[Congressional Record Volume 157, Number 115 (Thursday, July 28, 2011)]
[Senate]
[Pages S4996-S4997]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           PRIORITIZING DEBT

  Mr. TOOMEY. Madam President, last January--probably late in the month 
I think it was--it occurred to me that as we proceeded in the direction 
of approaching the statutory limit of our borrowing as a government, 
the discussion was becoming a little bit counterproductive in some 
respects. One, in particular, was this constant threat we would default 
on the loans we had taken out as a government, the bonds that were held 
by millions of Americans, and that a default would have cataclysmic 
repercussions. It occurred to me that this is an unproductive 
discussion, in part, because no such default was ever going to happen. 
Certainly, it didn't need to happen. In the event we didn't raise the 
debt limit upon reaching it or prior to that, we would have enough 
ongoing tax revenue to cover the debt service by many multiples.
  So I introduced legislation that would clarify this. It would take 
this risk off the table and try to provide some clarity to markets and 
to senior citizens who are savers and who have invested their savings 
in Treasurys and to have a constructive and honest debate about what 
the implications are of reaching the debt limit without raising it. So 
I introduced a bill that would instruct the Treasury Secretary to 
prioritize debt service in the event we

[[Page S4997]]

didn't raise the debt limit upon reaching it.
  Unfortunately, the idea was dismissed by the administration. It was 
derided. It was castigated. It was described as reckless and 
irresponsible and unworkable. This idea of prioritizing the payments we 
would make if we didn't raise the debt ceiling was dismissed out of 
hand.
  Now we have two reports that have come out this week. One cites the 
fact that senior Treasury officials have been calling around to big 
banks assuring them that in the event we don't raise the debt ceiling, 
which we will hit within just a few days, Treasury is assuring the 
banks there will be no default; they have this covered, and they have 
taken care of this. The scheduled interest and principal payments on 
our bonds will occur on schedule.
  It is nice that the administration is informing the banks of this. I 
think it would be nicer still if they would inform the American public 
and everybody who has such an important stake in ensuring that the U.S. 
Government not default on its debt. So that was the first report.
  The second report came out just late last night--and it has been 
confirmed today--which is that the Treasury has, in fact, been working 
on a plan of the very nature they have been deriding and denying for 
many months now; that they, in fact, have been developing and are 
continuing to refine a plan to prioritize the payments that will be 
made in the event the debt limit is not raised by August 2.
  I am glad they have finally come to this conclusion. I wish they had 
approached Congress and worked with us constructively many months ago 
when I first suggested we ought to have a plan B, but I would say it is 
better late than never. But now I think we ought to get this plan, such 
as it is, exposed to the sunshine of public discourse. We ought to 
understand what this process will be and Congress ought to have a role 
in it.
  That is why I introduced an updated version of this bill last week. I 
have 33 Senate cosponsors on the bill. The purpose of the bill is not 
to be a substitute for raising the debt limit. I understand if we don't 
raise the debt limit close to August 2, the results will be very 
disruptive. We can minimize that disruption if we have a game plan, and 
we ought to work this out. The bill I introduced with a number of 
colleagues is a bill that identifies three very high priorities, that 
we ought to make sure we make these payments, whether or not we raise 
the debt ceiling. We know we will have enough money to do so, and I 
think we have an obligation to do that.
  The three categories embodied in our bill are, first, interest on our 
debt. By making sure we make those payments we avoid a catastrophic 
default and we avoid the financial consequences which could be very 
dire. So that ought to be one of the top priorities. The second, 
equally important, is making sure we send out all the Social Security 
checks in full and on time to everybody who has one coming. Senior 
citizens all across America, including my parents, depend on Social 
Security checks, and they have earned those benefits by virtue of the 
contributions they made into that system, in many cases, for many 
decades.
  The third and final item I think ought to be prioritized in the event 
we don't raise the debt ceiling by August 2 is salaries paid to Active-
Duty military. I think the men and women who are risking their lives 
for all of us deserve to have the peace of mind of knowing that their 
families back home will not have to wait until Congress gets its act 
together for them to get their paycheck in arrears. It ought to be done 
on time.
  So these three items, if we add them all and look at the amount they 
would cost during the month of August and we compare that to the tax 
revenue that is going to come in the door in August, these three 
expenses are less than half the amount of tax revenue that is going to 
come in. Clearly, and obviously, this is easily manageable--or easily 
affordable, I should say.
  Technically, the Treasury and the Fed have some work to do, no doubt, 
to make sure this is all done smoothly. That is precisely why they 
should have engaged with us a long time ago, so we could have had a 
constructive period of time to work out whatever details are necessary 
so we could have as smooth a functioning process as possible--one that 
would have the benefit of a transparent debate.
  I acknowledge there might be other items that ought to be added to 
the list, and we ought to have a debate on the floor to consider those 
items. What we would end up with is a process that the American people 
would understand, they would know, they could anticipate, and it would 
be far more constructive. It is getting late in the day, but maybe it 
is not too late. I hope this body will take up my bill and it will have 
that debate, we will have some kind of resolution, and we will provide 
some guidance. I think it is part of our constitutional obligation to 
have control over spending that occurs in our government, and this 
should be no exception.
  I urge my colleagues to join me in supporting this legislation. If my 
colleagues have constructive suggestions of how we can make it better, 
I welcome them, as I welcome working with the Treasury and the 
administration, to make sure that we, in the unfortunate event--if it 
should occur--that we don't raise the debt ceiling by August 2, do 
everything we can to minimize the disruption that will follow.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.

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