House to vote on debt idea, healthcare funding

WASHINGTON Thu Feb 17, 2011 2:31pm EST

Secretary of Treasury Timothy Geithner gestures while testifying before the Senate Finance Committee on Capitol Hill in Washington, February 16, 2011. REUTERS/Larry Downing

Secretary of Treasury Timothy Geithner gestures while testifying before the Senate Finance Committee on Capitol Hill in Washington, February 16, 2011.

Credit: Reuters/Larry Downing

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WASHINGTON (Reuters) - Conservative Republicans are pushing a congressional amendment to give the Treasury Department the ability to avoid a debt default if U.S. borrowing authority runs out, highlighting possible dire consequences of political gridlock over government spending.

The plan by first-term Republican Representative David Schweikert would require Treasury to keep making debt payments if Congress fails in the coming months to raise the limit of the amount the United States can borrow.

"In the event that we reach the debt ceiling, this bill would prohibit a default on our debt, which would rattle already shaky credit markets and spook investors," Schweikert said.

He added that it would "prioritize debt payments in order to avoid a default on our debt," much of which is financed in foreign countries like China.

The proposal, which supporters hope will be added to a spending bill in the House of Representatives, has been described by Treasury Secretary Timothy Geithner as "unworkable.

Geithner on Thursday urged prompt action on raising the debt limit, saying that Washington should not allow financial markets to build in any risk that it will not be raised.

Democrats in Congress say the amendment would put Chinese and other foreign holders of U.S. debt ahead of the U.S. public as Social Security retirement checks, tax refunds and most other government activities would likely grind to a halt if government borrowing authority ran out.

Even if the amendment gets included in the bill in a vote on Thursday night or Friday, Democrats in the Senate are likely to block it.

BORROWING AUTHORITY

The Obama administration wants much different legislation that would simply raise borrowing authority from the current $14.3 trillion limit. Doing so, it argues, would allow Washington to continue paying holders of government debt as well as to keep federal programs functioning.

The U.S. Treasury has estimated that the United States will bump up its current ceiling sometime in April or May.

Washington is rapidly coming close to exceeding its debt limit because of huge deficit spending -- in the range of $1.6 trillion just this year -- and Tea Party conservatives have threatened to try to block another increase in borrowing authority until Congress achieves significant spending reductions.

Another conservative initiative to cut off U.S. funding of the landmark healthcare law enacted last year also was expected before the House wraps up work on the fiscal 2011 spending bill sometime Thursday or Friday.

The measure would stop the Obama administration from implementing the healthcare law, which aims to ensure that more Americans get medical insurance and to provide consumer protections in the healthcare industry.

The move to withhold funds is part of a broader attempt by Republicans to repeal the law that they derisively call "Obamacare."

Even if the House approves these amendments, the Senate is expected to oppose the overall spending bill that Obama has threatened to veto.

(Reporting by Richard Cowan and Donna Smith; editing by Mohammad Zargham)

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Comments (3)
bck555 wrote:
I nice goal of cutting the spending built into the 2011 budget could also keep us from reaching the debt limit. The 2012 budget could also be adjusted to spend only what we take in. Debt limit problem solved! Health care defunded! What a great goal. Go GOP!

Feb 17, 2011 3:12pm EST  --  Report as abuse
Sensibility wrote:
Medicare, Medicaid, and Social Security make up 60 percent of the country’s spending. We will never control our debt until health care costs are brought under control. Therefore, we must begin to roll back Medicare and Medicaid benefits. That starts with rolling back the health care reform act passed last year. We must support our Representatives as they defund this oppressive, debt inducing law.

Feb 18, 2011 9:16am EST  --  Report as abuse
txgadfly wrote:
Yes, health care is an “entitlement”. Social Security is an “entitlement”. But Treasury bonds are also an “entitlement”. Private property is an “entitlement”. If you cut one entitlement, cut them all. Hypocrites! How can people style themselves as “ethical” is they stiff one type of creditor (FICA taxpayers) while paying 100% to a different type of creditor (Treasury bond holders)??

The People will not permit the Government to rob them twice, taking away property that has already been paid for (FICA) while passing along full price debts run up by reckless war spending. The answer is no. If it takes a new Constitution, so be it. The pain must be shared, and the responsibility too. The US Government does not deserve a first class credit rating.

Feb 18, 2011 12:54pm EST  --  Report as abuse
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