checks, and active-duty military pay be prioritized after Aug. 2. I want to be clear: this legislation is not intended to represent a permanent alternative to raising the debt ceiling. Failure to raise the debt ceiling will likely be disruptive, but we should do all that we can to minimize any disruption. I hope we can all agree that preventing a default, protecting our seniors and paying our soldiers are important steps in that direction.

I urge you to support this legislation or to work with me and other members of Congress to constructively improve upon it. It is important that we send a united, bipartisan message to the markets that defaulting on our debt is not an option, and I hope you will join me and many of my Senate and House colleagues in doing so.

I look forward to your response.

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