On Wednesday, May 8, 2013, the House will begin consideration of H.R. 807, the Full Faith and Credit Act, under a rule.  H.R. 807 was introduced by Representative Tom McClintock (R-CA) on February 25, 2013 and has 106 cosponsors.  H.R. 807 was marked up by the House Committee on Ways and Means on April 24, 2013, which ordered the bill, as amended, to be reported to the House by a vote of 22-14.[1]

The legislation credibly and permanently removes any threat of default on the United States’ Treasury debt. 

H.R. 807 requires the Secretary of the Treasury (Treasury) to make timely payments of principal and interest when the statutory debt limit is reached by issuing debt exempt from the limit. Interest is defined to include interest owed to the Social Security Trust Funds, which provides Treasury access to debt held by the Social Security Trust Funds (debt already subject to the limit) enabling Social Security benefits to be paid in full.  In order to ensure that Treasury cannot issue debt to fund new spending, the legislation provides that this authority may only be used when the debt limit is reached and further, that if room becomes available under the debt limit, any exempt debt previously issued will be made subject to the limit. Finally, H.R. 807 requires that the Secretary submit a weekly accounting record to the House Committee on Ways and Means and the Senate Finance Committee of the principal on mature obligations and interest that is due or accrued and any obligations issued pursuant to the new authority. 

According to legislative background materials provided by the House Committee on Ways and Means:

"The current debt limit is $16.4 trillion. This consists of both debt held by the public and debt held by the government, both carrying the full faith and credit guarantee. Debt held by the public consists of securities the Treasury Department has issued to investors, and currently amounts to $11.5 billion. The balance is debt held by the government in the form of non-marketable Treasury securities, the majority of which, $2.7 trillion, is held by the Social Security Trust Funds.[1]" 

Earlier this year, the House passed, and the President signed into law, H.R. 325, the No Budget, No Pay Act, which included a temporary suspension in the debt limit until May 19, 2013.  On May 19^th, the limit will be recalculated to account for amount borrowed through May 18, 2013. This becomes the new statutory limit.  At this time, the Secretary will more than likely have to utilize extraordinary measures to pay our nation’s obligations.  However, with federal revenue up 12 percent to $1.197 trillion for the first half of FY 2013,[2] the Secretary is expected to have enough resources to pay obligations until sometime early fall.

According to CBO, “enacting H.R. 807, by itself, would result in no costs or savings to the federal government because it would not change any of the government’s tax or spending policies.  Therefore, pay-as-you-go procedures do not apply. In addition, CBO estimates that the bill would not significantly add to the Treasury’s administrative costs. H.R. 807 contains no intergovernmental or private sector mandates as defined in the Unfunded Mandates Reform Act." 

Representative Camp (R-MI) Amendment #15 – amendment clarifies the prohibition on compensation for Members of Congress and clarifies language to require that the Secretary report to Congress any time the new authority is used.