What is House Bill H.R. 2870?
Cost of House Bill H.R. 2870
In-Depth: Rep. Bill Foster (D-IL) introduced this bill to repeal the public debt limit. When he pitched this bill at the New Democrat Coalition’s Economic Policy Pitch Day, Rep. Foster argued:
“While the debt limit was originally intended to allow Congress to restrain the growth in federal debt outside the budgetary process, in practice it has been used, in the words of Warren Buffet, as a ‘political weapon of mass destruction.’ We need a long-term solution to address this issue, but defaulting on U.S. debt payments, which could trigger a massive increase in borrowing costs, tarnish our reputation, create market volatility, and threaten the economic health of the country, is not the way to do that. [this bill] will repeal the debt limit so that Congress can begin an honest, bipartisan conversation about how to reduce the deficit and build a responsible budget.”
Sen. Michael Bennet (D-CO), who was one of this bill’s Senate sponsors during the last Congress, wrote:
“Proponents of threatening default to extract partisan demands ignore two fundamental realities about the debt limit: First, they insist that the debt limit is a tool for reducing our annual deficits. The only relationship the debt limit has to our deficits is that if we fail to raise the debt limit well in advance of the deadline, those deficits will rise, because the rest of the world will be unwilling to finance our existing debt at such low interest rates for fear of not being paid. Second, some Members of Congress contend that if we don’t raise the debt limit by the deadline it’s not a big deal, because we can just go on paying some parts of our budget and not others. They suggest we can prioritize paying interest on the debt above all else with whatever cash is coming in on a daily basis, so we’re not technically in default. However, market participants and ratings agencies have said that even a very brief period where the U.S. was not paying all of its obligations would place us technically in default… In the unlikely case that everything goes smoothly and people are untroubled by their delayed Social Security payments and investors willingly continue to finance the United States, then where’s the leverage? Either crossing the debt limit is bad because people will be harmed (thus, the extreme factions have leverage), or it isn’t a big deal after all (thus, they have no leverage). It cannot be both.”
In a 2017 op-ed in The Hill, The Concord Coalition’s executive director, Robert Bixby, and James Carter, who served as the head of tax policy implentation on President Trump’s transition team and depty assistant secretary of the Treasury and deputy undersecretary of labor under President George W. Bush, wrote:
“The original purpose of creating a statutory debt limit in 1917 was not to prevent the government from running up too much debt, but to remove the requirement that Congress authorize individual issuances of debt. The intent was to help ensure that sufficient and timely credit would be available to finance World War I. One hundred years later, things are very different. The main use of the debt limit now is to prevent the government from paying its bills on time, putting the nation’s creditworthiness at risk and threatening a global financial crisis… The federal debt limit is the public policy equivalent of an appendix; it serves no practical purpose and, if ruptured, it represents a grave threat to the country’s economic and fiscal health. Some argue the debt limit provides useful leverage to extract fiscal reforms that would be hard to enact otherwise. However, this is ultimately a ‘trigger’ that must never be pulled, so it’s of limited value. Furthermore, there’s the risk it might go off accidentally.”
Bixby and Carter observed that both economists and Treasury Secretary Steven Mnuchin support abolishing the debt limit:
“Economists generally agree we should abolish the debt limit. Once government spending and tax decisions are made, the only question remaining is whether to honor our obligations. As Treasury Secretary Steven Mnuchin said last March, ‘We've spent the money. So the concept of the debt limit...is somewhat of a ridiculous concept.’”
President Trump questioned the debt limit’s utility in June 2017, saying that “For many years people have been talking about getting rid of the debt ceiling altogether. There are lots of good reasons to do that.”
Last Congress, Democrats in both the House and Senate introduced legislation to repeal the debt limit. However, some congressional Republicans were unwilling to entertain the idea of eliminating the debt limit.
This bill doesn’t have any House cosponsors in the 116th Congress. Its Senate companion, introduced by Sen. Brian Schatz (D-HI), has five Democratic Senate cosponsors. As of July 29, 2019, neither bill had received a committee vote.Last Congress, Sen. Schatz introduced this bill with the support of two Democratic Senate cosponsors and it didn’t receive a committee vote.
End the Threat of Default Act
To repeal the debt ceiling, and for other purposes.
- Not enactedThe President has not signed this bill
- The senate has not voted
- The house has not voted
Committee on Ways and MeansIntroducedMay 21st, 2019
- house Committees