U.S. Rep. Blaine Luetkemeyer (MO-9) is cosponsoring legislation requiring the federal government to prioritize its obligations on the public debt in the event the debt ceiling is reached. The Full Faith and Credit Act states that in the event the debt reaches its statutory limit, the debt held by the public takes priority over all other obligations incurred by the federal government. Officials predict that the federal government will reach its current $14.3 trillion debt ceiling within the next several months. 

“We have to keep our word to the American people that we will get a handle on our debt. The Full Faith and Credit Act will help ensure against default by requiring Treasury Secretary Geithner to prioritize payments on the debt in case the debt ceiling is not raised,” Luetkemeyer said. “This legislation requires the federal government to prioritize paying interest and principal costs on the public debt with existing revenue. By doing so, this bill will prevent the United States from defaulting on its debt held by American citizens, pension funds, and companies that own trillions of dollars in U.S. Treasury securities. Without prioritization of payments, Americans who offered both faith and investment in their government could face catastrophic losses.”

The principle behind the legislation is that the full faith and credit of the United States should not hang in the balance on every adjustment to the national debt limit. States protect their credit by pledging first call on revenues to their debts and so should the federal government.

###