Rep. Peters Introduces Bills to Protect the U.S. Economic Recovery, Lower the National Debt
WASHINGTON, DC – Today, Congressman Scott Peters (CA-52) introduced a two-part legislative package designed to protect America’s economic recovery and help reduce the national debt. The first bill, the ‘Protect America’s Credit Act,’ would prevent the economic instability caused by an unnecessary debate in Congress over whether to pay America’s bills like the nation experienced in 2011. The second, the ‘Pay Down the Debt Act,’ would help reduce the national debt by requiring a negotiated budget compromise if debt begins growing faster than the national economy.
Peters’ legislation has already earned the endorsement of Erskine Bowles and former Sen. Alan Simpson, who formerly co-chaired the National Commission on Fiscal Responsibility.
“We are very pleased that Representative Scott Peters has taken a leadership role by introducing legislation to deal with our nation’s debt and the debt limit in a responsible manner based on an idea in the budget plan we put forward earlier this year,” the two leaders said in a prepared statement.
“The political fights over the past two years about raising the debt limit have severely harmed confidence in our government and created tremendous uncertainty,” they added. “At the same time, debt cannot continue to grow faster than the economy without risking a fiscal crisis. The legislation introduced by Representative Peters would not only help avoid the dangerous political brinksmanship surrounding the debt limit, but also establish a mechanism to ensure Congress and the President act in advance of a crisis if the debt is projected to begin growing faster than the economy. We hope this legislation receives serious consideration as Congress grapples with the debt limit issue in the coming weeks.”
Bowles and Simpson currently co-chair the Moment of Truth Project, an effort to build on the ideas of the Fiscal Commission and spark a national discussion on comprehensive budget reform.
“As a country we must pay for what we’ve already spent,” Congressman Peters said. “Right now it is too easy for a small fraction of Congress to put the entire American economy and national employment at risk in order to score political points.”
Rep. Peters continued, “It is time for real reforms that get the politics out of the debt ceiling so we protect the job gains of the last few years and maintain the country’s credit rating.”
The prolonged national debate over the debt ceiling two years ago led to a credit downgrade, added $18 billion dollars to future borrowing costs, and incited a 2,000 point drop in the New York Stock Exchange over a two month period. This ineffectual solution harmed and extended an already weak economic recovery. The package introduced today by Rep. Peters builds on his consistent advocacy to find an alternative to the current mechanism for raising the debt ceiling, which in recent years has led to paralysis on Capitol Hill.
Background on the legislative package:
- The debt package is a two part process and would address both the economic danger of debt growing faster than the economy, and the uncertainty caused by the debt limit, by indexing the debt limit to GDP and requiring action by the President and Congress if the debt is growing faster than the economy.
- By indexing the debt limit to GDP, Congress would not need to approve legislation increasing the debt limit as long as the debt remains on a stable or declining path as a share of GDP.
- If debt held by the public is projected to grow as a percentage of GDP, Congress and the President would be required to consider policies to prevent the debt from increasing faster than GDP before a debt limit increase is necessary
- By eliminating the need to increase the debt limit if the debt is stable or declining as a percentage of GDP, and putting a process in place requiring the President and Congress to act to prevent the debt from growing faster than the economy, this legislation prevents the brinksmanship and last-minute deals to avoid default.
- At the same time it would make the need to increase the debt limit a more meaningful indication of fiscal stewardship, because legislation increasing the debt limit would only be necessary if policymakers have failed to keep the debt on a stable or declining path.
- If the Office of Management and Budget projects the debt will grow faster than the economy, the President and Congress would have submit legislative recommendations that would stabilize the debt.
- If a budget resolution with instructions to stabilize the debt is not adopted by June 15th, the President’s proposal, or alternative proposals with a minimum levels of support (50 cosponsors in the House and 10 in the Senate) to achieve savings necessary to stabilize the debt, could be called up for a vote by any member
- Congress could not consider any legislation affecting revenues or mandatory spending until it passes legislation bringing the budget back within the targets