Senators Push Bill to End Debt Ceiling’s Use as ‘Political Weapon’

Pay Our Bills Act would allow Congress to disapprove debt ceiling increases, instead of approving them

Sen. Chuck Schumer, D-N.Y. (Photo: AP) Sen. Chuck Schumer, D-N.Y. (Photo: AP)

More On Legal & Compliance

from The Advisor's Professional Library
  • Updating Form ADV and Form U4 When it comes to disclosure on Form ADV, RIAs should assume information would be material to investors.  When in doubt, RIAs should disclose information rather than arguing later with securities regulators that it was not material.
  • Dealings With Qualified Clients and Accredited Investors Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.”  The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.

Three Democratic senators introduced legislation Tuesday that would permanently allow Congress to disapprove debt ceiling increases, instead of approving them.

Sens. Barbara Boxer, D-Calif.; Charles Schumer, D-N.Y., and Mazie Hirono, D-Hawaii, introduced the Pay Our Bills Act, which they said was based on the "McConnell rule" first proposed in 2011 and employed again in the most recent agreement to end the government shutdown and avoid default.

The bill “would drastically reduce the chances that the debt ceiling could be used as a political weapon designed to extract policy concessions from the opposing party,” the senators said.

“We know from recent history that even the threat of not paying our bills does serious damage to our economy,” Boxer said in a statement. “It’s time for us to put in place a straightforward process to avoid a catastrophic default on our nation’s debt. The Pay Our Bills Act gives both houses of Congress and the president a say, but sends a strong message of certainty to the markets, to our families and to the world.”

“The way it works right now, the debt ceiling is like a ticking time bomb that threatens massive economic destruction,” added Schumer. “This bill would defuse it. By forcing Congress to disapprove debt ceiling increases, we greatly reduce the risk of default that would be a crushing blow to our economy – taking money out of middle-class pockets and destroying middle-class jobs. I hope our Republican colleagues will do the right thing and join in our efforts to limit the risk of default and provide certainty to American families and businesses.”

The disapproval mechanism, or McConnell Rule, was temporarily included in the bipartisan Senate agreement that reopened the government and avoided default earlier this month. This same mechanism was also used to lift the debt ceiling twice following passage of the Budget Control Act.

President Barack Obama has suspended the debt ceiling until Feb. 7, and under the new law, to disapprove the suspension Congress must draft and consider a resolution of disapproval. “If Congress passes the resolution of disapproval, the president has the option to veto the resolution. If Congress so chooses, it may attempt to override the veto with a two-thirds majority. However, subsequent increases in the debt ceiling will still have to be approved by Congress,” the lawmakers explained.

Boxer, Schumer and Hirono said they are pushing for the McConnell rule to be made permanent for all future increases in the debt limit, requiring that if Congress chooses to consider a resolution of disapproval it does so within 15 days after the President proposes an increase.

Sen. Orrin Hatch., R-Utah, said on the Senate floor Tuesday that “the debt limit debate provides us with an opportunity to re-examine our nation’s fiscal course and take steps to correct it.”

He continued: “Sadly, we have a President who appears unwilling to have that conversation.  Instead, he apparently wants to press forward full steam ahead on our already unsustainable course, saddling future generations with unheard of debts and broken entitlement promises in the process. Quite simply, it would be folly to approve of yet another debt limit increase without also working to address these programs, which are the main drivers of our debts and deficits.  Therefore, I disapprove of the President’s exercise of an authority to suspend the debt limit, and I urge all of my colleagues to similarly disapprove.”

---

Check out Senate Agrees on Debt Deal, as SIFMA Chief Blasts GOP and Obama for Woes on ThinkAdvisor.

Reprints Discuss this story
This is where the comments go.