Statement of Administration Policy: H.R. 2621 - Prohibition of Specified Cash Management Practices

(House)
(Archer (R) TX)

If H.R. 2621 were presented to the President, he would veto it.

The reason is straightforward: H.R. 2621 would guarantee a Government default almost immediately after the date of its enactment. As a consequence, the Government would be unable to make full or timely payment on a wide variety of obligations, including interest on the public debt, Medicare, Medicaid, military pay, certain veterans benefits, payments to defense and other government contractors, Federal civilian pay, tax refunds, the Earned Income Tax Credit, Supplemental Security Income, and various other programs.

H.R. 2621 would repeal the debt management authority conferred on the Secretary of the Treasury, under current law, to avert a default on outstanding obligations. Specifically, it would curtail the Secretary's flexibility to manage the investments of the G-Fund and the Civil Service Retirement and Disability Fund (CSRDF).

H.R. 2621 would require the Secretary to invest immediately all of the $60 billion in debt obligations formerly held by the G- Fund and the CSRDF that is currently uninvested. This would cause immediately the outstanding debt to be in excess of the debt limit. Treasury would be unable to borrow funds necessary to pay the bills of the United States; it could not issue another penny of debt to the public. Treasury has debt coming due every week, most of which is refinanced. Treasury would be unable to refinance that debt and would not have sufficient cash to retire it, thereby causing default within days, if not hours.

While the bill purports to set priorities for the benefits due to various Federal trust funds, the Government could not make such a prioritization scheme operationally effective for several months, if at all, and then only at the cost of extensive disruption to its existing payment mechanisms. In addition, court action by those who were not paid because of a Government default could prevent the Treasury from making the benefit payments envisioned by the scheme.

The Administration reiterates its request that the Congress increase the statutory limit on the public debt to $5.5 trillion, without objectionable restrictions. This would ensure the responsible management of the public debt.