The Wall Street Journal editorial page recently highlighted a largely unknown piece of legislation passed by the House of Representatives in May: the Full Faith and Credit Act, sponsored by Rep. Tom McClintock (R-CA). The bill would prevent the federal government from defaulting by mandating that the Treasury pay the nation's debts even after the debt ceiling is reached. There is enough federal revenue to cover those costs.
That means that some of the government's discretionary spending would not happen, effectively defunding and shutting down some government functions (perhaps in addition to those that are shut down already). But the U.S. government would not default. The Treasury actually has the discretion to structure payments in this way already, but without legislation mandating that it do so, there is no guarantee that it will.
During the 2011 debt ceiling fight, a few Republicans--some from the Tea Party, and even some moderates--suggested that the Treasury's public deadlines for a deal were illusory, because it could continue to service the nation's debt regardless. That is the basis for the spurious charge that the Tea Party, or the GOP itself, wanted default--a baseless claim hurled regularly by President Barack Obama and his Cabinet and party.
This time, the Republican leadership wants to ensure that default is not an option, or even a possibility. That is precisely why Senate Majority Leader Harry Reid (D-NV) has prevented the Senate version of the bill, sponsored by Sen. Pat Toomey (R-PA), from moving forward--and it is also why President Barack Obama has threatened to veto it if it passes. They--not the GOP--want to use threats of default as a bargaining tool.
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