Pennsylvania Republican Sen. Pat Toomey delivered an address at the American Enterprise Institute on Wednesday in which he doubled down on his claim – which has been gaining traction among conservatives — that the country will not go into default if Congress fails to raise the federal borrowing limit by Aug. 2.
“I want to say categorically that is absolutely false: Failure to raise the debt limit upon the deadline submitted by the Treasury Secretary does not equate to a default on our debt at all,” Toomey said at the event.
Toomey’s remarks came as House Majority Leader Eric Cantor (R-Va.), delivering an address on jobs in Richmond, also expressed skepticism about the deadline Treasury Secretary Tim Geithner has said Congress must meet if the country is to avoid default.
In so doing, Toomey and other conservatives are employing a legislative strategy resembling the one that House Republicans used during the debate this year over avoiding a government shutdown — turn the tables so that the blame for a potential default will rest on the other party’s shoulders.
During the shutdown battle, as the deadline for passing a funding measure loomed 34 hours away, the House passed a measure that would have kept the federal government running for an extra week while funding the Defense Department for the rest of the fiscal year.
Republicans contended that the measure, which they termed a “troop funding bill,” would have ensured that members of the military would continue to get paid if Congress and the White House failed to hash out an overall funding deal by their deadline the next day.
Democrats at the time dismissed the bill as a maneuver designed to give Republicans political cover in the event that the budget negotiators were unable to reach a compromise.
And sure enough, the blame game was in full force the day of the impending shutdown, with both sides holding a total of nine news conferences over the course of nine hours during which Democrats accused Republicans of waging an “assault on women” and Republicans countering that Democrats were waging an assault on the troops.
The “Full Faith and Credit Act” introduced by Toomey in the Senate and Rep. Tom McClintock (R-Calif.) in the House would essentially serve the same purpose as the House Republican “troop funding bill” did in March – it would shift responsibility for a potential default onto the shoulders of Democrats and the White House by calling on the Treasury Department to make only principal and interest payments past the Treasury Department’s Aug. 2 deadline.
In his AEI speech Wednesday, Toomey argued that the measure would “take the specter of default on our debt off the table.”
“It simply instructs the treasury secretary that in the event that we do not raise the debt limit upon reaching it, the service of our debt will be the highest priority,” Toomey said.
He added that “as a former government bond trader and someone who stays in touch with this market, I can promise you the bond market knows the difference between some kind of payment obligations and defaulting on our debt. ... Those kinds of postponements are not the same thing as defaulting on our debt.”
Like the “troop funding bill,” however, the “Full Faith and Credit Act” would not be likely to pass both chambers.
And it remains to be seen whether the argument continues to make headway among congressional leadership. House Speaker John Boehner (R-Ohio) said Sunday that he “understand(s) the doubts” of those who are skeptical of a hard-and-fast default deadline, although he added, “it’s clear to me that at some point we’re going to have to raise the debt ceiling.”
In the meantime, the measure remains a political tool that Republicans can utilize as the debt-limit debate heats up.