What This Bill Does
This bill creates a system that tells the Secretary of the Treasury (the official who manages U.S. money) how to pay the country's debts when the government hits its borrowing limit. The bill establishes five different categories of payments and requires the Treasury to prioritize paying certain obligations before others. The Treasury must also send weekly reports to Congress about which bills get paid.
Who It Affects
The Treasury Department, Congress, people who receive Social Security or Medicare, military members and veterans, federal employees, and holders of U.S. government bonds (people who loaned money to the government).
Key Provisions
• The Treasury must always pay "Tier I obligations" first, which include interest and principal on government debt and Medicare payments (Sec. 2(a)(1) and (b)(1))
• The Treasury can only pay "Tier III obligations" (most other government payments) if it can still pay all Tier II obligations (military and veterans benefits) (Sec. 2(a)(3))
• The Treasury must send Congress a detailed weekly report showing how much money was paid for each category of obligations and how much remains unpaid (Sec. 2(a)(6) and (d))
• Special government bonds can be issued to pay Tier I obligations without counting toward the government's debt limit, but only until Congress changes the debt limit (Sec. 2(c))
What Changes
If this becomes law, the Treasury gains a specific legal framework for which government bills to pay first when money runs short. Right now, the bill states the Treasury Secretary already has the authority to choose which bills to pay during these situations.
Important Definitions
• Tier I Obligations: Debt payments and interest, Social Security/Medicare payments
• Tier II Obligations: Military and Veterans Affairs payments
• Tier III Obligations: All other government payments
• Tier IV Obligations: Federal employee pay and travel costs (except military/veterans)
• Tier V Obligations: Congressional pay
Effective Date
Not specified in bill text
IB
Union Calendar No. 279
118TH CONGRESS
2D SESSION
H. R. 187
[Report No. 118–340]
To ensure the payment of interest and principal of the debt of the United
States.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 9, 2023
Mr. MCCLINTOCK (for himself, Mr. DUNCAN, Mr. GROTHMAN, and Mr.
GAETZ) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
JANUARY 9, 2024
Additional sponsor: Mrs. LESKO
JANUARY 9, 2024
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on January 9, 2023]
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•HR 187 RH
A BILL
To ensure the payment of interest and principal of the debt
of the United States.
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•HR 187 RH
Be it enacted by the Senate and House of Representa-
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tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE.
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This Act may be cited as the ‘‘Default Prevention Act’’.
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SEC. 2. PAYMENT OF OBLIGATIONS.
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(a) IN GENERAL.—At any time that the debt of the
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United States Government subject to limitation under sec-
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tion 3101 of title 31, United States Code, has reached the
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limitation imposed under such section, the Secretary of the
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Treasury (hereafter in this section referred to as ‘‘the Sec-
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retary’’) shall—
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(1) pay Tier I obligations as such obligations be-
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come due,
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(2) issue such obligations under chapter 31 of
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title 31, United States Code, as—
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(A) are necessary to make the payments de-
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scribed in paragraph (1), or
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(B) are to be held exclusively by a trust
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fund referred to in subsection (b)(1)(A),
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(3) pay Tier III obligations only to the extent
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that the Secretary can still pay all Tier II obligations
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as such obligations become due,
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(4) pay Tier IV obligations only to the extent
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that the Secretary can still pay all Tier II and Tier
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III obligations as such obligations become due,
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•HR 187 RH
(5) pay Tier V obligations only to the extent that
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the Secretary can still pay all Tier II, Tier III, and
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Tier IV obligations as such obligations become due,
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and
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(6) submit to the Committee on Ways and Means
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of the House of Representatives and the Committee on
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Finance of the Senate a weekly written report con-
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taining the information described in subsection (d).
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(b) DEFINITIONS.—For purposes of this section—
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(1) TIER I OBLIGATIONS.—The term ‘‘Tier I ob-
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ligations’’ means payments necessary to provide any
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of the following:
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(A) Payment with legal tender pursuant to
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the authority provided under section 3123 of title
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31, United States Code, of principal and interest
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on debt held by—
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(i) the public,
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(ii) the Federal Old-Age and Survivors
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Insurance Trust Fund or the Federal Dis-
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ability Insurance Trust Fund, or
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(iii) the Federal Hospital Insurance
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Trust Fund or the Federal Supplementary
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Medical Insurance Trust Fund.
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•HR 187 RH
(B) Payments under the Medicare program
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under title XVIII of the Social Security Act (42
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U.S.C. 1395 et seq.).
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(2) TIER II OBLIGATIONS.—The term ‘‘Tier II
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obligations’’ means payments necessary to provide
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any of the following:
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(A) Any obligation of the Department of
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Defense.
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(B) Benefits under laws administered by the
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Secretary of Veterans Affairs.
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(3) TIER III OBLIGATIONS.—The term ‘‘Tier III
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obligations’’ means any obligation of the United
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States which is not a Tier I, Tier II, Tier IV, or Tier
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V obligation.
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(4) TIER IV OBLIGATIONS.—The term ‘‘Tier IV
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obligations’’ means any payment which constitutes
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any of the following:
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(A) Compensation for any Federal employee
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for official time under section 7131 of such title
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5, United States Code.
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(B) Any payment for travel expenses for
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any officer or employee of the Executive branch
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of Government, including the President and Vice
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President, unless such payment is a Tier I or
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Tier II obligation.
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•HR 187 RH
(C) Compensation of any officer or em-
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ployee of the Executive branch of Government
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(other than an individual in the competitive
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service, as defined in section 2102 of title 5,
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United States Code), including the President and
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Vice President, unless such compensation is a
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Tier I or Tier II obligation.
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(5) TIER V OBLIGATIONS.—The term ‘‘Tier V ob-
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ligations’’ means compensation of any Member of
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Congress (as that term is defined in section 2106 of
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title 5, United States Code).
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(c) COORDINATION WITH PUBLIC DEBT LIMIT.—Obli-
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gations issued under subsection (a)(2) shall not be taken
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into account as subject to the limitation imposed under sec-
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tion 3101(b) of title 31, United States Code. The preceding
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sentence shall not apply with respect to any obligation after
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the first date (after the issuance of such obligation) on
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which any modification or suspension of such limitation
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takes effect.
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(d) WEEKLY REPORTS.—The written report referred
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to in subsection (a)(6) shall include, with respect to the pe-
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riod covered by such report—
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(1) the amount of Tier I obligations paid under
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subsection (a)(1) during such period,
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•HR 187 RH
(2) the amount of obligations issued under sub-
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section (a)(2) during such period, and
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(3) the amount of Tier II obligations, Tier III
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obligations, Tier IV obligations, and Tier V obliga-
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tions which were paid during such period (stated sep-
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arately for each tier) and the aggregate amount of
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such obligations which were due and unpaid as of the
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close of such period (stated separately for each tier).
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(e) NO INFERENCE WITH RESPECT TO EXISTING AU-
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THORITY TO PRIORITIZE PAYMENTS.—During any period
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with respect to which this section does not apply, nothing
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in this section shall be interpreted to restrict the authority
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of the Secretary to prioritize the payment of certain obliga-
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tions over other obligations.
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H187
Union Calendar No. 279
118TH CONGRESS
2D SESSION
H. R. 187
[Report No. 118–340]
A BILL
To ensure the payment of interest and principal of
the debt of the United States.
JANUARY 9, 2023
Referred to the Committee on Ways and Means
JANUARY 9, 2024
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union,
and ordered to be printed
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